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How to know when it is time to sell your business

Many entrepreneurs believe they can sell their business because their marketing is working, but demand is not the only indicator that predicts it is possible to sell. We talk to an expert to find out how you can gauge whether or not it is time to sell your business.

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Are there magical signs that point to selling your business?

Many entrepreneurs start their business because it is their dream to bring their product into the world, or introduce their service to an underserved niche, and other are building a brand to sell and set them up for their next venture or retirement. But how do you know when it is time to sell your business? Are there magical signs that present themselves? Do you wake up one day and the clouds part, traffic gets out of your way, everyone smiles at you and holds doors open? Nope. So how can you tell that your ducks are in a row?

FourBridges Capital advisor, Andy Stockett says there are some key signs that point to it being the best time to sell your business:

1. When Your Business is Humming

There’s a Merle Haggard song that goes, “Someday when things are good, I’m gonna leave you.” It’s probably not the healthiest mindset in a relationship, but it’s definitely the best way to think about the timing of a sale. Granted, business owners don’t always get to choose when a transaction takes place: if it’s a distressed situation or a personal emergency arises, the decision may be made for you. But assuming you’re in the driver’s seat, aim to go to market when your company is showing revenue and EBITDA increases. Why? You’ll be much more likely to maximize value and – most importantly – actually close a deal. Businesses that have gone flat, or worse, are trending downward, will have only a small universe of buyers. As a result, your ability to negotiate value and terms will be minimal.

2. When Your Management Team is Strong

Having gaps in your management team is akin to nailing a “buyer beware” sign over your business. Typically, buyers prefer to acquire a business that will continue to run smoothly post-transaction. If you’re hoping to sell your business and head to the beach condo, be sure you’re leaving behind a management team that can manage without you. Ultimately, that will get you more dollars in the bank.

3. When Things Are “Buttoned Up”

Potential buyers don’t want to deal with ongoing lawsuits or run-ins with the EPA. If possible, resolve these issues before trying to sell your business – and whatever you do, don’t try to bury them. Even if you come to terms with a suitor, the due diligence process won’t leave any stones unturned. If something pops up that the buyer wasn’t aware of and isn’t happy about, you can expect the whole transaction to come to a halt.

4. When Your Metrics Can Describe the Value in Your Business

Knowing your business is only half the battle. When you go to market, you need to be able to show it. Think:

  • Audits
  • Monthly “management packages” that present detailed financials
  • Operating statistics such as production runs, overtime hours, material waste and returns
  • There’s no substitute for hard – and accurate – data. For one thing, buyers will appreciate having all of the information laid out for them. It can also shorten the list of questions your buyers will be asking and minimize the back-and-forth, moving the whole process along faster.

5. When Your Personal Financial “Playbook” is Ready to Go

There’s a lot to think about when you’re considering a sale. While you and your investment bankers will be focused on positioning your business properly, don’t neglect your personal financial circumstances. Make sure you’ve explored ways to minimize taxes and address estate planning issues, and establish a plan for investing the proceeds from the sale. Lining up a wealth management advisor and an estate attorney can help you protect and grow the assets you monetize through a transaction.

The takeaway

Stockett makes some extremely important points that many businesses miss as they put their brand on the market – it isn’t just about nailing your offering, there are many moving parts that need to be in line before the time to sell is before you. Not all entrepreneurs plan to sell, but sometimes the stars are aligned and the timing becomes appropriate.

Marti Trewe reports on business and technology news, chasing his passion for helping entrepreneurs and small businesses to stay well informed in the fast paced 140-character world. Marti rarely sleeps and thrives on reader news tips, especially about startups and big moves in leadership.

Business Entrepreneur

Performance improvement through self-talk

(ENTREPRENEUR) Speaking to others can be scary, but speaking to yourself is normal and can actually improve your speech performance overall

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Do you talk to yourself? Don’t worry, this is a no-judgment zone. I probably talk to myself more than I talk to other people – especially when considering the inner monologue.

I once read that people who talk to themselves are likely to be more intelligent. Whether or not this is factual I don’t know, but I do know that it’s important that you’re smart about the way you talk to yourself.

I’m a fairly self-deprecating person, so when I’m talking to myself about myself, it’s usually some sort of insult. About a year or so ago, I realized how often I was doing this, and made a conscious effort to be a little bit nicer. In that time, my mood has been a bit more positive.

This experience fits well into the research efforts of psychologist Ethan Kross who has examined the differences in life success based off of how people talk to themselves. “Talk to yourself with the pronoun I, for instance, and you’re likely to fluster and perform poorly in stressful circumstances,” said Kross. “Address yourself by your name and your chances of acing a host of tasks, from speech making to self-advocacy, suddenly soar.”

This can be simplified as, talk to yourself the way you would (or maybe, should) talk to someone else, and respond in the way you would want them to respond. Treat with kindness, receive kindness back – as a result, things are more cohesive, copacetic, and successful.

After working with participants in his study, Kross found a number of performance benefits to this self-talk method, including: better performance, higher well-being, and greater wisdom.

With better performance, judges were used to listen to five-minute speeches prepared by participants about why they should be hired for their dream job. Half of the participants used “I” statements, while the other half referred to themselves by their own name. The judges found that the latter half performed better, and were found to have experienced less depression and felt less shame.

With higher well-being, Jason Moser, a neuroscientist and clinical psychologist, measured electrical activity in the brain during participants’ usage of the different types of self-talk. During stressful situations, those who used their names instead of personal pronouns were found to have a significant decrease in anxiety levels, which positively correlated with a major decrease in energy use by the frontal lobe (talk about a win, win!)

With greater wisdom, the research found that people who use their names instead of pronouns are able to think things through more wisely and more rational and balanced way. “The psychologically distanced perspective allowed people to transcend their egocentric viewpoints and take the big picture into account,” Kross said of this piece of the research.

Well, Taylor is now ready to wrap up this article, and she hopes that you’ll give name-first self-talk a try, as The American Genius only wants what is best for their readers! Additionally, encourage people around you and those on your team to give this self-talk, first name idea a try – circle back after a week of trying it and share the results.

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Business Entrepreneur

How freelancers can keep the peace with difficult clients

(ENTREPRENEUR) Freelancers are in a tight spot – keeping customers happy pays the bills, even when they’re impossibly difficult. Let’s discuss how to overcome this tremendous challenge.

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Freelancers have a myriad of benefits, but one distinct drawback is that there isn’t always a team to back you up if you find yourself working with a particularly nasty client. It’s especially important to keep clients — no matter how insufferable they may be — in good moods, so here are a few tips on keeping the peace with your most annoying customers.

It’s worth noting that you can often mitigate a large amount of potential misunderstandings — and thus, nastiness — by being clear with your intentions, terms, and rules up front and over-communicating at all times. A common issue for beginning freelancers is a tendency to settle on less-than-optimal terms for fear of losing a potential customer. A piece of advice – if they’re not willing to pay you what you’re worth now, they never will be.

It also helps to keep in mind that most obstinate clients are simply control-freaks who have found themselves outside of their comfort zones. Knowing that you aren’t dealing with inherently bad people can be the difference between snapping and having more patience.

Once you’ve established that your client is causing you substantial enough discomfort that their behavior is no longer acceptable, your first step should be to communicate to them the specifics of your problem. If possible, do this in writing – promises made via email tend to reinforce accountability better than phone calls.

Freelancers should also avoid using any additional stipulations or rewards for getting clients to cooperate. As long as they’re the one failing to hold up their end of the bargain, they should be the one to pick up the slack — don’t do their work for them (or, if you do, make sure you charge them for it).

Again, the majority of client-freelancer issues can be boiled down to miscommunication and shaky terms, so address all issues as quickly as possible to avoid similar problems in the future. And as previously stated, over-communicate at all times.

Of course, keeping the peace is only viable up to a certain point of abuse.

If your client doesn’t pay you by the agreed-upon due date, continuously disrespects you and/or your team, or keeps changing the terms of your agreement, you reserve the right to set the client straight, threaten to take them to small-claims court, or — if you haven’t initiated the work for your end of the deal — terminate the contract.

Remember, freelancers don’t owe inconsiderate customers the time of day, and for every non-paying customer with whom you waste your time, you’re missing out on a paid, legitimate opportunity.

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Business Entrepreneur

Is the best time to relocate your business before, during, or after the holidays?

(ENTREPRENEUR NEWS) If your business has outgrown its current space, it may feel like there’s never a good time to relocate. When can you pack everything up without disrupting operations, going offline, and sinking your sales?

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If your business has outgrown its current space, it may feel like there’s never a good time to relocate. When can you pack everything up without disrupting operations, going offline, and sinking your sales? The answer may be during that post-holiday slump.

Though the holiday season is marked by increased shopping and general economic activity during the run-up, once the holiday season actually begins, we tend to see a slowdown that leads to low first quarter profits. Decreased profits during this period don’t mean we’re looking at an overall economic slump, but rather that everyone is recuperating from holiday spending sprees, while companies assess and prepare to launch their start-of-year marketing strategies. It’s a time of renewal and reconsideration, from an economic perspective.

If you’re thinking about staging a move for your business this holiday season, you’re on track for decreased business disruptions, but that doesn’t mean you have an easy road ahead of you. Here’s what you need to know to execute the move smoothly.

Have A loose timeline

One of the most challenging things about planning a business move is that it can be hard to predict how long it will take to properly execute your move. That means, even if you tell your customers you’re relocating, you shouldn’t expect to give them a hard re-opening date. Rather, the length of time it takes to move tends to hinge on a number of factors, including distance, size of your business, infrastructure issues, and regulatory concerns, not all of which are easily predictable.

You’ll also want to leave some buffer time when planning your move because you can’t predict problems that might arise with the moving company. Bad weather or a broken down truck can delay a move, especially if you’re working with a small company. Moving companies may also offer you a lower rate if you’re flexible with your move dates.

Consider your employees

Another question you’ll want to ask before moving is, “Where are my employees in all this?” Some companies firmly believe in giving employees holidays off, even if it means closing a profitable business like a restaurant during an otherwise profitable time. Other companies, however, typically assume employees will be in the office during or immediately after major holidays.

Regardless of your usual philosophy, you need to determine what role your employees will play in your move.

While they shouldn’t be responsible for the physical process of moving, do you expect them to participate in packing and setting up the new location? You should be clear about your expectations while recognizing that moving is outside the scope of typical job duties. You also will need to budget to pay your employees during this downtime while also financing the move, even though you won’t be bringing in a profit.

Mind the locals

If you’re primarily an online business, you may not have to worry about how your move will impact customers – other than some downtime, these individuals will be minimally affected. However, for businesses that run a brick and mortar storefront, changing locations can have implications for your community relationships.

If you move outside your original area, for example, you may lose customer goodwill or even sacrifice some of your customer base altogether. Depending on the service you provide, they may come back, or they may find another option closer to home.

The holidays are a busy time in general, but they’re an unusual time for businesses since economically it’s the pre-holiday period that’s actually the most hectic. Take advantage of this imbalance to move your business with the least fuss during the last few days of the year or at the start of the first quarter. You’ll be pleased to find how smoothly a company move goes when customers are otherwise occupied.

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