Inventory: A Key Component to the Business Sale

Written by Ralana D. Shelley, CBI March 28, 2011 Article 5 in the "Prepare Your Business For Sale: Everyday Business Issues" series... One of the most overlooked but important issues in the health of any business is inventory. Inventory plays a pivotal role throughout its entire lifecycle, from purchase to storage to sale. It is just as important how inventory is kept and sold as who it is bought from, how much is paid for it, and how much one can charge a customer for it. Below are three key issues to consider about inventory and how it affects the health and future sale of your business. Inventory Accounting... Once a business has purchased its inventory, it becomes important how that business is going to handle it. How quickly or slowly it is turned over can have a direct impact on business value... To include in the purchase price or not to include... Most businesses offered through an intermediary will clearly state up front whether inventory is included in the purchase price, or whether it is in addition to the price... Counting Inventory at Closing... There are basically two ways to count inventory before closing... Inventory is not so simple when considering its impact on the value of a business both while running it and while trying to sell it. It is certainly somethign to handle and track carefully, and prepare it you are thinking of selling your business now or in the future. to read the full article and learn more about inventory's impact... click here.

Top 10 Dying Industries

WSJ.com, WSJ Bogs - Real Time Economics
By Phil Izzo
March 28, 2011

The U.S. Economy is recovering from a severe recession, but some industries are unlikely to ever fully bounce back.

A new analysis by research firm IBISWorld looks at 10 industries that appear to be dying. The list isn't exactly shocking, but it represents a mix of sectors that are being left behind by technology or have been hurt by cheaper overseas competition.

The biggest industry profiled by IBISWorld is wired telecom carriers, largely being supplanted by cell phones and the internet. The dominance of the Web and digital media also puts Newspaper publishers, record stores and video-rental companies on the list. Meanwhile photofinishing also takes its place among the top 10 dying industries thanks to the growing influence of digital photography.

to read the full article, and see the rest of the top 10... click here.

How to Hold on to Key Employees (Article 4, Exit planning series)

Courtesy of SunbeltMergers.com
During a company merger, the devil is in the details. Identifying key employees and employment issues early on can facilitate a smooth deal. And a communication plan can help prevent, for example, top-producing salespeople from defecting to competitors, decimating the company's customer base, and affecting its value.

It's important to offer employees incentives to stay, but you also need to anticipate potential legal issues. Plan now to put in place your protections to prevent employees from disrupting your deal, both before and after it closes.

to read the full article... click here.

And be sure to follow the next installment of our Exit Planning Series, Monday is about "Inventory."

Tips for Business Buyers: Selling Yourself - Seller Financing

Courtesy of Business Brokerage Press
Remember that when a seller offers seller financing, he or she is taking a risk. If you are the buyer, the seller is taking a risk on you, that you will be able to run the business successfully. Therefore, other than a seller needing the cash from the sale of the business, the biggest obstacle to seller financing is the seller's concern regarding whether a new owner will be able to pay off the loan from the profits of the business. While the seller already has the best idea about the potential profits of the business, there are some additional things a seller may want to learn about a potential buyer.

To read the full article... click here.

Exit Planning Series Article 3: Independent vs. Employee Status

The Big Question: Independent versus Employee Status

Are you workers independent contractors or employees? This is a compelling question, especially where the Internal Revenue Service is concerned. Every worker claiming status as a non-employee means payroll taxes and social security contributions that won't fall into the IRS's pockets.

Now many states are taking a closer look at the question, too. They are increasingly on the lookout for new sources of state revenue, including workman's compensation and unemployment insurance, both of which can be bypassed when a business uses independent workes.

to read the full article... click here.

And be sure to check out our Next installment in the Exit Planning Strategy series, Article 4: "How to Hold on to Key Employees" this Friday, March 25th.

Insurance: A Dull Subject Unless You Need It

Most business owners faithfully renew their business insurance policies every year, but how many actually review the policies on a regular basis? Unfortunately, too many of the business owners have never read the policies. This means, among other things, that they don't know whether the policies are continuing to adequately cover the changing needs of the business. For example, is the new expensive computer system covered? Are all the weather contingencies covered? Is the employee health coverage up to date with today's medical costs? Does your company have business interruption insurance? If so, when was the last time you reviewed it?

Now might be a good time to review all of your insurance policies...
especially if you are considering he sale of your business now or in the future.

to read the full article... click here.

Check Out: Groupon Has a Drinking Problem - Update 2

Forbes.com
Brendan Coffey
March 16, 2011

That $6 billion Groupon's Eric Lefkosky turned down from Google last year is probably looking a little better now.

The Massachusetts Alcohol Beverage Control Board, aka the no-fun guys, have told Groupon it appears to have been violating the state's laws on discounting booze since its inception. Here's part of the letter sent to the company in February, as reported yesterday by the Boston Globe:

"I am hopeful that the long-established, clear, bright lines of the boundaries of legality have not vanished in the rear-view mirror of entreprenurism driven by unbridled and imprudent, if not reckless, enthusiasm," william A. Kelley Jr., the commission's legal counsel, wrote to Groupon in the February letter.

That takes a bit of the shine off the discount deals, now that beer, wine and sangria are excluded from your $50 Groupon to Beefsteak Charlie's. Yesterday's deal for an Essex restaurant had a blodfaced "Not valid toward alcohol" on the offer.

click here to read the full article.

Do You Have a Plan?

While it may not be visible itself, a positive plan for the futre of the business is key to actually moving toward a positive future. Business owners should be prepared to spend what it takes to generate new business, and they should take time to explore new possibilities for long-range success.

If the company currently has no mission statement, creating one will be evidence of he owner's enthusiasm for the future and for the ongoing success of the operation. If the company has a mission statement that no longer fits current conditions and needs, it may be time to revisit and revise the statement.

To write/rewrite your mission statement, here is a great article from Entrepreneur.com... "How to write your mission statement."

Now, prospective business sellers, be sure to watch my blog on Mondays and Fridays for the next several weeks, as I will be covering several issues to consider in the everyday running of your business. Issues that will help you prepare for an eventual sale, or at the least help you have a more profitable, well organized and forward thinking business.