The Importance of Reliable Financial Statements When Selling Your Business

Many small business owners underestimate the importance of having reliable financial statements on hand when the time comes to sell a business. This article will explore some of the main reasons why you should have several years of accountant-prepared financial statements when you go to sell a business.

Valuing a Business
One of the first steps in selling a business is coming up with a selling price or a business valuation. In order to do so, a business broker or business valuator needs to have a complete financial picture of the business from which to conduct an analysis and form an opinion. Too often, business buyers insist that there is unclaimed “cash” in the business. An ethical business broker or valuator will not take this into account in their valuation as they themselves cannot validate this money to a prospective investor.

Presenting the business to buyers and due diligence
A qualified business buyer will most certainly ask to review the financial statements of the company before consummating a transaction. In fact, in the province of Ontario it is law that a buyer must be given financial statements and a detailed asset list prior to the sale of a business. Once presented with the numbers, a buyer will usually take this information to their accountant for independent validation. An accountant will certainly not advise their client to proceed with a deal unless the books check out. In other words, business buyers need a good set of financials in order to give a green-light to a deal.

Getting a bank to approve a loan for a business acquisition
The sale of a business really involves three different parties to the transaction – the buyer, the seller and the financial institution that will be financing the purchase. Banks in Canada are especially conservative and will insist on valid financial information as well as relevant tax returns in order to pass their credit process. Most banks in Canada will require recent accountant-prepared financials (less than 6 months old ideally) and will absolutely not consider “under the table” cash sales claimed by the owner. The harsh reality is that even if a buyer and a seller want to proceed with a deal, it could all be a moot point if the bank is not in on the deal too.

Revenue that is claimed increases the valuation of the business
Many business owners falsely believe that by pocketing cash sales that they will be saving money in the long run. The truth is, not claiming cash revenue may save in the income taxes payable on that revenue but it is highly illegal and probably not worth it from a financial perspective too. Consider an example where a business owner does not put through $1,000 in revenue. The business owner may have saved about $200 in taxes payable by doing this. However, from a valuation perspective if the business has a 3x earnings multiple then the owner just shaved off about $3,000 in overall business value from their company by not recording the sales.

The overall point is that if you are a business owner make a point to have a professional accountant prepare your business financial statements every year. Keep all of your personal expenses distinct from your business too as it makes the process of selling your business so much easier. The market to sell a small business is already difficult enough without the added burden of not having clean books to rely on.

Business Technology Career Training Schools

In business, the use of technology is becoming prominent. Working through a training program can teach students how to understand business technology. Several colleges offer career training to students by preparing them for the work needed within a business. Two main options are available to students and these include completing a certificate or associate’s degree program. Students can learn a number of things prior to enrollment.

1. The goal of education is to learn how to become an administrative assistant or office manager. The skills learned integrate business knowledge with computer technology and training in these areas fosters the correct level of understanding to work in any clerical or supervisory role. The technology of a business includes all computer programs used to keep track of business transactions and communications. Working with Word and desktop publishing programs are all programs covered in the technology side of this degree. Many colleges offer basic business courses as well.

2. When training inside a certificate program students should expect to be immersed in studying how to effectively work with business technology. Colleges create this environment by providing courses in business math, database management, and staff management. Essentially, students are learning how to work as a business technology manager. The skills acquired include being proficient in keyboarding, accounting, and managing. Students can expect to learn how to use computer systems to accomplish everyday tasks needed to help keep a business running smoothly. Continuing education at the associate’s degree level is where most students begin their education.

3. A two-year associate’s degree trains students to enter the competitive field and be successful. With the knowledge gained through specific courses students are able to work inside a business setting and contribute to a businesses operation. Business information systems, business principles, spreadsheets, data management systems, and business communications are all courses that provide the needed career training and experience to enter a career. Students learn what it takes to provide these services to a business. The work done contributes to business information that needs to be typed, saved, and distributed accordingly.

4. The workplace provides a place for trained students to observe and learn more about how a business works. The field is estimated to grow considerably. This is due to the continued need that businesses have for qualified individuals. Trained students are able help a business reach its highest level of potential and workflow making their education in demand. Depending on the level of education students can obtain careers working for a business as an office manager or assistant. The average yearly salary is approximately $35,000. Student’s that find the work of a business intriguing and desire to move up in the industry can find training in management technology. This closely related field prepares students to become managers of an office by operating business technology like computers, spreadsheets, and bookkeeping programs. The added responsibility is gained through the management side of career training.

Accredited training schools give students all of the skills needed to enter the field ready for work. Accreditation is provided by agencies like the Association to Advance Collegiate Schools of Business (www.aacsb.edu) to schools and colleges that offer a quality education. Beginning training is the first step to earning a college education. Complete the first step by finding a program in business technology.

DISCLAIMER: Above is a GENERIC OUTLINE and may or may not depict precise methods, courses and/or focuses related to ANY ONE specific school(s) that may or may not be advertised at PETAP.org.

Copyright 2010 – All rights reserved by PETAP.org.

Interior Design Business Plan

One of the most exciting businesses to be in today, interior designing is a fast growing business with a huge potential as more people are buying newer homes or remodeling the existing ones. According to Home magazine around 46% Americans plan to remodel their existing living spaces today. Like any other business,the interior design business too needs the drawing up of an interior design business plan before beginning operations.

The benefits of making an interior design business plan are;

1.It gives you a framework within which to operate your business
2.The plan outlines the main action points to be done to set your business in motion.
3.The drafting of the plan gives you a thorough idea about all the facets of the business and you get an insiders view of your business.
4.The plan outlines your mission, company profile, target market and products and services to be offered thus giving you a broad framework for your business.
5.The plan will also give you a idea of the expenses that you will need to incur to start your business and thus greatly reducing the risk of overspending and unproductive expenditure.
6.The plan is also the basis on which you can approach banks and investors for funds for your project.

The key points that are to be included in an interior design business plan are; ( This is an indicative list and actuals may vary for different individuals)

1. The business plan should begin with an executive summary of the company which is actually a short summary of your entire business plan. This is normally drafted once you are done with preparing the entire plan.
1.The plan should include a list of the objectives of the business in terms of what it aims to achieve in revenue and market size and how it aims to do so.
2. It should include a mission statement which will highlight the reason for operating the firm and how they plan to achieve their objectives.
3. The interior design business plan should also include a company summary which will contain a brief note about the company along with the name and address of the owner of the business. apart from this it will also contain the address of the registered office of the firm along with the locations and addresses of branch offices if any.
4. Organizational layout of the company.
5.The interior designing business plan will also contain details about the all products and services being offered to the clients.
6.It should contain a market analysis survey based on geographical area and demographics (specific preferences and tastes) which will help it to understand its potential clients better and design their products and services to suit their clients needs.
7.The plan should also contain a report about the future potential of the market in terms of the growth expected (to help you analyze the scope of the market). This will help you to select a niche which has scope for growth and has a low entry barrier.
8.It should also include details about the target market (in terms of the geographical area, segment and the size of the market) that you have chosen to operate in and a list of the services and products that you would be providing to your target market.
9. A Competition analysis report can be included to give you a picture about your competitors (their strengths and shortcomings). This can be very useful to you to decide the segment you want to work in by analysing the level of competition in each and can also help you to build up on the weaknesses of your competition and to learn from their strengths.
10. A SWOT analysis ( strengths,weakness,opportunities and threats) of yourself to help understand your strengths and weaknesses and to analyse threats and see if they could be converted to opportunities.
11. The report should contain a list and preferably quotes from different vendors and suppliers in the area to help you zero in on the vendors that you wish to work with.
12.Marketing strategy to be undertaken by the business to penetrate the market.
13.Personnel and human resource policies to be followed.
14.Financial projections and estimations.
15.Pricing strategies( includes the credit terms for customers and also the rules to make tenders to participate in bids)
16.Future growth plans for the interior design business.
17.A section containing details of why you think that the growth assumptions made by you are realistic.

Make a note here that you should try and incorporate as much data and figures in your plan that you can manage to collect. Data pertaining to market size,market trends and even competition will give you the correct picture of the business you are about to begin and will help you formulate a realistic interior design business plan.

After collecting all this data preparing the plan you will begin to see a outline for your business and now you can begin to execute your plan on the ground. You can begin by following the plan in the listed order and begin to undertake the activities that you have listed in the interior design business plan.