Positioning your business for sale is similar to what you would do when you start a business. Business plans can be useful for some types of traditional businesses in getting ready for sale. Consider these questions as you get ready for an exit.
Key Questions to Ask Yourself About your Business
1. What is your Product or Service? Take time to define and refine your product or service. Not all products and services have to be completely unique. Ask yourself if you can find a different angle or better approach to meet a need. Make sure you can explain to someone in one minute what it is you do.
2. Who is Your Customer? Write down who you think will buy your product or service. What need are you helping your customer solve? Why will someone buy from you rather than someone else? Test your product or service by asking others who will be honest with you what they think. (Don’t ask your mother because she loves you and will think any idea you have is a good one.) Now honestly assess the size of your potential market. How many people within your reach really can’t do without your product or service.
3. How will you Reach Your Customer? Now that you have identified your customers, how will you reach them to let them know about your product or service? Unfortunately just because you build it doesn’t mean they will come like in the movie “Field of Dreams.” Likewise, simply printing business cards, putting up a web site or forming a legal entity doesn’t guaranty you customers. By considering how to reach customers, you will be able to assess if you have an idea which will actually support a business or simply be a fun hobby.
4. Do you Have a Viable Business Model? Now that you’ve defined your product and identified your customers – before you toil away on some lengthy business plan, which no one will fully read, start with a simple outline of the economics. How much will each customer pay you and what is your cost for the product or service offered? What general expenses will you have to incur to launch your new business venture? Write down your assumptions in coming up with the numbers so a friend can look over what you prepare and give an honest opinion. If the numbers work, it may be time to form a legal entity to fit your needs.
5. What Type of Legal Entity do You Use? Determining the best legal structure for your new business and which state to form your entity in requires you consider items such as if your business will be local or national, have more than a few owners, have employee owners or require outside capital among others. Each type of legal entity LLC’s, corporations, or s-corporations has pros and cons. Before you jump into a business entity, we need to discuss the options available.
6. What Business Documents do You Need? Documents and agreement are a necessity part of business. You should have a Founders Agreement defining what happens if one of the founders no longer helps with the business. You should also have non disclosure and non compete agreements to protect your concept from employees or consultants. Before you sign leases, vendor agreements, licenses and other legally-binding documents, have them reviewed by a business attorney. Customer agreements are also a necessity when providing certain types of services.
7. How Much Money do you Need and Where Will You Get it? How much capitol is it going to take to launch your business? Can you last while you wait for the cash register to ring enough times to pay your bills? If you need outside capital from family, friends or others you will be selling a “security” and must comply with securities laws. DON’T DO THIS ON YOUR OWN. Raising money is a serious undertaking and you don’t want to get yourself into trouble. We can help you with SBA Loans, Private Offerings and Venture Capital transactions.
8. How do You Launch Your Marketing Plan? You really need a website and basic marketing materials explaining your product or service as soon as possible. Basic websites are much cheaper and easier to establish than you may think and are available through various sources. If you need help we can direct you to an option that will meet your needs. Branding is also important for many businesses, particularly if you sell products, we have resources to help. We can research and file trademarks and trade-names when the time is right for your business. How will you create buzz? Unless you are an experienced marketer, you should seriously consider using your limited cash to get help for your launch. Customers need to know your business exists and why they should buy for the cash register to ring.
10. How Can You Capitalize on Your Success? An exit strategy is very important. If your business becomes a huge success (of course it will!), plan and structure to sell it for a profit. Operate your business from day one with the mindset that you could potentially sell it later. Document everything! Keep good corporate records and make sure your agreements are sound.
These 10 things to consider will help you get started but the most important thing is to have faith in yourself. With all of the resources in Utah available to you, you can make the successful leap into entrepreneurship and starting a business in Utah.