Persistence
June 26, 2012 2 Comments
Getting Investors For Your Start-Up
June 24, 2012 Leave a comment
At its heart, a startup investment is an investment in the entrepreneur. And the earlier stage the investment, the more so this is true.So how does an entrepreneur, just starting out, with little or no track record gain the credibility necessary to attract capital ? They gain credibility in two ways — they borrow it and they demonstrate it.
Borrowed credibility runs on the same principle as guilt by association. If entrepreneurs surround themselves with people who have credibility, they gain credibility themselves. In the business world, reputations are paramount. As a result, when well-respected individuals vouch for an up-and-comer, it is meaningful. There are lots of ways someone can vouch for you as an entrepreneur.(1) They can provide services to your company (awesome lawyers, accountants, recruiters, etc. are in great demand — if they work with your company it means they were willing to bet on your success). They can lend their name to the company as an official advisor (ideally you will be able to clearly explain how they are working with your company other than merely lending you their name).(2) They can invest in the company (if industry experts or startup/product/marketing gurus invest in your company, it is a huge vote of confidence in what you are doing). Read more of this post
Why Buy An Existing Business ?
June 24, 2012 2 Comments
Once you have made up your mind to enter a certain line of business , the next question is whether to start a new one on your own or buy an existing business. Both options are doable. Yet, buying an existing business might be an easy way out. Here are the advantages of selecting this alternative:
No waste of time and effort:You are spared the time and hassles of getting approvals and licenses.
Ready-made systems: When you buy an existing business you get employees with on the job experience.They are familiar with purchasing,marketing, selling, billing, financing and so on. You also take over a pool of customers who are time-tested and whose credit history is known. In addition, there are suppliers with whom workable deals have already been cut. Read more of this post
Questions To Ask The Seller Of A Business
June 23, 2012 6 Comments
Here is a checklist of questions for a buyer to ask the seller of a business and in this order:
1. How the market operates? Get the broad picture initially by learning about the market place of the business, how its product is facing up to competition. Get the competitor profile, growth rate in the market and whether the business is beating the market or just following it. You can also find out latest market trends.
2. Who are customers & suppliers? Ask the buyer to talk about his customers and suppliers. Some of them may be known to you. It is better to a dwell little more here not the least because you want a lot of names but to assess how critical they are, in terms of volume and value. Also you must ask the buyer about credit terms offered and obtained. Will these terms continue to be in force once the business changes hands is yet another clarification you need.
3. Who is the staff? Number of staff, the gross emoluments and their experience should engage your attention. Key members and how important they are is also a relevant question. Will the staff be happy to get a new owner? Ostensibly, their cooperation is vital for the sale and transition to new owner. Staff is, in essence, in every business which is of course not saying a lot. Read more of this post
How Much To Pay For A Business ?
June 23, 2012 Leave a comment
When a seller quotes a price for his business it is known as “Ask price”. In response a buyer offers his price; this is known as “Bid Price”. After negotiation both parties agree at a price to close the deal. In order to make a bid price a buyer must do a valuation of the business he is interested in. There are five methods of valuing a business before buying it:
1. Asset Value: This is the easiest method in valuing a business. Underlying assumption in this method is that the business is a going concern. You tally all assets tangible and intangibles, fixed and current to get the total value. In the case of fixed assets either you can take the value net of associated depreciation or on replacement value basis. Current assets are appraised generally on realizable amount basis. Intangibles such as goodwill can be re-estimated. From the total assets value you must deduct outside liabilities to arrive at net value of assets in a business. Although the method is a popular one, it lacks credence as it does not take the capacity of the assets to generate income in the future, which is more meaningful to the buyer than just jotting up assets. Moreover, small businesses as well as service providers are very lean on assets but fat on earnings. Hence, asset value may not be representative for these businesses. On the other side of the coin, large scale industry is asset rich but whether they generate adequate returns on assets employed is a moot point. Read more of this post
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