Have More than One Source of Income

Even if you have a great full-time job, it's not a bad idea to have a source of extra income on the side, whether it's some consulting work or selling collectibles on eBay. With job security so nonexistent these days, more jobs mean more job security. If you lose one, at least you still have the other one. You may not be making as much money as you were before, but every little bit helps.

Preparation Needed for Selling a Business

So you’ve decided it’s time to sell your business. You may want to retire, or you simply want to unload the company before the market turns against you. How do you go about finding someone to actually buy your business?

Determine Your Business’ Valuation

Before you can sell anything, you have to determine its market price. If your business is privately held, you can value the company based on annual revenue and earnings, combined with physical assets – such as real estate and equipment, and then deducting debt. Patents and existing partnerships should also figure into this total. If your company is already publicly traded, then its value has already been determined for you by its market capitalization, and you won’t be able to sell right away unless you are in possession of the majority of outstanding shares.

Either way, as a seller you should ask for a healthy premium over its current valuation, citing future earnings and growth potential. It’s not unusual for larger companies to pay over 50% of the current “market value” in an acquisition. If in doubt, hire a business broker or mergers and acquisitions professional to help you get the best deal for your company.

Prepare a Selling Memorandum

Before you reach out to any of these prospective buyers, you need to prepare a selling memorandum, or “business plan in reverse”. This is intended to clearly outline all the main details that buyers would request.

These would include, but are not limited to -

• Your company’s history, structure, products and operations
• Your business’s valuation and asking price
• Your industry peers and competitors
• Your employees and leadership structure
• Past financial statements
• Future guidance and projected revenue and income
• Potential problems within the company (this is very important, as any attempt to cover these up could be viewed as fraud)

The selling memorandum is an extremely sensitive piece of information, and you would be wise to have prospective buyers sign a non-disclosure agreement before reviewing it.

Financial, Strategic and Inside Buyers

There are three main kinds of buyers on the market – financial, strategic and inside ones.

Financial Buyers

Financial buyers tend to be large investors looking to buy your business while keeping the management in place, using your company as an investment to generate income. Financial buyers are not interested in integrating your company into a larger web of companies, and will generally pay less for it.

Strategic Buyers

Strategic buyers are competitors who will purchase your company for vertical or horizontal integration, who want to either shut you down to eliminate competition, or to take advantage of your patents, products and distribution channels to further their own empire. These buyers will pay top dollar for your company, sometimes only to keep your business out of a competitor’s hands. Dealing with these buyers is dangerous, and you should be on guard with airtight, carefully drafted non-disclosure agreements to insure that a business meeting is not simply a guise for a “buyer” to steal your trade secrets.

Company Insiders

Company insiders could also purchase your company. These could be executive employees, family or friends, who have a personal stake invested in the company and would benefit from its continued survival. While this is a more assuring situation than handing your business over to a strategic buyer, most company insiders lack the cash to take over the entire company. After all, if they were working for you to begin with, it’s unlikely that they could amass the fortune necessary to overtake the entire company. However, since you know these parties well, you could work out third-party financing to allow them to buy out the company in portions, and you could stay on as an advisor. You could also sell the entire company to all of your employees via an Employee Share Ownership Plan (ESOP) if you have such a provision in place.

I’ve Been Knocked Down, Now What

Jack Dempsey on one knee. (From Washington Post)

*****

The ability to get up after being knocked down
is the most important ability in life.

*****

Alison asked, “After being knocked down it feels a lot slower to rise up? Is it ok to take it slow?”

Don’t pop up quickly after being knocked down.

It’s humbling to find yourself looking up from your back. Wise boxers climb to a knee – clearing their head – until the referee’s count reaches eight.

Taking a knee isn’t defeat its preparation – preparation to kick ass.

Pride yells bounce up quickly, “Get up you fool. Don’t let anyone know it hurt.” Pretending it doesn’t hurt doesn’t help.

8 Principles for getting up, again:

1. Self-reflection. Few things are talked more and done less. Few times are better than when you’re on one knee. Don’t talk to others before you talk with yourself.
2. Forgive. Forgiveness is a process not an event. Act without offenses in mind – even when they are. Acting with offenses in mind results in bitterness, revenge, or both. Feeling forgiveness isn’t as important as acting in it.
3. Accountability. Holding someone accountable to make restitution and offering forgiveness may be separate issues.
4. Embrace. Few things change us more than brokenness, embrace it. Embracing frailty opens your heart and mind. You’ll see yourself and others more clearly when you feel the burn and let it hurt.
5. Support. Channels of support are open when you’re broken. Pretending it doesn’t hurt, squeezes support out.
6. Honesty. Avoid whining. Open your heart to select trusted friends. Tell them the things you wish you didn’t feel, but do.
7. Responsibility. Own personal weaknesses that tripped you up. “How few there are who have courage enough to own their faults…” Benjamin Franklin.
8. Adapt. You’ll repeat the pain if you don’t learn and adapt.

What helped you when you were knocked down?

Tips for Protecting Your Intellectual Property

  

Every great business starts with a “perfect” idea. In the fast moving, dog-eat-dog world of corporate business, however, ideas are stolen, duplicated and imitated as soon as they are conceived. If you have that million dollar idea, how can you go about protecting it while still attracting the attention of prospective investors?

Your first step, before presenting your idea to any companies or investors, is to hire a lawyer experienced in patent laws for your industry. Have this lawyer help you patent your idea, if applicable, which is a time consuming and expensive process. Depending on the complexity of the idea, it can cost you $1,000 to $100,000. Patents generally take over two years to clear and last approximately 20 years once in effect. As your patent clears, instruct your lawyer to write a nondisclosure agreement, which forces companies to promise they won’t copy your idea, under penalty of litigation. Penalties should be strict but fair, as to not frighten off investors. Penalties in nondisclosure agreements are usually monetary.

Be aware, however, that companies often have their own teams of lawyers whose sole purpose is to circumvent nondisclosure agreements and patent laws, modifying your design just enough to avoid litigation. In this case, your lawyers can first serve a cease-and-desist letter, followed by a lawsuit, if the company does not cease production. Taking on an alleged copycat in court can be extremely costly and time consuming. In many cases, the court will not rule in your favor unless you can prove monetary damages as a result of the copycat’s actions, which can be difficult if your product’s sales have been rising. This can also be difficult to prove if your idea is still in the nascent phase, and has still yet to turn a profit.

There are three questions to always remember when sharing an idea: whom, when and how much.

• Remember who you’re speaking to about your idea – is it a partner whose business would be aided by its success, or an employee who can steal your idea and make it his or her own?

• Record when you disclosed information. If the meetings are documented clearly, with an attendance record, then they are admissible in court to prove the theft of intellectual property.

• Entrepreneurs often don’t know how much information to disclose. It is a good rule of thumb to disclose the minimal amount of information of the production phase when presenting your idea. In some cases it may be beneficial to mislead investors about the production process, as to detract any potential copycats. It is important, however, to get across the specific need your product fills, and its production margins. These are important factors that investors and companies will pay attention to.

In the corporate world, ideas are more valuable than cash. Major legal wars are fought over ideas, and a sub-culture of corporate espionage has even emerged to steal valuable trade secrets from competitors. Keep your valuable ideas clutched close to your chest and tread softly, when negotiating, but carry a big stick – in case those investors turn out to be copycats.

10 Ways to Become a Risk-Taker

 “Real change agents comprise less than
10% of all business people,” Jack Welch.

Most leaders play not-to-lose rather than playing to win, especially in large organizations. The more we have to lose the more we play not-to-lose.

What we protect owns, limits, and controls us.

What we risk propels us forward.

When to risk:

An unsatisfying present continues until you step toward your new future. If the present satisfies, roll over and go back to sleep. Listen to discontent – it’s yelling, “Get up and get moving.”

If the present is unsatisfying, risk losing it. It’s riskier not to risk when the present sucks.

Risk-taker questions:

1. What could you gain?
2. What could you lose?
3. What happens if you don’t change?
4. Who do you want to be? “To dare is to lose one’s footing momentarily.  To not dare is to lose oneself,” Soren Kierkegaard.
5. What’s in you that suggests success is possible?
6. What weaknesses require compensation? Risks become peril when you ignore your weaknesses – build the team.

Risk-taker practices:

1. 70% certainty is enough.
2. Postpone all or nothing moments. Don’t go all in on the first play.
3. Use long-term purpose to fuel passion and provide guidance. Set one eye on the future while focusing on the present.
4. Acknowledge failure courageously and quickly.
5. Adopt experimental mode. Say, “Let’s see what happens.” Failed experiments aren’t cataclysmic, they’re expected.
6. Success isn’t the path to success – learning is. “I am always doing that which I cannot do, in order that I may learn how to do it,”  Pablo Picasso.
7. Keep opposites handy. Those who aren’t like you add more value than those who are.
8. Don’t quit! Adapt.
9. Measure and evaluate progress.
10. Adapt again.

Should a Small Business Owner Take Accounting Courses?

While having an M.B.A. from Harvard is certainly not a prerequisite for running a successful small business, having some basic accounting skills and knowing how to use accounting software can save a small business owner a lot of money and frustration.

Even if the business owner has the resources to hire an accountant, a lack of accounting knowledge could allow an unscrupulous accountant to commit fraud without being detected for quite some time.

Also, keeping track of money flows and having a good basis in accounting makes good business sense for owners of both small and large businesses. In many ultimately unsuccessful enterprises, failing to keep track of the money often results in the company’s money gradually or suddenly disappearing.

Learning Basic Bookkeeping: A Good Place to Start

Many a small business has failed due to a lack of proper bookkeeping. One of the most important elements shared by all successful businesses of any size is keeping accurate records, which is also a legal requirement.

Besides unnecessary fees such as overdrafts and late charges, a lack of poor records also attracts the attention of the Internal Revenue Service and can be the reason for an audit and other tax consequences. Poor record keeping can cost a business a lot of money and is the first step to ruin in many small businesses.

To help remedy any lack of understanding of basic accounting principles, a course in business accounting will generally include bookkeeping skills. Once you have taken the course, a family member could easily be taught to keep the company’s books until the firm’s profits allow for the hiring of a professional bookkeeper or accountant.

Furthermore, having basic bookkeeping knowledge will give you the possibility of effectively reviewing another person’s work. Having a working knowledge of bookkeeping is an essential financial element for just about any small business owner.

10 Questions That Give Vitality to Beginnings

Painful endings and uncertain beginnings are the two moments you make the most difference in a leader’s life.

10 Dangers in every new beginning:

1. Confusing and obscure pictures of success.
2. Listening to counsel from people who don’t first ask, “What’s your vision?” Everyone who offers advice without clarifying vision has their own agenda, not yours, in mind.
3. Choosing a course rooted in what others want from you rather than what you want from yourself.
4. Reacting against the past rather than reaching toward the future.
5. Decisions based on inaccurate information or faulty opinions.
6. Moving forward alone; neglecting allies. If you wait until you need a relationship to build it, it’s too late. (Inspired by Steve Keating, Selling Skills Manager for Toro)
7. Glorifying giant steps and minimizing mundane progress.
8. No following through.
9. Emotionally dipping after exciting first steps. Getting there is harder than you think, if it isn’t, you aimed too low.
10. Failing to adapt as you go. People always get stuck when they fail to adapt.

10 Questions for beginning well:

1. Why does this matter? Listen for positive motivations base in personal values.
2. What personal values drive you forward?
3. Are you reacting against or reaching forward? Reacting seldom takes you where you want to go.
4. What does success look like? The first step toward success is defining it. Clarity instills confidence. Those who resist clarity aren’t prepared to move forward.
5. What have you assumed to be true that might be false? Challenge assumptions.
6. What’s next?
7. Have you followed through?
8. What is frustrating and/or fulfilling?
9. Are you becoming who you want to be?
10. How can I help?

What dangers do you see in new beginnings?

What questions would you ask to help others begin well?