3 reasons why businesses are sold

Business woman

When you think about it, there are really only 3 reasons why a business owner would want to sell their business:

Cashing In

Sometimes the the value of your business could be over inflated, remember the dot com bubble. Throughout history there have been times when the price that a buyer is prepared to pay is huge compared to normal business valuation models.

Investopedia – Dot Com Crash

When: March 11, 2000 to October 9, 2002
Where: Silicon Valley (for the most part)

Percentage Lost From Peak to Bottom: The Nasdaq Composite lost 78% of its value as it fell from 5046.86 to 1114.11.

Imminent Threat

This can be caused by many things:

  • New Legislation
  • Loss of Resources
  • Increased Competition
  • Loss of Banking Facilities

Basically the seller will be aware that a problem is looming and they want to sell before the problem damages their business.

Life Changes

From a buyers perspective these are often the best businesses to buy, the key reason behind the sale being:

  • Retirement
  • Relocation
  • Life Style
  • Selling due to Illness
  • New Business Opportunity

steve@bicknells.net

 

Business Plans – Do you really need one?

business plan tree

A business plan is a written document that describes your business. It covers objectives, strategies, sales, marketing and financial forecasts.

A business plan helps you to:

  • clarify your business idea
  • spot potential problems
  • set out your goals
  • measure your progress

But its no good unless you have business model that works as Doug Richards explains

Research by the national enterprise campaign showed that last year 484,224 businesses were started, compared to 440,600 in 2011.

According to the FSB at the start of 2012:
  • There were an estimated 4.8 million businesses in the UK which employed 23.9 million people, and had a combined turnover of £3,100 billion
  • SMEs accounted for 99.9 per cent of of all private sector businesses in the UK, 59.1 per cent of private sector employment and 48.8 per cent of private sector turnover
  • SMEs employed 14.1 million people and had a combined turnover of £1,500 billion
  • Small businesses alone accounted for 47 per cent of private sector employment and 34.4 per cent of turnover
  • Of all businesses, 62.7 per cent (three million) were sole proprietorships, 28 per cent (1.3 million) were companies and 9.3 per cent (448,000) partnerships
  • There were 907,000 businesses operating in the construction sector – nearly a fifth of all businesses

micro: 0-9 employees, small: 10-49 employees, medium: 50-249 employees (updated October 2012)

The best bit of advice I have heard is this piece from Doug Richards ‘Take the Order’

Once you have a business model that works, then create a business plan, here is a link to some free plans to get you started http://www.bplans.co.uk/sample_business_plans.cfm

steve@bicknells.net