Category Archives: Business

5 Online Business Assumptions Made by Solopreneurs

Not every online business strategy works for every business. Unfortunately, many Solopreneurs will continue to force themselves into one standard. Don’t let that be you. Learn some PROVEN tactics to help you avoid these common pitfalls of assumptions and set your brand up for profitable success.

With over 4 Billion+ active online businesses, and all of them fighting for attention, the Internet has made it possible for companies of various sizes to compete on a level playing field of sorts. The main issue remains that most of these companies are unsure how to gain the buying attention of potential clients for their products or services. Creating a Power Crew will be essential to your success as a Solopreneur because you will have to trust someone to help you handle day-to-day tasks. Check out these 10 common assumptions made in online business that you should avoid in order to have a successful head start.

1.Skimming on Investing. There is a large difference between spending smart and just being cheap. The Cheap Comes Out Expensive (“Lo Barato Sale Caro” – Judge Marilyn Milian). Reciprocity goes a very long way and helps you build a secure and trusted network. Everyone wants a deal when spending their hard earn money. Most business people have heard the saying, “you have to spend money to make money.” Actually when you take your brand seriously enough to invest in it, be it time or money, you will ensure that everyone on your Power Crew is properly compensated. This could be financially or through barter systems. Either way, you should be willing to give as much or more than you take from others.

2.Remaining Blissfully Ignorant. Are you leaving clients under-serviced because you refuse to explore new opportunities and creative possibilities? Put some investigative action behind your motives. Ask your Virtual or In-House Assistant to check out some new avenues. Hire someone to manage these new avenues for you and add them to your Power Crew. They would usually be focused on these tasks for at least 5 hours a week; 1 hour a day. Ignorance is not bliss, especially in business. there are too many opportunities out there for Solopreneurs to get on track and dominate some corner of their market.

3.Financing Blindly Without Reason. How can you properly guide your brand into financial success or at the very least avoid bankruptcy if you cannot track how much money is flowing throughout your business? If you are shocked at the amount of money you have spent over a one-year span, are constantly hunting down all of your expenses at tax time, and/or are always living in the red then you’re doing everything all wrong. Don’t become accepting of your business being a financial burden on you. You should have a budget in place to help you remain on track. Remember, you started this for FREEDOM not to trade on pair of frustration created shackles for another.

4.Maintenance Is An Option. I see many clients who believe that paying someone to manage their website is a waste of time, yet these are the same people who’s websites are constantly outdated behind the scenes and left vulnerable. Your carelessness is a hackers dream key to your Information Buffet. So much of these items can and should be automated, but you have to remain vigilant in protecting your online business. If you are collecting customer information, there is no room to be casual about Website Security and Maintenance.

5.Keeping Up with the Joneses. Doing all you can to follow what the crowd is doing rather than taking stock in what will work for your brand is ultimately a waste of time for you. This is not to say that watching your competition and friendly peers cannot be a learning experience. you simply have to learn to take the learning knowledge and map out your own destiny.

Is Your Business Target Potential For Next Digital Disorder?

What does Digital DISRUPTION mean for your business? If it’s the destiny of every business what can we do to prepare for it? Let’s dive in and find out!

Drive for digital has already happened!

According to a forecast by Accenture, in just 5 years, Australia’s digital economy is going to experience a 26.1% growth from 2015 to 2020.

Business around the globe are spending $174 billion on cloud technologies alone. Many organisations now have chief digital officers or have developed separate units that are responsible for driving digital strategy.

While the stats look promising, many business are still struggling with their organisational structures to facilitate the change towards digital transformation and to face the digital disruption challenges head on!

Innovation is transforming every business!

The phenomenon of digital disruption is not a new one! Nonetheless the opportunities and risks it presents change over time and those who make the first move, history remembers them as innovators!

Ever wondered how iPod replaced CDs, how Amazon defeated Barns and Nobles, why didn’t Marriot think of AirBnb, why cab drivers couldn’t come up with a brilliant idea that Uber did and how Netflix became the number one choice of Blockbuster’s long-time customers!

Businesses that are bold enough to innovate, serve as the poison pill for those that are still following the rules of the last century!

Speed of change remains critical!

When I say only the agile survive, it means that not do businesses need to innovate and change their business models, they need to do it at the speed of digital disruption, in order to survive!

From the rise of digital, to beginning of internet era, to social media and now mobile, technology, every couple of years, digital seems to be disrupting every aspect of our lives and that too at an unprecedented pace.

Instead of embracing and expanding the new digital wave, Kodak, Polaroid and many others spent their time and energies on defending the status quo. By the time, they realised digital photography is here to stay, it was already too late!

Rethinking value creation

One thing that’s common among all these innovators (Netflix, Uber, AirBnB and many others) is their ability to pin point a gap in existing products and services and filling it by rethinking a solution that creates greater value for the users! Most importantly the core of their investment is focused on the customer and supplier value proposition not product or services they serve!

Do you really think Marriot knows what a hotel industry is all about? Without having to own property, hire and train housekeeping staff or be on call 24/7, AirBnB was able to run a simpler and more efficient business model that was profitable to all parties (i.e. customers and suppliers) involved!

AirBnB’s impact on the hotel industry is yet another example! “Digital disrupters know how to rethink value creation and create a new market space that did not exist before!

Businesses can deliver value to customers using the five steps in the interaction curve: Buying, using, transferring, co-creating and integrating products and services! Business that are able to offer greater value in terms of novelty or efficiency on any of these customer touch points.

Understanding the magnitude of change

The magnitude of disruption can often potentially wipe out major businesses and sometimes entire industries.

Understanding the magnitude and the scale at which a new business model will affect your remains critical. Consider how YouTube’s “How to” videos is impacting formal education and how online booking for travel has almost eliminated the traditional role of travel agencies.

Personalisation of products, services and interactions

Today, consumers are actively approaching businesses they can interact with on a personal level. Digital Marketing analytics has made it possible for businesses to reach their customers with a personalised, relevant and targeted message, which they are more likely to welcome than cold calling or mass marketing methods. It’s the customers who dictate the business, not the other way around.

In the era of internet of things, wearable technology and social media, suitability, affordability and timeliness all play a vital role in delivering personalised service to the target market!

Timing is everything

Businesses that can anticipate the disruption before it happens, become leaders! Such businesses see themselves in a powerful position to launch themselves as pioneers in a field and sustain that image by continuing to innovate.

On the other hand, if the alternate solution does roughly the same or better job more quickly and at a cheaper cost, it will only be a matter of time that this new business model improves to a point that your solution will become irrelevant!

When Reed Hastings, founder of Netflix offered John Antioco, Blockbuster’s CEO to promote Netflix in its stores in return for Netflix running Blockbusters’ brand online, he got laughed out of the room. 10 years later Blockbuster went bankrupt and Netflix rose to a multi-billion dollar company.

Those who survive the wave of disruption, make a move before it’s too late to make any move at all.

Investment in digital infrastructure

Digital disrupters understand that technology alone cannot make all the difference. True disruption happens with the right integration of technology, people and processes with a change in the overall organisational structure and business model.

Whether it’s by hiring new talent, reinforcing new vision, or reallocating budget to new digital technologies and better customer interactions, business need to find a way to survive the wave of disruption quickly sweeping over the industry they serve.

Opportunities to survive digital disruption

Despite the eye-popping examples of digital disruptors vanquishing seasoned market players, According to Global Centre for Digital Business Transformation, 45% of company leaders believe that digital disruption is not a broad-level concern!

For those who do realise the threat it poses are in a better position to act on time. So what are the opportunities for those willing to survive digital disruption?

1. Disrupt the disruptor – Challenge the competition before it starts (Jet.com has become a threat to Amazon – the greatest disruptor of the 21st century)

2. Secure your position – “If you can’t be as good as them, buy them! (Facebook acquired WhatsApp) acquire

3. Absorb digital capabilities – Integrate online and offline customer interactions (AudiCity – Audi’s showrooms where you can custom design virtual car models on a digital screen)

4. Follow the footsteps – Learn the disruptors’ tricks and infuse a digital first mindset within your organisation.

Next wave of disruptive technologies

Digital Disruptors are always ready for the next wave of disruptive technologies that might hit their industry or affect their value chain. Preparing for a response towards potential threats and maximising the organisational capabilities to bring digital business innovation is what businesses need to do.

Even if you are a market leader today, to continue being so, businesses need to become their own disruptors!

Get out of your comfort zone and challenge your own silos and business processes, before someone else does!

Conclusion

Digital disruption is already happening and no one can escape it.

Applying high-level digital technologies to your business without understanding their potential impact, can be deadly. The need for businesses is to

  • Understand which companies are most prone to steal your share of the pie and how?
  • How can you disrupt your own business model to keep your competitors from narrowing the circle in the first place?
  • Can you use digital technologies to improve the customer experience throughout the value chain?
  • Do you have the right set of skills to compete in the age of connectivity, collaboration and rapidly evolving customer needs?

Digital disruption can be unpredictable and overwhelming, but those willing to take the risks are rewarded immensely!

Is your business a potential target for the next digital disruption from Logan Nathan Attention Business Owners: Are you lagging behind in Digital Transformation Strategy for your business? Feel free to Contact us to examine your business digital disruptive potentials and turn them around before it is all too late!

10 Your Criticism Ought to Get a Business Rating

Business appraisals are an economic analysis, or professional engagement, to conduct business valuation in order to determine the worth of a business, professional practice or certain business assets. They are a critical tool in any business owners’ arsenal, and should be considered right from the day the business concept originates through the life cycle of the business.

Reasons for Business Appraisal

Here are the top 10 reasons why you should get a certified business appraisal.

– Your business is in the startup phase and you need to value it to determine how much of it you will have to give to investors in exchange for seed money.

– If you’re an established business and have to provide quarterly or annual updates to your investors or other stakeholders. This will give your stakeholders a clear picture of the financial health of the business that shows them exactly what the worth of their current investment is.

– You may find an opportunity to sell or merge which needs to be decided quickly. Having an up to date business appraisal allows you to take advantage of the opportunities.

– You may want to take on a new partner and you need to know the value of your business to determine the buy-in price.

– With the array of new fundraising options available to small-business owners, it’s important to know the value of your company before you begin fundraising.

– You may want to expand or build new facilities, and taking your business appraisal to the bank will help them make the decision to lend money.

– To determine the annual per share value of an Employee Stock Ownership Plan (ESOP). ESOP is used when you want to share ownership of your corporation with your employees.

– For gift tax planning purposes such as transferring an interest to family members, donation to a charity, transfer to an intentionally defective grantor’s trust, etc.

– For litigation support purposes, to determine economic damages, lost profits, uncover fraud or value of a business in a shareholder or partnership dispute.

– To identify whether the business is growing, stagnant or declining in value to restructure the business.

Business Appraisal Techniques

Some of the business appraisal techniques are as follows:

– Asset Approach

The asset approach examines the assets of the business to determine the value of the assets of the business. This method would be particularly significant for a business that is closed down and being liquidated.

– Income Approach

This approach concentrates on the main purpose of the business, which is the income it generates through its operation. Detailed discovery and analysis of various streams of income and types of expenses are performed. Projections of future income and expenses are also taken into account.

– Market Approach

This approach treats the business as an object available in the marketplace for purchase or sale. This method relies on finding closely similar or comparable businesses in the marketplace that recently were sold.

This list is not exhaustive and there are many other reasons that a business appraisal may be needed. A certified business appraisal is a complex financial analysis that should be undertaken by a qualified valuation professional with the appropriate credentials.

Are You in the Right Business?

Do you love going into your business every morning and spending time with your clients?

This may seem a strange question to ask. If you know your life purpose, you will find the answer comes easily. Your business will become your drug initially and maybe continue to be for a very long time. So, we aware of the sacrifices that you may have to make in being a business owner.

I often wonder if solo or micro business people really know if they are in the right business or not. I do believe that if you know your WHY (your purpose) you will know if you are in the right place for you and your growth. Being in business is not something that you can do half-heartedly. It needs to be something that you want so badly that you will do whatever to make it work.

All too often I meet with people and clients who really have not thought about their WHY or the Vision and Mission of their business. To get real clarity you need to firstly know your ‘why’ for your life and only then can you really be aware if the vision is correct for you and your future.

To be in business on your own you need to be an entrepreneur who has a dream to create something extraordinary. You have to be prepared to go to whatever lengths to make sure it happens, understanding that initially there may be no money, long hours and ups and downs. It takes COURAGE to be in your own business, especially in the early days.

Firstly, ask yourself why you are in business? What is your reason? It is because you love what it is or are you there purely to make money?

Choosing the correct business is important. We are all different so there is no one size fits all. Ask yourself what type of business attracts you? If you understand who you are and where your innate gifts are you will find it easy to know the type of business that suits you best.

Are you a people person or someone who likes to be behind closed doors? Once you understand this part of your personality and what it is that you love to do, then, and only then, will you know who you need to put around you to support you to grow your vision.

Knowing the industry you wish to be part of is important as well as understanding the target/ customer market that suits your service or product. The demographics are important too, for example gender, age, background, knowledge etc. Having an idea of what you want in the way of size and of staffing or if you want to do it alone needs to be considered too.

Is your business to be a quick get in and get out type of business or a hobby type business? Do you know how much you want to earn? Have you considered an Exit plan for the future also? All important questions initially.

It is also a good idea to find out what your customers/clients want that they are not getting elsewhere. What can you create that will fill the need? How can you solve their problems? What is their greatest criticism of where the marketplace is letting them down or not meeting the demand?

Has your business come from a hobby or personal interest that has heart and mind in it? Or, is it what you have been trained to do and can’t think of anything else that would suit you? Do you love what you are doing now and is it what gets you out of bed in the morning?

Is your business home-based or needing to have it’s own premises as it grows? What are you looking to create size-wise in the future? Are you considering an international, national or city business?

Is your business a service or product orientated business? This will make a difference into outlay too. A service business can be run as a home-based business without costly inventor, theft problems, product spoilage or premises.

The opportunities the internet gives us today to search, profile and gather information that will support one to create a good business is outstanding. There is so much support and knowledge that has no cost to it to work out how and what you want your business to look like. So do your research and be discerning with what you find out and learn. Find people who you can trust to discuss your ideas with who will help support you and your business to move forward.

We often have great ideas with a sound theory when in reality it just won’t or can’t work. It may be lacking skills or certain personality types, so make sure you reduce all the risk possible before you get too deep into your business creation. Make sure that you do your market research and that there are people out there wanting what you are creating!

To own and run a business that will be successful takes an enormous effort. You must be willing to work the long hours, invest everything you have financially as well as physically in the dream to bring it to fruition. You need to commit and listen only to the people who you know are able to give good sound advice. Family and friends are often not the right people to do this as they will say what they can to protect you. Not everyone is an entrepreneur. Many people I come across are really the technician and are without the personality or management skills necessary to be successful long-term.

I have found that by self-understanding both personality and thinking wise you will make many less mistakes and be more successful. I then come to the question of what is SUCCESS to you as the business owner? This can vary dependent on what you want from your life, your experience, your contacts and how much you want to earn from your hard work.

Are You Including Entrepreneurs or Small Business Owners?

Do you want to be an Entrepreneur or a Small Business Owner? Is there a difference, and does it matter?

There is a difference, and it’s easy to confuse the two or use the two terms interchangeably. A Small Business Owner owns their own business, but also actively participates in that business. Often the Small Business Owner is critical to the ongoing success of the company. Without him or her, the business either does not exist (i.e. medical, legal, accounting, consulting, freelancing) or would suffer greatly in the owner’s absence for any period of time.

We often use the term “Solopreneur” to refer to the individual practitioner who is their own boss but must personally deliver a service or create a product for their business to generate revenue. While this may certainly be better than working for someone else, it’s still about trading time for money – and time is our most limited resource.

Whether you are a Solopreneur or a Small Business Owner, you likely own a business that depends primarily on you. Perhaps the business is run by you and a couple of other founders. The point is, only a few people know and can execute on the secret recipe at the foundation of your business. And those key people must be present for the business to operate.

An Entrepreneur instead builds a business and supporting systems that are independent from the founder. The founder may well be an integral (or exclusive) part of the businesses initially, but the goal is always to grow the business to the point where the owner does not have to be involved in day-to-day operations. When you build a business that continues to generate revenues in your absence, then you have created a truly leveraged model and can call yourself an Entrepreneur.

Many of us start as Small Business Owners, enjoy success, and grow our companies. We may then move on to creating a larger business that does not require us to be present, and we graduate to the level of Entrepreneurship. If we repeat this multiple times, then we may call ourselves Serial Entrepreneurs.

“Entrepreneurship is the pursuit of opportunity without regard to resources currently controlled.”
Howard Stevenson, Harvard Business School Professor.

You may not be clear at the start as to which one you want to grow up to be, an Entrepreneur or a Small Business Owner. But by asking yourself a series of hard questions, and honestly assessing your true desires, you are more likely to start a business that suits you best. And it’s certainly acceptable if you want to be Small Business Owner… we are not saying that’s a bad thing. But it’s important for you to begin understanding the difference between the two as it may impact the type of business you build and how you plan to develop it.

It’s also important to avoid creating another low-paying harder-working “job”, like the one you may already have! Michael Gerber explains this situation best in his seminal book “The E-Myth”. This book is a must read for small business owners, with one of its major themes being the difference between working “in” your business (you make the pies) versus working “on” your business (others make the pies following your recipe and systems).

As you prepare to become your own boss, or if you have already started a small business, it’s important to keep your long-term vision in mind. Doing so will help you determine the type of business you start and build, helping ensure that you achieve your definition of success.

Do you want to be an Entrepreneur or a Small Business Owner? Here are some questions to ask to help you determine want you really want:

  1. Do you want to own just one or two locations (i.e. one or two franchise units, or your own practice) or do you want to create something bigger with multiple locations and perhaps grow internationally (i.e. offer franchises and hire others to run the business)?
  2. Do you want to work in the business (i.e. make the donuts) or do you want to have someone else manage the day-to-day operations (i.e. someone else makes the donuts following your instructions)?
  3. Are you looking for a job or are you looking to create a self-managing company (a business that does not rely on your day-to-day presence for success)?
  4. Do you prefer to create or do you enjoy executing?
  5. Do you envision creating multiple different businesses across multiple industries?
  6. Are you able to let go of all of the details, or are you a micro-manager?
  7. Are you the only person who can deliver your service or product, or can you teach others how to do it?
  8. Is your goal to work hard until a certain age and then retire, or continue creating and leading your businesses until you are no longer mentally capable?
  9. Can you sell your business as it currently operates and without you having to continue being part of it?

How to Think Differently in a Business

To hit gold in business, you have to think gold. What is your business all about? How do you intend to maximize profits? Here are tips on how to think different in business:

Think back to the future

Don’t wait till the harsh business storm hits your business; rather, always think of what to do better or next. For example, what are the things you need to put in place to ensure business growth? What stage is your business on the business chart, that is, in areas of development, growth or decline? Is your business vision realistic? What is your current profit margin? What is your intended profit margin? How do you intend to speed up your productivity? Evaluating your business, keeps you prepared for the future.

Believe your ideas are valuable

Always think your glass is half full. Think about possibilities not only about likely constraints. As a business owner, you have to nurture a positive mental attitude; believe things will work out fine. If there are possible risks, device means to avoid or manage them. Risks are unforeseen, but you can plan ahead to avoid or mitigate them. Being positive in business enables you take a chance on yourself, be bold to take calculated risks, and believe you are adding value, even when the numbers say otherwise. That is a way of thinking differently in business.

Dig beyond your current offerings

Do not just view things on the surface. Think intensively and carry out research on other ways your business can benefit your target market. Reflect on the true realities of where your business stands at the moment. What are your business challenges? Classify them and analyse them to see how you can make a difference. Outline your business SWOT analysis (Strengths, weaknesses, opportunities and threats). Go beyond the surface; be realistic.

Your competitors are watching

Understand your business environment; be familiar with your competitors’ strategies – if you are not, you can bet that your competitors are doing their homework. What resources do they have that surpasses yours? How can you leverage to collaborate and partner to get the necessary resources? What’s the best way to build more goodwill? Do a survey on your business, and be cautious of the events happening in your business environment. It’s business, so be prepared for the competition. Business is about profit making and goodwill, be focused on these objectives.

Create a war-room

Now that you know who your competitors are and understand your type of business. Identify the threats and evaluate them. Compare your business to your closest competitor. Be battle-ready. Draft a graph of your sales and profits. Can your business survive in business storm or in an unstable economy? Figure out what you can do better? What is not working? Are your key employees performing as expected? Carry out a performance appraisal. Take action: pave the way for more business improvements, do some advertisements, up your business game. Remember it is a game of profit, and that should be your aim.

Thump your chest

What makes you outstanding makes you great. Build on your business competence and promote it. Every product or service must have its own uniqueness, that thing that makes it different from others. Device means to make your business goals and objectives unique. Distinctive competence is that special attribute that shows how your business is similar to your competitors, but different in aspects of branding, concept and product offerings.

Do You Have Any Business Idea About The Internet?

Now that you have had that internet home based business idea and have decided to start a business from home, selecting the right business opportunities is as easy as 1-2-3, well maybe 1-2-3-4!

1. Decide to Market a “Consumable” product

When trying to decide which internet home based business idea you should develop, just think about this for a minute – every time anyone gets out of bed each day and goes to work, someone makes money. Every time you pick up the telephone, someone makes money. Every time you eat, turn on the water, start your car, use a bar of soap, or get a haircut, or go on a vacation, someone makes money. Imagine transactions of hundreds or even thousands of dollars and also millions of $3 or $4 sales several times a month, year after year, after year.

The ideal internet home based business idea which develops into a turnkey home business is one that markets consumable products or services in such a way that after your initial effort is done; repeat orders, sales and commissions come to you for that effort on a continuing basis.

2. Be ahead of the major Market Trends

A “Market Trend” is really an economic movement, meaning that large masses of people’s spending habits are moving in a uniform direction. The effect the baby-boomers have had and will have for years to come on the American economy is a good example.

One leading economist likened the effect the baby-boomers have had on the economy since birth to a basketball running through a garden hose! That fact along can be a major factor in generating profitable home based businesses and should certainly be considered when developing our internet home based business idea.

When developing our internet home based business idea, the question we must ask ourselves is: Are we positioned in front of the basketball or behind it?

History shows that those who identify these trends early, and are able to meet the needs of these trends, are able to create abundant wealth for themselves. In essence, they get in front of an economic wave and ride it to financial freedom!

The key is timing. Get in front of the wave and take the ride of a lifetime.

Current research shows, that what most people want out of life is feeding the current market trends and should be considered in your internet home based business idea:

1. Owning Their Own Business

2. Having Tax Advantages

3. Being Financially Independent

4. Being Healthy

5. Being more environmentally conscious

6. Having A Rewarding Career

7. Owning Their Own Healthy Home

8. Looking & Feeling Younger

9. Losing Weight

10. Traveling

11. Improving Their Lifestyle

12. Personal Development Training and Support

Mega-Trends

These are the wants and needs of some very large consumer groups. In fact, some very large trends are gathering momentum as you read this. They are so large that they can accurately be called “Mega-Trends”.

One of the mega trends is in the area of Health and Wellness- An Internet Home Based Business Idea Because of the economic influence of the Baby-Boomers, economists are predicting that this industry will be the next Trillion dollar industry within the next ten years. Paul Zane Pilzer, an internationally known author, college professor and economic advisor to two presidents, predicts that there will be 10 million new millionaires in the Health and Wellness internet home based Network Marketing industry within the next 10 years. Now that could be a basis for an internet home based business idea!

I guess the question we need to ask ourselves is: Will we be one of them?

Another of those trends is in Travel – an Internet Home Based Business Idea and recreation. Some estimate this industry to be 7 trillion worldwide with expectations to double within the next 6 or 7 years which is over 20% faster than the US economy. Other experts estimate that travel in the US along exceeds 1.3 trillion.

I have read that there are more cruise ships to be built within the next 5 years than in the previous 45 years total. Baby-boomers are swarming to the luxury resorts around the world and this activity is expected to increase as the boomers experience the inheritance of their parent’s money and also begin to draw on their own retirement plans.

With the baby boomers currently retiring at the rate of about 1 per second and increasing, increase in travel could very well be the largest mega-trend we will experience in our lifetime!

The combination of these Mega-Trends is causing one of the most explosive economic waves in history. Now there is another potential internet home based business idea! All Wealth is first created in the Mind and then transformed into reality by the application of known Principles! – Think and Grow Rich! – Napoleon Hill

3. Leverage your time

Leverage, through the process of duplication and multiplication, allows us as entrepreneurs to develop a successful internet home based business idea, part-time, around our busy lifestyle. In essence, leveraging our time allows us to get more done in a shorter period of time with less effort. This concept applied in your home based business means you can accomplish more than you could normally accomplish on your own.

When effectively incorporated into an internet home based business idea, computer and internet technology can multiply leverage thousands of times. That means in the right system, networking and internet technology can do the work of thousands of people, and you get paid on that work! Imagine developing a business part-time, which can grow to a full time career, that wouldn’t interrupt your present circumstances, and provides you a flow of income while you spend time with your family, travel, go to the beach, or even sleep! That’s the power of leverage.

4. Market Selection

Before choosing the right internet home based business idea, one must first identify the fastest growing industries as well as the most profitable home based businesses. Some of the fastest growing industries today are:

Greeting Card Industry – 7 billion greeting cards are purchased every year. Annual retail sales of greeting cards are estimated at more than $7.5 billion. Nine out of every ten households purchase greeting cards each year.

Working From Home – $401 Billion Dollar Industry.

Internet Marketing – exceeds $523 Billion according to a study done by the McCombs School of Business and is expected to reach 7 Trillion within the next 3 years.

Mail Order Marketing – $350 Billion Dollar Industry and growing.

Wellness Industry – $200 Billion Dollar Industry and expected to reach $1 Trillion within 10 years.

Nutrition Industry – $4.2 Billion Dollar Industry and exploding.

Weight Control Industry – $33 Billion Dollar Industry fueled by epidemic size obesity levels. An estimated 70% of the U.S. population needs to lose 10 – 50 pounds.

Personal Care Industry – $72 Billion Dollar Industry.

Cosmetics Industry – 8 Billion Dollar Industry – and steadily growing.

Travel and Vacation – $860 Billion and growing.

When developing an internet home based business idea into profitable home based businesses, it is not necessary to pick an industry which we already have an affinity for, although it certainly is desirable. However, as you will see in upcoming pages, if you have the Desire to build a business and new lifestyle, there is a fit for you out there. Again, the challenge is to select the right business and company when you start a business from home.

Not only should the market and marketing concept fit you, but in order for a business to be real it must have the right: Product, Market, Timing, Management, Company, Compensation, and Benefits and Rewards.

We should not look for get-rich schemes! If you are serious about your goals of personal development and building a long-term residual income and work diligently towards goals you will succeed.

Here are the Business Challenges and How to Overcome them

For many businesses today, there are many challenges that come along inhibiting success. It is, therefore, important to know the pitfalls that one can run into and the possible solutions. Some of these challenges are:

• Lack of Integrity
• Resource management; borrowing cash
• Increased Competition and Selection
• Customer Loyalty and Marketing
• Uncertainty
• Regulations
• Risk management and problem-solving
• Finding competent staff

These are the main challenges that every business faces or will face. It will only be wise to have a prior understand what they are and hence find a proper way of solving them. No one starts a business to fail but at the same time, challenges are not meant for failing but to sharpen, strengthen and inspire growth. This article goes deeper into each of these setbacks and offers practical solutions for the same.

Challenges and solutions

1. Lack of Integrity

Lack of integrity can put a business on its knees. With the standards of living going up the roof, workers trying to meet their quarterly goals and be successful at the same plus get that little overtime bonus, the temptation to cut corners is so great.

Information is omitted or given in terms of doing what it takes to get ahead. There is head to head competition among employees, and soon the entire staff is infected. This behavior goes up the ladder whereby the managers and directors are also involved.

For integrity to improve, there is a need for work policies to change. There should be no room for any minor or major misconduct. Staff should be trained on how they are expected to conduct themselves. Different kind of systems can be used to deal with problematic employees namely, counseling, warning, and termination. The greater the misconduct, the greater the action taken. Those who show high levels of integrity should be rewarded so that other employees can be won over to good virtues.

2. Resource management; borrowing cash

Money is everything, and that is a statement that will be heard for a very long time to come. Many businesses are making a profit but what draws them back are heavy expenditures and borrowing. It is quite common to see many businesses, especially small ones, fail to manage cash flow.

The main solution here is to ensure that there is enough capital or cash saved up to meet business obligations as they rise.

Cash management becomes vital during the fluctuation period, as cash is flowing in more slowly into the business and moneylenders are less than willing to extend the loan repayment period. For the growing small business, tackling taxes and business the proprietor may handle accounting but dealing with the professionals is even better. Business books get more complexed with every client that walks in and employee you add. Having a professional bookkeeper will ensure your business succeeds where others are failing.

Borrowing money from lending institutions only adds injury to the cash flow situation since these institutions have the power to dictate the lending terms and policies.

3. Increased Competition and Selection

It has never been an easy task to start a business, however, gone are the years when it took long procedures to start a business. Today you can purchase a host domain name online and register a business with just a few clicks. Nevertheless, staying in business is a much more convoluted subject. While business expertise was once a time consuming and expensive endeavor, nowadays you can find experts online who you can consult and get assistance from on any difficulties encountered. There are user-friendly interfaces and even support teams to help you set up an online store, get marketing materials and business cards, all at a very pocket-friendly price.

The simplicity of starting a business creates a much wider level of competition. You are likely to find different businesses competing to come up with the best product while others concentrate more on their selling point instead product manufacturing. This contributes to increased selection, which makes it more challenging for businesses of all sizes to maintain customers who with a click of a mouse can change suppliers. It is a battle of marketing, focus and perception. Business owners who master these changes and provide a good customer experience will more likely be on the winning team.

4. Customer Loyalty and Marketing

Along the same road of increased competition and selection to a potential customer, emails, social media, texting and other communication modes are making it easy for individuals and businesses to get their messages out to customers and hence sell more.

The conservative fluctuation period is also causing a decrease in client base. Customers are forced to be conservative with their pockets and as a result, the normal business growth of new clients is not taking place as quickly as it should. Executives and business owners are forced to spend more time figuring how to go an extra mile in order to keep the existing clientele base. The same time, trying to figure out how to reach new customers in a cost-effective way without necessarily competing chiefly on price, this always leads to a race that ends at the bottom.

Figuring out the best channel for marketing is the key for individuals to be successful in the current business world. How do you reach your clients with the right message and where can you find them? Once you get a new customer, how do you keep them and when do competitors of all sizes and types, trying to convince them that they can provide it cheaper or better, constantly barrage them? Identifying what your clients want and giving them a satisfactory experience will make a huge difference in your business’ future.

5. Uncertainty

Everyone including business leaders is usually uneasy with uncertainty. Because of economic struggles and global debts, uncertainty is more common today than in the past years. The sorrowful news is that uncertainty leads businesses and individuals to a short-term focus. Because of uncertainty, businesses tend to shy off from long-term planning for short-term benefits.

While this might seem like a better choice, failure to plan five to twenty years ahead can end up destroying the value of the business in the end. Businesses must learn the art of balancing short term goals and long term goals. Usually, short term goals should be small steps leading towards the bigger goal. The ever changing market speculations by business analysts in the news usually leave a bitter taste in the mouth of business owners. The end result is executives and business owners raising prices, and thus, clients stop spending on the business. You need to get back to work with what you have and not media speculation.

6. Regulations

A change in the regulations is always a major concern in certain marketplaces, but unexpected energy, financial and environmental policy is wrecking mayhem for nearly every business today. Whether a demand from stakeholders or clients to become environmental friendly or an imposed policy to increase costs due to the new carbon taxes, environmental consideration is among the biggest problems that businesses face. And we don’t have to give too much pressure to the issue of financial regulation and reform though we do have some suggestions about how to prepare to face that problem if you are a brokerage house or bank.

The challenge to be solved is to comprehend the meaning of regulation in your marketplace, its effect on your business, and how to develop the skills which are required to deal with the challenge. Two main areas of regulatory problems and difficulties are health care and taxes. Lawmakers are still arguing over what is called the fiscal cliff, the combination of millions of dollars in budget cuts and tax increase. Even if the congressmen reach a conclusion, it is most likely that it won’t be understandable enough to the point of being required the following year.

Health care has also been another problem for businesses. For instance, the new Affordable Health Care Act (ObamaCare) is so complicated that local and state governments won’t understand what to do, and businesses will have to sacrifice resources and time to understand the law hence hiring professionals to break it down for them to implement it effectively.

Many businesses do not know whether they will have to continue with the national system, or the state system will be creating exchanges. Additionally, they do not know what that will mean for their costs. For some business enterprises, that information will aid them to conclude whether it is cheaper not to provide insurance and just pay the government fine of two thousand USD per employee or whether they will provide insurance to their employees and avoid the penalty. Companies that have nearly close to fifty workers may opt not to recruit more employees in order to remain outside the law’s radar.

7. Risk management and problem-solving

A major problem faced by nearly all companies is assessing, identifying and mitigating risks, including the financial and human capital. The need for a more sophisticated challenge solving competency among current business controllers is limiting the possibilities of their ability to effectively deal with risks facing their businesses. This is the main reason business managers tend to land from the frying pan into the fire, depending on who among their executives they are trying to put away and in most cases the ever changing business environment is what starts these fires.

So what is the challenge to be solved? We believe, to achieve more in the future, organizations must conclude that problem solving is the main path to business success then develop a strong problem-solving ability at all levels. As organizations continue to identify the challenges, they will have the right problem-solving techniques to know how to best maneuver them.

8. Finding competent staff

Without exception, every business owner has faced the major business challenge, which is, finding the right staff, ensuring they buy into the business’ vision and retaining them. I firmly admit that I have no magic formulae for this challenge. In fact, if business executives can come up with the right formula to engage and recruit the right staff members, they would have made millions.

A small organization is like a family and in most cases, they can dysfunction or work well. In large organizations, the main challenge in human resource is how to fit in the workplace and office politics, but when it comes to small organizations, it is skills and personality. When you work in a small firm, each individual’s personality can have a huge impact on the productivity and harmony of the business.

The main goal is to learn how to deal with each staff member’s personality, find out what drives each staff member and shape your management accordingly. In spite of unemployment, many businesses try to find the ideal staff members with the precise skill for the business. Many upcoming manufacturing jobs require individuals with hi-tech skills. They include vacancies at the production sites where computers and machinery are used to build products like machines and airplane parts. Some skills require several years of perfection and training. Because of technological advancement, business executives are struggling to find the right high-skilled individuals to fill positions in their firm; that is individuals who have the right IT skills, deductive reasoning skills, and problem-solving skills.

Final thoughts

Without the right skills to identify and solve problems that arise in business, many businesses end up failing in fulfilling their core mission and vision. It is then the obligation of business owners and executives to make sure that all these challenges are looked into and come up with the right formula to solve them. Moreover, it is not only the obligation of the business executives but also all other members involved in the business to make sure that some, if not all the challenges, are dealt with in an appropriate and ethical manner.

Does Your Business Have What It Takes To Become a Franchise?

I have been involved in franchising dozens of businesses, at last count over 60. Some from concept and some where we converted an existing business to the franchised model and I am really happy to deal with either pathway with one really important proviso.

The business owner must have a reasonable understanding on what it takes to run a business successfully – franchised or not.

And unfortunately I have concluded this is easier said than done.

Done well, franchising does help to structure a business so that it has the best chance of success because franchising helps to put some great business practices in place. Systems and money management being at the top of the list. But overall, I have found that in most businesses, there are some aspects about business success which need to be reviewed and without sound business experience, creating a franchise is not likely to succeed.

Understanding how business works is especially important, because you, as franchisor, will often be training less business savvy-franchisees on successful business practice.

The most useful way I have found to think about business success is to look at the stages of business growth because it is through this journey that many learn the value of different business skills needed as they grow.

The 5 Stages of Business Growth

Way back in the early 1980’s, the concept that businesses grow through defined stages was first discussed in an article published in Forbes by Neil C. Churchill and Virginia L. Lewis. This work is still cited to explain the importance of basic business elements to success.

Before I go into the 5 stages, there is one important point to make.

Businesses do not necessarily need to go through each stage. It is possible to speed through stages into whichever is your goal. The way to do this is to understand what is required. This is how the likes of Richard Branson create new businesses everyday – Richard will have all his business ducks in a row before he starts. But even his businesses will need to go through some of these stages on the way to creating an empire.

In a nutshell these are the stages

Stage 1 – Existence

This is generally the start-up stage for any business. With no revenue, the focus of the business owner is obtaining customers and delivering the product or service. Inevitably, the owner is definitely working in the business, often alone filling every role. A major concern is having enough money to cover this start-up phase. The strategy here is simply to stay alive.

Stage 2 – Survival

By now, the business has proven it is workable and can be profitable but it is still simple in structure. There may be a limited number of employees supervised by a sales manager or a general foreman but neither will make any major decisions independently. They carry out the rather well-defined orders of the owner.

Systems development is still minimal. Formal planning is, at best, cash forecasting. The major goal is still survival, and the owner is still the business and working in the business. The main aim is to get a return on investment and making the business profitable.

However if the business is to grow, it is important to begin to understand the need to systemise and understand how business operates.

Some small businesses choose to stay here, hardly making a profit, others choose to move into the Success Stage.

Stage 3 – Success

At this point, the company is stable and profitable and cash is not a problem. Most telling, basic financial, marketing, and production systems are in place to power effective delegation.

Organizationally, the company has grown large enough, in many cases, to have functional managers to take over some duties previously performed by the owner and some planning through operational budgets support this delegation.

There should also be some strategic planning in place and the owner and, to a lesser extent, the company’s managers, should be monitoring this in accordance with goals.

While cash is plentiful, the main concern is to avoid a cash drain in prosperous periods to the detriment of the company’s ability to withstand the inevitable rough times.

Some choose to stay in this phase while others choose to move into a phase of growth.

Stage 4 – Rapid Growth

If the decision is made to grow beyond the Success Stage, then key problems will be how to achieve growth and how to finance it. Growth will return to a phase where cash management becomes critical.

Churchill and Lewis report they found the keys to success here are having a sound understanding of delegation and how to manage risk in cash flow.

As staff numbers grow, systems need to become more refined to ensure delegation is efficient and both operational and strategic planning are crucial to make sure everyone is on the same page.

At this stage, the owner no longer works in the business but does have a strong presence over the way it is run and over things such as stock control.

Churchill and Lewis state:

‘This is a pivotal period in a company’s life. If the owner rises to the challenges of a growing company, both financially and managerially, it can become a big business. If not, it can usually be sold-at a profit-provided the owner recognizes his or her limitations soon enough’

Stage 5 – Maturity

The company has now arrived. It has the advantages of size, financial resources, and managerial talent. If it can preserve its entrepreneurial spirit, it will be a formidable force in the market.

If not, it may enter a sixth stage of sorts: ossification and death.

Franchises often do it better

Yes, even in the 1980’s when the Churchill and Lewis first published their article, it was acknowledged that franchised businesses moved through the stages to Success and Rapid Growth better than those not franchised.

Why?

Because franchises often have the following advantages:

First of all, they have, in most cases, a franchisor who really understands, through experience, the essentials of business, making sure clear structures are in place from the beginning to move through Existence and Survival fast.

At the very least they will have:

  • A marketing plan developed from extensive research
  • Promotion and other start-up support such as brand identification
  • Sophisticated information and control systems so the whole franchise can be monitored
  • Operating procedures that are standardized and very well developed so delegation is consistent and efficient

I would add that, if the franchisor has really done the homework, there will also be:

  • Strong leadership for the group and an understanding of managing teams of equal partners
  • Good strategic and operational planning which has input from all franchise partners
  • And a very clear understanding of money management in the franchise group, making sure that all levels of the franchise can be profitable

I have to say, not many business I see have all these business aspects in place when they start to think about franchising. And the franchise process will help to put some in place. Things such as systems will be built and it will be essential to have a sound understanding of money management as the franchise structure is developed. If you are still working in the business though, putting in 60 or 80 hours a week, I think you will find the extra work and emotional energy to do the conversion can be more than a little overwhelming.

The Pillars for Successful Business Growth

So what’s the answer?

It’s really quite simple…

In discussing the five stages of business growth, Lewis and Churchill identified some skills needed and show that these skills are what are built up through the business growth process.

  • Money management
  • Systems development
  • Delegation, leadership and people management which results in leveraging you out of the day to day of the business
  • Strategic and operational planning

In my mind, today, there is at least one other skill to be added.

  • Marketing and your brand

The thing is, I know very few of us, if any, have the individual skill to deal with every business ability to a satisfactory level, so creating a team is an essential component as soon as it is possible. The key is to understand each area and to know who to put into your team to move you and your business forward.

9 Steps to Buying the Right Business

Purchasing an established business can be a daunting and complicated process for many individuals. Understanding the steps involved in the acquisition and doing the necessary planning and preparation will enable the buyer to increase their chances for a successful transaction. Following an established and proven process will not only reduce the stress that often comes with chartering new territory but also eliminate many of the risks and unknowns that often derail a business acquisition.

  1. PERSONAL ASSESSMENT

The first step in buying a business starts with introspection. This process should be a thoughtful and honest examination of the candidates’ strengths and weaknesses, skill set, as well as their likes and dislikes. This analysis will assist in narrowing the selection for the logical and best choice of business enterprise to pursue.

What talents, skills, and experience do you bring to the table and what are the types of businesses that can excel with these attributes behind the helm. Here are a number of questions that the introspection phase should involve:

  1. What type of business do you want to operate? Is it one where you are the owner/manager or do you prefer to have a management team in place?
  2. What hours are you available to dedicate to the business? Obviously, owning a small business will never be a 9 to 5 endeavor. Having said that, it will be important to determine the time available to manage the business. Do you prefer a B2B business that operates M-F 8-6pm or are you more flexible and would consider a consumer oriented business that is open late or often over the weekends?
  3. Are you successful at sales, meeting with clients, and being the face of the business or are you better suited to a managerial role and running the business from behind the scenes with an established sales force in place?
  4. Are you able to travel and be away from home for several days or do you require a business that keeps you close to the family each day of the week?
  5. Do you have a background and expertise in the manufacturing of products or is it the service industry or distribution model that is more your forte?
  6. Do you have any licenses or certifications that qualify you for a certain business? If not, are you prepared to obtain the necessary credentials required for successful ownership if the targeted business requires such certifications?
  7. What are the things that you really enjoy doing? What are the things that you prefer not to do? The best advice is to start considering businesses in industries that the buyer is passionate about.

These are a few of the questions that will help an individual assess the types of businesses that they are best suited for and assist in narrowing the range of enterprises where the buyers skill set, experience, capabilities and passions can be leveraged.

  1. DEVELOP INVESTMENT CRITERIA

Now that you have established the type of business that is a ‘good fit’ the next step is to put pen to paper and concisely define your investment criteria. If you will be seeking bank financing it will be important that the investment criteria match your resume or the transferrable skills that you are bringing to the table. The investment criteria will state the following:

    1. What is the price range of the business that you can afford to buy?
    2. What is the geographic location for the business you seek to buy?
    3. What type of business are you looking for?
      • Manufacturing
      • Wholesale/Distribution
      • Service
      • Retail
      • Web-based
    4. What industry should the business be in?
    5. Management structure (owner managed or management team in place)?
    6. Size of business. In terms of:
      • Revenues
      • Profits/Earnings
      • Number of employees
      • Number of locations
    7. Recurring revenue model vs. project based

  1. LENDER PREQUALIFICATION

If you plan to use bank financing to acquire a business it is important that you obtain a prequalification before your search process. Not only will this the ‘prequal’ provide you with the data as to how large of a business you qualify to purchase but it will also demonstrate to the business broker and seller that you are a serious buyer. If you are serious about buying a business and will need to obtain financing, receiving a bank prequalification is a required step at some point in time. Therefore, what would be the reason for procrastinating and not having this in place at the outset? There is zero downside and only considerable benefits. Contact your business broker as they will be able to recommend a financial institution that does business acquisition lending for the type of business you are interested in purchasing. This is an area where having the right lender is critical.

  1. BUSINESS SEARCH (Individual or Retained)

What is the process that you are following to locate and qualify businesses for purchase? Will you be conducting the search on your own or will you utilize the services of a professional business intermediary or broker. There are literally thousands of business for sale at any given moment. A process needs to be established for conducting the search and qualifying businesses. Few of these businesses are of the quality, caliber, and profit level that distinguish them as being best in breed. What have you done to ensure that you will stand out and be given the proper consideration when engaging a broker regarding a business for sale? The business-for-sale marketplace is plagued by unprepared and non-serious buyers inquiring about any enterprise listed for sale. It takes the right preparation, message, and professional team to establish contact and quickly get to the point where the business can be qualified as a legitimate candidate or one that should be dismissed. Too many prospective buyers fall prey to the late business internet search process and clicking on any business that catches their interest. Unfortunately, serious buyers get lost in the field. This is where the prior steps come in handy – having a personal bio, an established investment criteria, as well as a lender preapproval.

  1. QUALIFICATION

A business that is professionally represented for sale will have a number of documents available for review by prospective buyers (e.g. Financials, Asset list, Business Summary, etc). Buyers will need to execute an NDA in addition to demonstrating that they are qualified both from a financial standpoint as well as an experience standpoint to be considered a serious candidate.

At this stage the buyer should already have completed individual research or have first-hand knowledge on the industry. For those without direct industry experience there are trade magazines for just about any business sector not to mention the wealth of data available on the World Wide Web.

The buyer should have a list of questions already prepared, designed for one purpose – determining if the business meets the majority of elements within the investment criteria. The buyer should understand the value of the business. If the business is priced outside of their financial ability they should not be evaluating the business and wasting anyone’s time, most importantly their own. It will be important for a serious buyer to recognize that there is no such thing as a perfect business and each will have different strengths and weaknesses. Most buyers are seeking businesses with growing revenue, a stable customer base, excellent staff, established policy & procedures, and increasing profits. What are the most important qualities that you are seeking? Ranking the criteria is often helpful when qualifying businesses. Finding a business which meets some but not all of the criteria is more the norm than the exception. In many cases, the buyer may be positioned and experienced to improve certain business aspects that are deficient. Following this approach will also enable the buyer to quickly and efficiently eliminate those businesses which will not be a suitable fit, an endeavor that will save all parties considerable time. A quick no is far better than a slow no for everyone’s sake. Lastly, the buyer should recognize that the better the business is, the more they will be expected to pay.

After the initial information exchange the buyer should prepare a second set of questions based upon the particulars of the specific business. After receiving this information the time has been reached where the buyer knows whether their basic criteria has been met. The buyer is clear on the business valuation, the financials, and the business operations and the seller (through the broker) should be clear on how the candidate will be financing the transaction.

A teleconference should be arranged by the business broker to fill in any gaps of information and to allow specific business questions to be asked by the buyer and answered directly by the seller. Should this interaction satisfy the requirements of all parties a personal meeting and site visit is often arranged. During this meeting the buyer, seller, and broker can discuss the framework for a transaction that will satisfy the needs of each party. Only serious contenders should be involved at this point. Now is not the time to waste anyone’s time as a tire-kicker if the goal is not to proceed. Buyers should be clear that regardless of signing the NDA, data such as names of specific clients will not be divulged, not just at this point, but until the transaction closes.

  1. LETTER OF INTENT – TERMS SHEET

A Letter of Intent (LOI) and Terms Sheet are typically non-binding documents which are used for one fundamental purpose… to determine if there is a meeting of the minds between the buyer and seller on the price and terms of the sale. The LOI will outline the strategic points of the agreement. Investing time at this stage and preparing a more detailed document will avoid misunderstandings and prevent key terms from being renegotiated later. Some of the broad points that should be addressed include:

  1. Who is buying the business?
  2. What is being acquired (Assets, Stock)
  3. Transaction price and how that money is being paid
  4. Loan commitment letter date.
  5. Proposed closing date.
  6. Is there a consulting agreement and if so, what are the terms?
  7. What are the contingencies for the transaction to close?
  1. LOAN COMMITMENT LETTER

With an executed (signed) LOI in hand the buyer will now need to obtain a ‘Loan Commitment Letter’ from the lender. A loan commitment letter is produced by the bank and will confirm that the buyer is approved for financing to acquire the business. The Loan Commitment Letter is generated after a thorough review of both the buyer’s data as well as the target business’ data.

  1. DUE DILIGENCE

Most business acquisition transactions will require bank funding. The bank will have a proven, structured, and very detailed due diligence process and it is this methodology that the buyer should rely upon when acquiring a business. Why attempt to recreate the wheel? The bank works solely on behalf of the buyer and their fundamental interest is in ensuring that the buyer is acquiring a business that has the required financial framework for the new owner to be successful and positioned to repay the principal and interest on the acquisition loan. The bank will provide a DD checklist that covers a wide variety of documents, including but not limited to the following areas:

  1. Financial Statements & Tax Returns
  2. Asset & Inventory List
  3. AP & AR
  4. Corporate Books & Records
  5. Contingent Liabilities
  6. Sales & Marketing Materials
  7. Employee Agreements & Benefit Plans
  8. Equipment, Vehicle, & Property Leases
  9. Customer and Supplier Contracts or other Agreements
  10. Insurance Policies
  1. PURCHASE CONTRACT

The business for sale contract aka Definitive Purchase Agreement (DPA) is typically drafted by the Buyer’s ‘Transaction Attorney’ after the LOI is in place. If the proper care was taken in developing the LOI, the DPA should be a much easier document to produce. In circumstances where the major deal components were not properly negotiated or addressed in the LOI, the DPA becomes much for complicated and a higher risk level is associated with the transaction closing.

Upon execution of the LOI, the DD period commences and the DPA should begin being drafted. The DPA is the binding contract covering all aspects of the transaction. The DPA will cover all assets that are connected to the purchase, including but not limited to:

  1. Assets/Stock being acquired
  2. Price, Terms, & Payment
  3. Representations & Warranties
  4. Covenants
  5. Indemnification
  6. Non-Competition Agreements
  7. Lease Assignments
  8. Landlord Consents
  9. Consulting Agreements
  10. Asset Allocation

In most transactions the DPA is executed at the closing table but this is not a requirement. In certain circumstances, the buyer and seller will elect to execute this Agreement prior to the actual close.

The DPA is the actual contract that consummates the sale of the business. It will include a number of Schedules and Exhibits detailing all of the terms of the sale. This is a custom Agreement and the level of detail, length, and companion schedules and attachments is predicated on the particular business.

During this stage the buyer should already have their new business entity established (assuming it is not a stock sale), business bank accounts created, insurance policies prepared, merchant credit card accounts (if applicable) in place, etc.