Business Recovery – A Slow And Painful Journey

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Selling a business requires number of virtues, especially if you are planning to handle the complete sale procedure yourself. Strong negotiation skills, razor sharp mind, solid reasoning are some of those virtues. In case you hire a professional company then most of the time it is their people who will do the negotiation.

In either case a seller has to be prepared emotionally and mentally.

A business sale typically begins with the seller’s asking price; which undergoes time consuming and complex negotiations. The buyer would like to know whether the company is registered as a sole proprietorship, partnership, LLC or as a corporation. This is an important aspect. Tax structuring, external financing, liabilities in terms of unpaid bills, labor obligations are some of the issues that a seller will be asked to clarify.

As mentioned earlier each tax structure has different tax consequences.

You, as the seller will have to decide whether you want to dispose off your business with stock or just assets. With an asset sale, the buyer’s liability is limited, whereas in case of stock purchase, the buyer typically gets ownership of shares of the company. In such a scenario the buyer accepts all the liabilities, assets and stock. This type of sale just changes hands.

However, the buyer’s liability is limited in case of asset sale.

A seller has to clarify other issues such as contracts with labor and companies, supply of goods to customers, leased premises occupied, and other hidden issues. All these make a big difference if the buyer or seller opts for stock sale or “Lock stock and barrel” sale, as it is popularly called.

A failing business is not easy to handle. It takes time to get out of the financial and operating mess. business recovery is a slow and painful journey. At the very outset the owner should first identify the reasons; issues that plague the company. Narrow down these troubles and threats and develop strategies to over come these hurdles.

Once the strategies are in place the next step is to implement them.

The evaluation process will definitely spell out some harsh measures to be taken; such as cost cutting, revenue generation, increasing customer base, arranging funds etc.  
Restructuring is the keyword. Old habits or working methods which comes in the way of profitability has to be axed. New and contemporary methods need to be adopted. The thumb rule is; change with time.

Once the business is stable, the next step is to increase its revenues, efficiency and presence in the market, to take it to the next level. Growth will be the last factor to consider. For this, plans need to be put in place. Implementation is the buzzword. Additional manpower, new machines, professional managers are all the part of this strategy.

Lastly, the mistakes that have been rectified should not be repeated.

How to sell a business?

A tough question! Selling your business which you have operated for years and cherished is still tougher. Below mentioned are some pointers to the above question.

•    Spread the word – Among business community, organizations that buy loss/profit making businesses etc.
•    Get your business evaluated by a professional.
•    Keep all your paperwork ready; this includes legal, tax and business related documents.

Once you have covered the above mentioned steps, familiarize yourself with the selling process. Avoid time wasters. Follow up only with professional buyers who have ready clients or people who are ready with tangible offers.

If a buyer is genuinely interested, sign a letter of intent to safe guard your interest. Of course this agreement doesn’t bind either of you in any way.

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