Making the Most Out of Your Confidentiality Agreements
Great deals can quickly be derailed when confidentiality agreements are not properly used and observed. The number of headaches that can occur due to a failure to follow the requirements of a confidentiality agreement are rather extensive. Whether it is employees discovering the potential sale, to the loss of key customers or even alerting a competitor that your business is for sale, there is no end to the headaches that can arise when a confidentiality agreement is not in place or adhered to. Simply stated, adhering to confidentiality is one of the most important aspects of the entire sales process.
Thanks to a well-constructed confidentiality agreement, sellers can enjoy protection from the disclosure of critical and confidential information during the sales process. While confidential agreements may have originated as a way to safeguard against prospective buyers revealing information about a seller’s business, these agreements have evolved to consider numerous seller concerns.
A good confidentiality agreement helps to protect all sorts of important details that may be revealed during the sales process including trade secrets and proprietary information. It can also outline the fact that a prospective buyer will not attempt to hire away key employees.
Considering the importance of a confidentiality agreement, it is well worth the time to create an agreement that covers all key areas. Everything from how confidential information should be shared to how breaches in confidentiality should be remedied must be addressed by a confidentiality agreement. It is not prudent to cut corners to save money and time when drafting a confidentiality agreement, as it is likely one of the most important business documents your business will ever create.
Just as no two businesses are the same, this fact holds true for the content of important legal documents. The sale of every business is a unique situation, and for that reason every confidentiality agreement must be tailored to fit the precise circumstances of the business.
Business brokers and M&A advisors are experts in the buying and selling of businesses. Part of that expertise extends to the creation and execution of confidentiality agreements, which are also sometimes referred to as non-disclosure agreements.
At the end of the day, the last thing any business owner wants is for key information regarding their business to be revealed. Working closely with a brokerage professional is an important way for sellers to safeguard their confidentiality throughout the process.
Copyright: Business Brokerage Press, Inc.
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Discovering How to Leverage SBA Lending Options
For most entrepreneurs, finding the money to launch their first business stands as a tremendous challenge. The good news is that getting a loan through the Small Business Association (SBA) is turning out to be a viable option for many business owners.
The SBA doesn’t directly provide loans itself, but instead, works to facilitate lending. SBA assistance can even extend into the realm of micro-lending. It is very important for prospective buyers to realize that since SBA loans are government backed, lenders are typically much more willing to offer a prospective buyer a loan. Impressively, the SBA will cover seventy-five percent of a lender’s loss in the event that a loan ultimately goes into default.
Many entrepreneurs find the issue of collateral to be a challenging one. Once again, the SBA can be of assistance. In some cases, an SBA loan may bypass the need for collateral altogether.
Overall, SBA loans do in fact have a good deal in common with other types of loans. Prospective buyers should have all of their financial documentation ready and well organized. In short, prospective buyers should have all their information organized as they would when dealing with a bank without SBA involvement.
Not every prospective buyer will qualify, so the first step that should be taken is for a would-be business owner to check and verify that they do indeed qualify for a loan. The next step for a prospective buyer is to find a lender and complete all necessary SBA forms.
There are several factors that determine eligibility for an SBA loan. Here are the two top factors that are important for qualifying for a loan
- The business must be based in the United States, the business must be a for-profit venture.
- Prospective buyers should expect that their application will take two to three months to process once it has been submitted.
All too often, people assume that they simply won’t qualify for an SBA loan. The statistical data tells a different story. Every year, thousands of people are approved for SBA loans. It’s important to keep in mind that these loans are not just for those looking to buy a business. The SBA also helps existing businesses that are looking to expand.
For the end of 2023, the SBA Administrator Isabel Casillas Guzman announced that this year, the SBA delivered $50 billion and this included capital, disaster relief and small business support. Guzman stated, “The Biden-Harris Administration remains committed to simplifying and addressing persistent inequities in accessing capital to ensure all small business owners can get the funding needed to grow and create jobs for our economy. In Fiscal Year 2023, the SBA transformed its lending and investment programs and expanded its capital partners to deliver nearly $50 billion in startup, growth, and recovery capital, as well as surety bonds, including more small business lending to people of color, women, and veterans.” [1]
Business brokers and M&A advisors are experts in working with the SBA. Entrepreneurs looking to buy a business can benefit enormously from their years of SBA experience. Working with a business broker or M&A advisor can help you streamline the SBA process and dramatically increase your chances of success.
[1] https://finance.yahoo.com/news/sba-announces-biden-harris-administration-154000629.html
Copyright: Business Brokerage Press, Inc.
KostiantynVoitenko/BigStok.com
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Employees and the Long-Term Success of Your Business
There can be no doubt that the quality of your employees will directly impact the quality of your business and its long-term value. Employee quality and the success of your business are intrinsically linked. Unfortunately, far too many entrepreneurs learn this lesson too late, and their businesses suffer as a consequence. Employees who do not feel invested in a business and its long-term growth and success can damage your business on a daily basis.
The quality of employees stands as one of the most important factors that entrepreneurs should consider before buying a business. With this fact in mind, it is critically important that business owners do everything possible to put together a great team.
It’s important to keep in mind that your employees can be either an asset or a detriment to the success of your business. A dedicated and knowledgeable team of employees will help boost not only a business’s bottom line, but also its value when it comes time to sell.
Along similar lines, if you’re considering buying a business, you should take a careful look at how much work the current owner is responsible for and how well they are supported by the staff. If the owner is shouldering too much work and not relying on capable employees, then owner burnout can be a real possibility. Remember that the amount of work the current owner is doing could be what you’re facing down the line.
It is also important to consider the loyalty of employees and how likely it is that they may quit and join a competitor. Potential buyers should carefully evaluate employees and how they operate before signing on the dotted line.
At the end of the day, most businesses are only as strong as their employees and management. It should come as no surprise that employees who don’t feel invested and are just doing the “bare minimum” to not get fired are not the kind of employees that help build a successful business.
A successful business is one with longevity, and the future of a business depends on employees that care about the business. In doing so, they will work to ensure customer or client satisfaction and loyalty. There are many variables that you must consider before deciding to buy a business, but buyers should never overlook the strength of employees.
Copyright: Business Brokerage Press, Inc.
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How to Score Business Plan Models Before Investing
It’s no secret that starting a company is a ton of work, which is why some people choose to invest in one instead. Approximately 20% of businesses fail within the first year.
Investing allows you to leverage the company’s existing industry presence rather than build from the ground up. Before you move forward with business investment, it’s essential to understand how to score a business plan. They provide insight into how well a company will perform.
Let’s explore the key factors you should consider.
Level of Uniqueness
How unique is the company you’re interested in? What attributes help it stand out from other businesses in the industry?
Uniqueness is an important detail to explore, as it plays a large role in branding. Keep in mind that uniqueness doesn’t always require 100% originality.
It could be as simple as providing an extra level of communication, reliability, or service compared to your competitors. Uniqueness also contributes to the development of the company’s identity.
If the business seems like a typical company you’d find in that space, consider searching elsewhere. Businesses that don’t stand out have a hard time succeeding.
Funding
No matter what product or service the company offers. It won’t get very far without proper funding.
You should also look at the company’s ongoing expenses. If it seems to burn through capital without producing proportional results, this is a red flag you can’t ignore. Investigate where the business obtained its previous funding from.
A scenario you want to avoid is investing in a company that has exhausted conventional funding options. This often occurs if the company has accumulated loan debt that it can’t pay off.
Target Audience
The company you choose should have a strong understanding of its target audience. Misunderstanding a target demographic is a death sentence in terms of business longevity. To clarify, imagine you were considering a men’s athletic apparel company.
You would assume that their primary target would be something like men between the ages of 18 and 35. However, they tend to advertise to men and women of all ages.
Casting that too wide can provide poor results. By extension, this will harm your investment and cause you to lose money.
Competition
Markets with a large amount of competition are ones you should avoid. The same can be said about industries that contain major players.
For instance, when was the last time you heard of a new business that focused on selling computers or tablets? This market is already dominated by companies like Microsoft and Apple. It’s simply impractical for a new business to break into the industry.
However, the presence of a heavy hitter in an industry doesn’t always mean you can’t thrive. Nike and Adidas are household names among many athletes, but there are still plenty of athletic clothing brands out there.
Current Economy
When economic performance is high, people have more disposable income. They’re more likely to spend money on “wants,” such as luxury items, instead of “needs,” such as groceries.
If the country is experiencing economic hardship, it’s not the best time to invest in businesses that provide expensive cars, costly experiences, or high-end services. While there will always be people who can afford these things, some companies simply won’t have a large enough customer base to be sustainable.
Timing
Even the best ideas require proper timing. This is affected by many factors, and many of them are outside of anyone’s control.
A great example is choosing to invest in a manufacturing business during a period of supply chain disruption. Even if the business plan is solid, it will likely fall short of intended metrics.
Marketing Strategy
It takes a long time for people to find out about businesses independently. It’s crucial to invest in a comprehensive marketing strategy that effectively reaches the company’s target audience. Marketing is often cost-efficient due to the Internet.
It’s easier than ever to connect with others, and many contemporary marketing methods are free. Regardless, you won’t have much input into how the business markets its products or services. It’s best to choose a company that already uses a strategy that has proven to be effective.
Business Ownership
Look at the history of the company’s performance and determine how well it’s been run. The owner(s) have a strong influence over the company’s business plan and business structure.
If they don’t seem like diligent, responsible individuals, you should avoid investing. A company could be at the top of its industry and still fail due to poor leadership. The last thing you want is to waste your time and money by overlooking who owns the business.
This is also something you may need to reassess in the future if you choose to invest in a company. For example, things might have been running smoothly until a change in leadership occurred.
Getting Started
The easiest way to find a business investment opportunity is to use a dedicated platform. These are specifically designed to connect business owners with investors. When searching for one, look into its past reputation.
Make sure there are plenty of satisfied clients who have stellar feedback to give. You should also consider its pricing structure.
How does the platform make money? For example, does it charge a monthly membership fee? Or do you pay only once an agreement has been reached?
Avoid platforms that don’t have solid customer service policies. Dealing with issues on your own can be frustrating and even impossible. With enough due diligence, you’ll find the best choice for your needs.
Score a Business Plan Before Investing
It can be tempting to quickly take advantage of business investment opportunities. However, you should always strive to score a business plan before moving forward. This ensures that you avoid mistakes you could have otherwise encountered.
Fusion uses a fully integrated process that helps our clients understand their business purchase options. We work with companies of all sizes across every industry. Get in touch with us today to learn more about how we can connect you with the perfect investment opportunity.
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How Can You Find the Ideal Buyer for Your Business?
In the day-to-day routine of running your business, it is easy to forget that eventually the day will come when you need to sell. The last thing that any business owner wishes to discover is that they are ready to exit, but they are hopelessly underprepared. One of the key ways to prevent this from happening is to prepare for the sale of your business as far in the future as possible.
1. Always Look Ahead to the Future
Many experts consider not having an exit strategy to be a risky endeavor.
So, what are some of the most important steps that business owners need in preparation for selling their business? The first step is thinking about your exit strategy on the day you found your company.
If you build your business while keeping an eye on the fact that you will one day be seeking to be acquired, then you will adjust your plans and strategies accordingly. All of this means understanding the market and knowing exactly what prospective buyers want from a business. In other words, the sale of your business should be built into its very foundation.
2. Think About Prospective Buyers
There are a variety of reasons why acquisitions occur. For example, sometimes it is an entrepreneur looking for opportunities, and sometimes it is a business in the same industry that is looking to expand. The more you can learn about the motivating factors that cause individuals and entities to buy businesses, the better positioned you will be.
3. Constantly Network
Another good idea is to constantly network and make connections. The more people you know, the better off you will be. You may be running and developing your business for decades. During this time, get to know as many people in the industry as possible.
While it may be necessary to modify the exit strategy in the future, having one in place serves to create an invaluable framework for when the time comes to sell. A savvy business owner will have a well thought out exit strategy in place at the very beginning.
When you work with a business broker or M&A advisor, you will also benefit from their professional connections and years of networking with buyers. Selling a business is all about preparation, making connections, and finding the right advisors and partners.
Copyright: Business Brokerage Press, Inc.
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