Entrepreneurs- Got A Great Business And Want To Capitalize As Quickly As Possible? Exit Strategies

Many business owners either with a new or established business are seeking to capitalize on their hard work and move onto other things. Some entrepreneurs are seeking capital from angel investors and need to provide suitable exit strategies within their business plans.

Please remember that venture capitalists are seeking high returns in exchange for their high risk investment. Many of them expect your company to go public within a short time frame.

Angel investors are not so concerned with you going public, but are still looking for a quick and high rate of return on their investment. They are not as sophisticated as venture capitalists or institutional investors and are more likely to wish to be in your business.

Here are a few ideas for you.

If you have no investors and merely wish to exit yourself from your business. Investors do not accept these exit strategies as being very professional.

Sell: The most obvious option if you have a viable business.

Asset Strip: You can pay yourself a huge salary and sell off all viable components of the business. It could be that this is a more profitable option than selling your business as a going concern.

Minimize the Business: If time is your problem then just restrict your trading hours and/or product line. Outsourcing some areas of the business will give you more time.

Liquidation: Cease trading, pay off your debts and sell your assets. Close the doors and walk away with your memories and stories.

Give your Business Away: You can remove yourself from the business and leave your business to your heirs. Take legal and financial advice first though please.

Here are a few more conventional exit strategies that an investor will be interested in hearing about.

Consultancy: You could let your management team take over the running of the business and take on a consultancy or executive role. This can only be done if your management team are capable of running and improving your business. This option is quite often take if you personally have reached the pinnacle of your ability, or want to spend more time away from the business. This option allows for a more experienced management team to run the business whilst you retain an income and influence on the business. An example of this would be Anita Rodderick of Bodyshop – who took the opportunity to follow her love of conservation whilst still retaining some influence over the company that she founded.

Merger or Acquisition: This is a particularly attractive option when you are a small company with a strong presence in a niche market. There are many small company owners that have become very rich by being bought out by the likes of Google or Amazon. These large companies do this as they want the products you have and buying a company is cheaper than the research and marketing necessary to bring these products to market. The merging or acquiring company is paying for your assets, patents, copyrights, good will, market share and client base. In a merger you can arrange for a nice consultancy post for yourself in exchange for giving up your chairmanship. Not quite giving up the business but not a bad lifestyle.

Franchise: If you have a business that can be duplicated in many different regions why not consider setting your business up as a franchise. Similarly of you have a business with numerous outlets why not franchise some of these? Alternatively why not turn your head office location into a franchise headquarters and then sell off franchises? This option does take some time and money but can drastically decrease the time that you have to spend with your business, whilst still providing a good income.

IPO: The holy grail of business and one that you read about when people become “over night millionaires”. About as likely as becoming an overnight millionaire by winning the lottery. Unfortunately rather than handing over your Dollar/Pound/Euro for a ticket – you are going to spend hundreds of thousands on lawyers, analysts, PR and bankers!

Which ever option you choose – choose carefully and good luck with your new found wealth and leisure.

Why You Must Be in Business and How You Can Be the Best in Business – Part 1

According to John Han cook – “The more people who own little business of their own, the safer our country will be, and the better off its cities and towns; for the people who have a stake in their country and their community are its best citizens.”

The unvarnished truth is you do not depend on your country to make you rich. If you want to be rich, you must be in business for yourself.

Being in business is not about luck; it is about applying good, proven principles to whatever you do – principles that have been around for many years. You must do the basics well! You must have a business, it is the most effective way if you do your homework and pick the right business.

A well-run business can generate unbelievable profits and will outperform any other means of gaining wealth.

You must be in business for yourself – you must have act of giving up substance/goods to another for valuable consideration which may be money, dealing in articles for sale or offering quality services on a regular basis and set of cognitive skills applied in the business sphere of activity.

Run a successful ownership of an entity that produces passive income – income that accrues to you when you put ideas, money and people to work without being directly involved.

Thus, even while you sleep, the money keeps flowing; and if you are not making money while you sleep, you may never become very rich. Passive income is the golden key that opens the door to wealth and financial stability. Profits from businesses owned by you, but not run by you produces passive income for you which pave the way to a future of wealth and success.

Build a solid foundation for a business in order to build a great investment for your future. Buy your own business and own your business. You do not get rich working for someone else. Limit your income potential no more! Your business is a vehicle you use to make money; be able to walk away from your business and let it still earn for you.

If you study the most successful people and companies, they have simply done this better than anyone else and made very large amount of money in the process. You can be a success! You can create your success as a great business entrepreneur. You can actually set up your own business, and take the first step towards breaking the yoke of eternal financial struggle that is the result of working for somebody else, all your life.When you set up a business run by yourself, you have only become self-employed. You do not truly own a business yet. You only become a true investor and business owner when you do not have to be part of the business you set up, for it to survive.

Owning a profitable business or businesses not run by you is a source of real wealth. Since you do not run the business yourself, you are free to engage in other productive ventures, and can afford to spend quality time with family and friends. Even when you go away for months or years, your business does not suffer; rather it grows stronger under a competent management team. When you set up a business that is successfully managed by others, you have effectively combined the people at work and the money at work methods of wealth creation. That is a sure route to great fortunes.

10 Steps for Simplifying Business Plan Financial Statements

For most business owners and entrepreneurs, preparing, and communicating the financial statement section of a business plan is like trying to give driving directions to someone who doesn’t speak the same language.

“Numbers” is the language most investors speak. But, it is also the language that many business owners and entrepreneurs don’t speak or understand.

So how do you bridge this gap?

1) Understand there is a difference between “crunching” or preparing the financial statements and presenting them.

Preparing business plan financial statements often requires expert knowledge of double-entry accounting, taxes, merger and acquisition accounting, and finance. Skills most business owners or entrepreneurs don’t have, except for perhaps the most seasoned or those with accounting backgrounds. Presenting the numbers, however, only requires that you understand how what you plan to do translates into cash; and, what the potential financial risks for the business are, and how you’ll minimize them. If you cannot demonstrate that you understand these, then why would an investor ever give you money?

2) Get help early on.

Okay so you don’t have any money to hire a CPA or an accountant, and they just won’t do it for nothing. Reach out to your local college. Find the head of the accounting department or an accounting professor. Then, see how your project might be used to help the class learn about accounting, starting a business, or building financial models. The point is; you need someone who understands how to build projected financial statements based on your specific plans for the business. It is also important to find someone who can help you understand your financial statements.

3) Know the kind of investor you are seeking.

This is the same as a writer taking the time to know the audience before writing a book. For example, a banker puts more weight on the business’ liquidity, collateral, and ability to convert assets into cash quickly if the business runs into trouble and a loan is called. The emphasis on these financial measures is different for a venture capitalist whose interest is more on how quickly your business can grow, the potential future cash flow it can generate, and the potential for cashing out at an amount much higher than the initial investment.

4) Present only the numbers and measures most important to your type or types of investors in the body of your business plan.

Save the more detailed financial statements for the appendix and due diligence stage. Of course you need detailed financial statements and projections to support your business plan, but don’t think you need to share them with potential investors upfront. Investors are more interested in seeing if a few key numbers and financial measures make sense and that they support your strategies before they waste time digging through your supporting data. If they are interested in moving forward with you, believe me, they will dig into your financial statements.

5) Use graphs and tables wisely to present financial information.

Graphs are great for presenting trends and comparisons. Keep them simple and uncluttered. Be sure headings, labels, axis tabs, and so on are clear and legible. Nothing is better than a great graph or table to convey a message clearly and quickly. But remember, a bad graph or table can create much damage and confusion too.

6) Check you numbers.

Like typos, a wrong number can shatter your credibility instantly. It can cause your potential investors to lose confidence in your ability, or to question your understanding of the business. Be sure the numbers in your plan agree to the correct model or version of your financial plan. Verify the numbers in your business plan agree to all supporting documents.

7) Always include a statement of the sources and uses of cash.

If you have teenagers, I’m sure you always ask them where they’re going to spend the money you’re about to give them, before you hand the money over to them. The Statement of Sources and Uses does the same for investors. It tells potential investors how you plan to use their money. The statement accounts for all the money coming into the deal, whether it is bank debt, seller notes, personal cash, cash proceeds from the sale of stock, and so on. It then explains how you intend to use this money, whether it is to buy an existing business, buy certain assets, payoff existing debt, or payoff certain start-up liabilities, fees, and expenses.

8) Include all three fundamental financial statements: income statement, balance sheet and cash flow.

Don’t just provide potential investors with an income statement, it doesn’t give them the complete story. Also, be sure that all financial statements conform to Generally Accepted Accounting Principals or GAAP. Include at least three years of actual historical financial information, if available, and five years of projected financial statements. Although no one expects you to be able to predict the future with absolute certainty, projections do provide insight into your thought process, assumptions, and understanding of the business and its markets.

9) Maintain a good financial model capable of running sensitivity analyses to show how your projected results will change as your assumptions change.

This allows you and your investors to identify which assumptions are most critical to your future performance. Each critical assumption needs evidence to support it. Also, include in your model benchmark comparisons to other companies in your industry. Compare things like revenues per employee, gross margin per employee, gross margin as a percentage of revenues, and various expense and balance sheet ratios.

10) Use footnotes and descriptions to explain how key numbers were derived or the specific assumptions behind them.

As much as possible, keep these short and to the point. Don’t get carried away footnoting every number. Footnote only key numbers or unusual items.

At the end of the day, more business deals are not consummated because investors don’t feel like they can trust the numbers for one reason or another. Spend the time, effort and money to communicate your financial statements clearly and convincingly. It can be the key to making your deal a reality.

Flexible Business and Financial Mangement Is Possible Hiring a Chartered Accountant

For any business, big or small, accounting services are essential to keep track of finances and resources. Precise bookkeeping is essential to keep core areas of the business running. Therefore, it is always advisable to hire services from professional Chartered accountants in London, which offers complete range of financial management services. These include tax planning, tax preparation and payroll services. Proper decision in choosing a good Chartered accountant in London will result in increased efficiency as well as it saves money and time.

For any business, hiring a proficient Chartered accountant in London can greatly help in monitoring and keeping track of all financial matters. Industries, insurance companies as well as financial and banking sectors also recommend hiring a tax accountant. Chartered Accountants in London can be a good guide in maintaining day-to-day records and prove helpful in analyzing decisions and shortcomings of the company. Bookkeeping, updating of records, tax preparation are also some areas that require professional intervention by professionals like Chartered accountants in London. Business also becomes more transparent. Badly maintained records and incorrect reports can severely hamper business and incur huge losses to a company. With professional financial management, these aspects can be monitored appropriately. Entrepreneurs can then concentrate on developing core areas instead of being preoccupied by financial matters.

Taxation related processes are very tedious. It can involve large amount of paperwork to keep track of various taxes, which the company is liable to pay. Most entrepreneurs are not aware of tax preparation and that is why they need the help of Chartered accountants, who specializes in dealing with financial matters. Tax laws are also ever changing and evolving. This frequent changing of laws makes it hard to keep track of when managing and running a business.

The vital segments of tax management that a Chartered Accountant in London handles are Corporate Tax, Individual Tax, and tax planning for self-employed individuals. Corporate accounting involves people dealing with business activities in corporations; this includes financial and operational audits, treasury services, credit services etc. Accounting represents the division of a corporation, which is responsible for maintaining balance between other core areas of business activity. As is the case with any unit, a manager who is capable of dealing with tasks in a professional manner should lead finance.

The first choice for business owners would be to look for a competent Chartered accountant firm in London. The advantage of hiring a firm is that you can find accountants who are experienced and well trained. Hiring firms is not mandatory, business owners can opt to hire Chartered accountants in London who practice on their own and are not associated with any firm. The decision of hiring an individual or a firm rests with the owner based on what kind of accounting jobs need to be taken care of.

London has many firms that can help small businesses with financial statements; tax returns bookkeeping etc. these firms also provide tax consultations and can be useful with personal income taxes. Their vast experience in handling corporate and personal accounts gives them the edge in helping people to maintain orderly financial records.

Great Businesses to Start in a Recession – The Top 3 Recession-Proof Businesses to Consider

What would be some great businesses to start in a recession? That seems to be the question on the minds of many individuals who have fallen victim to our current financial situation. Company downsizing, the loss of wages due to pay cuts, and the lack of good employment opportunities has left many individuals struggling to survive and looking online for an alternate source of income.

Searching for great businesses to start in a recession is definitely not an easy task and can quickly turn into a costly mistake without doing your due diligence and thoroughly researching the industry before making any big financial decisions. In this article we’ll take a closer look at a few of these recession-proof businesses to inform you and provide you with some options that you might not have considered. So let’s get started.

Online Selling

Selling products online is certainly a great place to start building a business. You can easily get started by listing some products on eBay, Amazon, or Craigslist. You could then move up to creating an online store with these sites as your reputation grows. This could then lead to creating your own website and selling your products to the masses online. Online selling is just one of the many recession-proof businesses that you may want to consider.

Online Writing

Online writing is another example of great online home businesses to start in a recession. Writing content for websites in the form of articles and placing them on ezines can be a great source of income and can all be accomplished from your home and in your spare time. Now if you really like to write, you might consider creating a blog that is focused around a particular niche. You could then find and sell products relating to that niche and get paid as an affiliate.

Online Consulting

Here is another one of the great recession-proof businesses that you can start from home. This involves becoming recognized as an expert in a particular field and then providing your services to other businesses or individuals who are willing to pay you for your expertise. This is a great recession-proof business because in a recession, businesses will be looking for alternative ways to increase their sales and if you possess that kind of knowledge, your services as a consultant would be highly desirable.

Going online to search for recession-proof businesses is definitely the way to go. With online home businesses, you can reap the same benefits that any offline business would receive only without all the headaches. Some examples of these headaches would be:

• Overhead costs

• Employee costs

• Inventory

• Distribution costs

• And there are many more…

Now here is the greatest advantage that you can give yourself before you start any of these online home businesses. That advantage is learning how to effectively market online. And here’s why.

All businesses (online or offline) is about making sales. And to make sales, you need to have customers… and lots of them. By learning how to effectively market your business online, you will be able to accurately estimate how many customers your online business will bring in based upon your marketing research. Once you have determined how many customers it takes to make a sale, you could simply adjust your marketing efforts to increase your sales volume. This now becomes a numbers game and it’s almost like being able to right your own paycheck.