The 3 Levels Of Building A Business

There are three stages involved in building a business. Each of these stages are very crucial for the success of the business. Understanding these stages by the entrepreneur is key.The Three Levels Of Building A BusinessLEVEL ONE: PLANNING YOUR BUSINESS AND PROVING IT’S VIABLEAt Level One, you are designing and planning your new startup. You’re gathering your initial team, raising any required startup capital, and executing your launch plan. Your focus at Level One is to plan your new business. And get immediate market feedback to learn if your business concept and model is economically viable. This is a fancy way to say you’ll be testing your product or service to see if you can sell it at a price that allows your business to be profitable.A Simple Formula To Know Which Business You Should Start.After observing thousands of entrepreneurs start businesses and seeing which ones thrived and which ones struggled, which succeeded and which failed, I’ve developed the following simple formula to help you know the business you should start.You will find your highest likelihood of success when your business falls within the overlap of these three areas:Your passions
Your talents
Your advantagesYour passions: what are you passionate about? What do you love to do? What thing do you find absorbing? Engaging? Engrossing? To build a successful business requires focusing on your business long after the blush of the initial excitement has faded. Your passion keeps you in your business and enjoying it even when you’re faced with the inevitable challenges.Your talents: what are you great at doing? What skills come easily and naturally for you? What do other people say looks easy when you do it? In what area are you consistently improving?Your advantages: what are the resources, both financial and non-financial, that you can bring to your new business venture? What life experiences have you earned and want to apply? What relationships have you built that you can tap into? What skills and proficiencies have you invested the time and money to cultivate? What financial resources can you access? What symbolic capital have you earned?The most successful startups live in the overlap of these three areas: your passions, your talents, and your advantages.Before you decide on which business to start, clearly list your passions, talents, and advantages. From there, look for a business opportunity that addresses the overlapping area of all three. More on this in a subsequent chapterThe 4 Action Steps You Must Take In Level OneAction step 1: Clarify your basic business ideaLet’s say you’ve been dreaming of your new business for months or even years and playing the “what if” game in your head. It’s time to get serious and turn your dreams into tangible, concrete ideas on paper. To clarify your core business concept, start by answering these seven questions:In two or three sentences, describe your business idea.
Who is your ideal customer? Describe that person’s characteristics in as much details as possible.
What exactly will that ideal customer buy from you? Describe your product or service including the key features and benefits that will prompt your customers to buy it.
How much will your ideal customer pay? How and when will you collect that money?
Who will be your main competitors? List the most important ones.
What will separate you from your competitors? How will you find space in your market or niche to generate sales?
What is your dream for how you will expand and grow your business? What do you imagine it will look like in three to five years?Action step 2: Conduct your market researchBefore launching your business, invest time and energy to do an intense period of market research. Study your prospective customers, your key competitors, your likely key vendors, and you business advisors. Use this chance to sharpen your thinking, gather raw data, and record the information you’ll need for your planning process. Get online and start Googling away. Phantom shop your competitors. Interview your prospective vendors. Talk with your advisors and mentors. See if you still want to move forward with your business idea. If you do, determine how you can refine it to increase your odds of success.See chapter 5 for more details.Action step 3: write your business plan “draft”A business plan is the written outline for how you’ll launch your new business. Too many business owners never take time to write one because they find it intimidating. However, you don’t need to create a perfect business plan; you just need to use it as a template. It will help you refine your thinking, organize your thoughts, identify the questions you need to ask. You don’t need to have all the answers, but you need to identify the questions you must pay attention to- immediately and over time. Your business plan will help you create a clear action plan with defined next steps, timelines, and deliverables. In addition, if you need to raise outside capital, your business plan will be essential to helping you fund your new company.Note that I suggest writing a “draft” of your business plan. This is to reinforce the concept that your business plan will always be a work in progress and you don’t have to get it perfect. It’s the process of doing the plan and updating it regularly that is useful.Remember, writing a ‘draft’ gets you to start organizing your thinking and capturing the questions you’ll need to answer as you launch and grow your business.You will learn more about writing business plans in a subsequent chapter.Action step 4: test your product or service to make sure it will sellIf your new business involves selling a product or service that customers are already buying from someone else, then you just need to know how you can attract new or existing customers to buy from you so that your business will succeed. But what if your product or service is new? Then you have to find a quick, fast, and cost-effective way to see if people actually will buy it before you go to the expense of investing time and money in large amounts. This might mean creating and selling a prototype. Or you can canvass members of your target and gauge their feedback on whether they will buy if it were available. In any case, use your best efforts to get objective feedback and test the waters on the viability of your business idea.Proving your idea is viable means determining if the market will buy your product or service from you at a price that can be profitable. What is the best guarantee of getting accurate information? Actually close a sale! You can sell a prototype and deliver later; you can sell someone else’s product or service that you buy wholesale; you can even sell the product or service and just go back the next day and refund the money, explaining you have a delay in your ability to deliver. Yes, you might lose a sale, but at least you’ll know you can actually make that sale! This confirmation is worth the world to you in Level One when you are wondering if you can sell your product or service at a profitable price for your business.So what happens if your test marketing shows you can’t get any sales? Does this mean your business won’t work? Not necessarily. It just means your business won’t fly in its current form. But before you redo your entire product or service, experiment with your sales and marketing efforts. Tweak those first. Not only are they the cheapest elements to change, but they’re the most likely reason no one is buying. Check out the chapter on sales and marketing for more strategies.If your offering still doesn’t sell after improving the way you sell and market, then re-examine the product or service itself. How should you change it to make it sell?Do you need to:Simplify the product or service?
Add more features or more depth?
Change the tune of the product’s delivery?
Tweak the way you package the product or service?
Bundle your offer with other products or services?
Consider other possibilities?The goal of Level One is to plan your new business by drafting a business plan, and then get a direct market feedback to prove that it’s viable. That is the scope of this book. The rest of the chapters shall take you deeper into the Level One action steps in detail.LEVEL TWO: THE “SELF-EMPLOYMENT” STAGE OF YOUR BUSINESSAt this level, your business works, but only if you’re there every day to make sure it’s working. At level two, you haven’t really built a business so much as you’ve created your own job. In essence, the business works as long as you the business owner are there each day to make sure it stays working. At level two, you have the control, but with that control comes long hours and the sense that all the decisions, all the risks, all the responsibilities- all of it rests on your shoulder. Everyday, you have to keep going because if you stop, it all ends. You have the control, but no real freedom.Note that this is a crucial transition stage of your business so don’t despair if you find yourself at this stage. You are just passing through.LEVEL THREE:the real target of your business- a system-reliant enterprise that profitably creates value in the market place independent of you the business owner.A Level three is one where the business no longer needs your daily participation to make it run. There are intelligent business controls in place, clear processes and procedures, and a winning management team to guide the venture. Your business’s success is independent of you. Working for your business is now a choice, not an obligation nor a requirement. You’re the owner of business that runs without needing your presence and efforts every day.Okay, there you have the RoadMap to building a highly successful business. Now let’s start the journey….

16 Secrets to Finding a Legitimate Work at Home Business The Average Person Can Do!

What are the secrets to finding a legitimate work at home business the average person can really benefit from. There are at least 16 secrets to finding a legitimate work at home business for women or men. If you’re just starting to look into the work at home world or have some experience; don’t launch into something with all your heart and effort to later be disappointed.A good checklist will help you avoid a lot of wasted time, money, energy and nightmares.This checklist will help you to make most of the crucial decisions before launching your work from home business. In fact some of these secrets you will remember for the rest of your home business or Internet business career.Money can be made on the Internet, and lots of it! In fact unlimited! When I began doing my investigating of home businesses; I was able to rub shoulders and visit the homes of home business marketers making anywhere between $20,000 a month and up to $50,000 a month. They are generally those who have become very experienced, but you can find programs that you can get into right away and make $1000 to $10,000 a month or more which can be accomplished by women or men despite education or time constraints.”Someone said, you can work for a living or you can work part time for a Fortune.”If you will study these home business secrets, you will discover the principles you will need to make a part-time fortune.1. Tangible Product That Is Needed in Today’s World. Concentrate on programs or products that are needed by most people in today’s world. The best product is one that needs to be purchased monthly! Think of a product that most people need to replace, re-use or purchase on a monthly basis. For example, toilet paper. You definitely need that every day. I often wonder how many wealthy toilet paper tycoons there are?There are many great products and services to promote in a home business. You can earn big commissions to sell them. HOWEVER, would it be better to make a $39 profit just one time, or a $10 profit over and over again indefinitely?It has been well said, that when you sell a product that will pay you only once, you are making money that is going to benefit the company more than yourself. But, if you sell a product over and over again, month after month you are making an income that is going to benefit you.Let’s use weight loss as an example since I myself promote a weight loss and health product. If you’re selling a number one weight loss product in North America and it needs to be purchased every month you only need to make one sale and reap the benefits over and over again. When you gain a customer, you have a monthly reoccurring sale for the effort of the initial sale.2. The Truth about Free Home Businesses. There is no such thing as a free business!Despite all the hogwash you read about making $1 million and never spending a dime; ladies and gentlemen, it might happen once in a million years! But don’t hold your breath!It’s always going to take some money to make money on the Internet or with a legitimate home business that you can be proud of working. The good thing is it takes a whole lot less to start a work from home job. Also, even though you can join almost any Internet program FREE; realize it only gets you in the door; and without benefits to actually make a financial profit. Normally, you get what you pay for.The Internet world is so jam packed with opportunities, if you look around you can find most of the components that you would need for successful business. But it takes some work. You have to know WHERE to look, WHAT to look for and HOW to put it together. Often times than not, the learning curve can be very involved.So whatever you do, you’re going to have to invest some money in the form of cash or time. Cash can help you shorten the time and time can help you use less cash. You will have to determine where to balance the time and money you put in.3. Do Not to Put All Your Investments in One “Boat.”The best home businesses entrepreneurs will diversify their businesses. Getting involved in a program or selling a product with multiple sources of income is what you want to have! If your business has more avenues of income, it will be more stable and you will be less likely to go under.Can you imagine if you invested all your time and effort in an Internet program and after one year it disappeared! But if you learn the proper way to diversify your investments, then you may only lose one arm of your business instead of the whole thing!Considering the condition of the economy; where would it be better to place your 10 gold nuggets?Would you put your 10 gold nuggets in one bank or would you put it in three different banks? The answer is obvious. Three banks would be the best prevention from being wiped out financially all at one time.If you were promoting the best weight loss program in America and all of a sudden the company goes down. What do you do? Make sure you diversify and also have a plan to quickly recover any loss of monthly income4. Why Multilevel Marketing?Multilevel marketing, network marketing and what we have often heard as “pyramid schemes” have given home businesses a bad rap. Really, multilevel and network marketing is a concept that happens in almost every business and social organization in existence.It’s not the system that’s wrong. It’s people who have used a perfectly legitimate business tool to use in a wrong way. It’s no different from saying that cars are a “scheme” because people are using them to transport and hide drugs as they come across the border. Does that make cars bad? Of course not.Neither is there anything wrong with multilevel marketing and network marketing. It actually is very powerful and gives a team of people the ability to not have to work as hard and be able to make more money or have more time and freedom.5. Why You Shouldn’t Sell Pink Toilet Seats!Know the difference between selling and marketing.One of the biggest mistakes many home business and Internet business owners make is not knowing the difference between selling and marketing. Most of us look for something interesting to sell, or something we like to sell and hope for the best.However, an “internet marketer” evaluates the market and determines what products are the most popular products. Their objective is to find what’s hot and what’s not.There is nothing wrong with taking into consideration what you have a passion for or a gift for marketing; however, don’t get stuck on promoting what suits your fancy. Most successful home businesses have learned to find hot products and market them as long as they remain hot.6. Know for Sure Programs Work before You Invest Your Effort.Now, that sounds like common sense; however, many new business owners concentrate on programs because it’s comfortable for them. They like them. It was the first one they learned. It’s easy to do. Easy to understand.They had enough success to make them feel good.Many small-business owners never experience much success because they got stuck with what was comfortable.However, you should be doing a particular business because it works well enough to produce the success that you desire.Also, it’s very easy to get caught up in the work from home business hype. Don’t let your emotions lead you into making a decision that was not good. There are many home business gurus that are masters at making you think you have to act Now!7. Working for Yourself but with Others.Know that you can’t do it all by yourself!Working alone is somewhat of a mirage. Sure, being your own boss is what work from home businesses are all about.Everybody wants to be their own boss. Everybody’s tired of the 9-to-5 job. But even when you’re your own boss, the home business man/woman realizes that they will have to outsource, some of their work, or do joint ventures with others, and sometimes team up with others to make their business run efficiently and successfully.8. What Do You Really Think of Your Service or Product?Make sure to build quality into your product.There are many businesses that have great marketing plans and vision but don’t necessarily have a quality product.They may even make a lot of sales but because the product isn’t as good as the marketing, there is a lot of dissatisfaction.If you are a promoter of a product that does not deliver the goods” it will have a lot of adverse effects in the short-term and long-term of your business.It is hard to be passionate and promote something that you don’t think is of good quality. That’s why there is such a high failure rate of first-time home business entrepreneurs. They really aren’t passion about what they are promoting.If say your weight loss program is the best in America and you know it’s not; it’s hard to have passion promoting it!9. Have Promoters That Have Integrity.If you are a promoter or distributor of a business which has deceptive sales practices, distributes dishonest information or is using other unethical practices; it doesn’t matter whether the company is making millionaires, the end result is not going to be good.It is not the type of company that you would want your mom to be proud of.10. Knowing the Leadership of a Company Can Tell You If It’s Standing on a Solid Foundation.If you have a product that you are selling as an affiliate; investigate the leadership’s experience, education, etc.Every consumer wants to buy a product that has quality. If it is a tangible product; the company needs enough financial stability to produce a quality product that the consumer wants to have.Secondly, a good business will have a good foundational training program for their promoters.Thirdly, a good business will have up-to-date technology which is important in today’s modern world. Especially with today’s social networking, Facebook, Twitter, cell phone apps and many of the other well-known social networking tools.A good leadership will make sure these leadership qualities are part of their organization.11. How to Keep Your People in the Business.Your home business will have a way to encourage their promoters to stay in. You need a product that compels not only the purchaser to be a promoter but also the promoter to be a purchaser.This is actually a very important secret that a good business should have, but is not necessarily required.Why?Because, if a product is really that VERSATILE, then it should not only be desired by the consumer, but even the promoter as well. If a promoter is interested in his own product, it will be that much easier to represent. There are many products with disability.Also, if the consumer is so impressed in the purchase of the product, they will also automatically become promoters as well.If you can find a product like this and it is a quality product; then you have probably FOUND A WINNER!On the practical side; if promoters are compelled or even in some businesses required to consume their own product, they become more knowledgeable of their products.When the promoters and consumers are using the product, more sales are made and everyone is benefiting because more money is being exchanged, more product is being used, and everyone is happy.This generates much more income for the promoters and the consumers are happy also because they not only have a good product but also get additional benefits.12. Real FreedomDoes your opportunity provides the average promoter an income that gives them the freedom they’re looking for?So many home businesses and internet businesses do not really deliver the freedom that people are looking for. We are talking about finances as well as the freedom to have time to do more than just work.If it does not provide the financial freedom and the freedom of time for the average promoter, it’s not a winner.For example; the weight loss program that I personally promote works for women who have to stay in the home and can still work while taking care of family duties. It also will work for men or women in the workforce who want to work a legitimate part time business.13. Have Products That Are Desirable for a Large Segment of the Community.Which products do you think are easier to promote; toilet paper, cups, forks & spoons, water and food or do you think it’s easier to promote purple toilets, alkaline water machine ($2000 cost), metal chopsticks, etc.Really, it’s not always about whether a product is good for you or not. It’s about whether it’s desirable by the consumer. Does the consumer want it? And is the consumer willing to pay the price? Sometimes the consumer wants it desperately, but not desperate enough to pay the price?Some businesses have an extremely good quality product but the price is so undesirable that the average consumer is not willing to purchase it.14. Rewards and Benefits.Does your company have incentives and rewards that compel the promoters to reach higher goals. The main product that I promote does such a excellent job of this, that they have given away more incentives and rewards than most companies give out in commissions.If you are promoting affiliate products in your home business that provide incentives and rewards that compel you to move more product you probably have found an exceptional company that has learned how to reward its promoters.A good quality program will have built-in reward systems that inspire promoters to reach high goals.15. Find out If the Cup and He Really Cares.Does your program genuinely care for consumers and promoters alike. If you have any hint that your company deliberately does not put care into their promoters or consumers, jump ship!It should be clearly evident in the marketing and the product that both the consumers and promoters are genuinely cared for.16. Money, Money, Money.Does your company have a compensation plan that shares profits generously..Make sure that the compensation plan is reasonably attainable. Don’t spend one year of your life thinking you’re working a legitimate home business and find out that the amount of money you want to make is not even remotely possible. Count the cost before you start.Most, if not all of these secrets are required for a good business. If you use this list as a guideline for evaluating legitimate work from home businesses, you are starting on the right track!If you would like to look at a business model that incorporates all of these qualities in one business; feel free to take a look at the resource box below.

Eleven Steps in Buying a 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.

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:

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?

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?

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?

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?

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?

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?

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.

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:

What is the price range of the business that you can afford to buy?

What is the geographic location for the business you seek to buy?

What type of business are you looking for?

Manufacturing

Wholesale/Distribution

Service

Retail

Web-based

What industry should the business be in?

Management structure (owner managed or management team in place)?

Size of business. In terms of:

Revenues

Profits/Earnings

Number of employees

Number of locations

Recurring revenue model vs. project based

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.

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.

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.

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:

Who is buying the business?

What is being acquired (Assets, Stock)

Transaction price and how that money is being paid

Loan commitment letter date.

Proposed closing date.

Is there a consulting agreement and if so, what are the terms?

What are the contingencies for the transaction to close?

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.

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:

Financial Statements & Tax Returns

Asset & Inventory List

AP & AR

Corporate Books & Records

Contingent Liabilities

Sales & Marketing Materials

Employee Agreements & Benefit Plans

Equipment, Vehicle, & Property Leases

Customer and Supplier Contracts or other Agreements

Insurance Policies

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:

Assets/Stock being acquired

Price, Terms, & Payment

Representations & Warranties

Covenants

Indemnification

Non-Competition Agreements

Lease Assignments

Landlord Consents

Consulting Agreements

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.

THE CLOSING

The closing should be the easiest part of the process. Why? Because all of the above steps have been followed diligently by both parties. For business-for-sale transactions the “closing” is simply the process by which both the buyer and seller execute (sign) all of the documents that have already been discussed and agreed to. Having the right transaction team in place from the start (transaction attorney, business broker, and lender) will make this a smooth process. Each of the advisors has their role and when done properly the closing becomes an uneventful step.

TRANSITION

The terms and conditions of the business transition will vary based upon the type and complexity of the individual business. Obviously, the specifics will have already been spelled out and agreed to in the DPA. For some businesses, a customary 4 week transition period is all that is required. For others, the Seller will assist for an extended period of time, often under an employment or consulting contract. When bank financing is involved, especially the SBA, the Seller is typically restricted to a consulting or employment contract that does not extend beyond 12 months. The transition period is the stage where the seller and new owner implement the change of ownership and how that is communicated to employees, customers, suppliers, etc.The transition of ownership represents a big change and the goal is (often) to make it as seamless as possible. To be effective, this process must be planned in advance with all stakeholders in agreement