Are You Buying A Business?

Craig Weston Inspired Director

If you are contemplating buying a business, there are numerous matters to be considered.

The numbers:

• copies of financial accounts for the last 3 years 
• schedule of sales, on a monthly basis, for the last 3 years
• reasons for any large credit notes processed after 31st March
• trading terms for the business
• recent Debtors' Aged Analysis

People and Systems:

• If you are taking over employees, obtain:
• –  an organisation chart and all position statements
• –  all employment agreements
• –  a schedule of employees’ entitlements
• Is there a systems manual for the business? Is it current?

Who you deal with:

• customers' list
• suppliers' list

IP

• Details of patents, trademarks, trade secrets and intellectual property systems

What and Where:

• methodology for valuing stock
• a copy of the business' lease agreement. 

Check:

• option period
• reinstatement conditions (painting, new carpets etc)
• business uses permitted 
• can the lease be reassigned?

Other issues to be aware of:

• Never sign a contract until you have had legal and accounting advice
• Make sure you are buying the business in the appropriate entity
• Keep full records of everything that is said or given to you by the vendor or vendor's representative
• Do your own due diligence and check all the information supplied to you
• Is the location satisfactory for your business?
• If you would like a copy of our Guide to Buying a Business, please contact Craig Weston.

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Read more, download the full copy of businessforward Issue 51, click here.

Article Source: www.buyabiz.co.nz

Do I really need a Shareholders Agreement?

Lizandra Bailey at Fortune Manning

If you are thinking about becoming a shareholder in a company with others – the answer is usually yes.

Many people think that a Shareholders Agreement is not necessary because they are not likely to have any issues. Well if you use the analogy of a relationship – you may start off in love but when there are issues it can be very expensive to sort them out. In this way you can think of your shareholders agreement as your prenup.

Another reason people think a shareholders agreement is not required is because of that piece of legislation called the Companies Act 1993. Surely that provides the rules that we need? Wrong! The Companies Act 1993 only has very limited provisions which deal with what happens when things go wrong.

A shareholders agreement not only deals with what happens if there is a problem between the shareholders but it can also be helpful for other reasons:

• It can provide a process for the sale of shares by a shareholder – who can a shareholder sell too, must the shares be offered to an existing shareholder and for what value? There may also be a period during which shares cannot be sold.
• Restraints of trade – a shareholders agreement can contain provisions which prevent shareholders from competing with the company both during and after the period during which they are a shareholder.
• Minority shareholders may want to have additional rights – for instance there may be certain decisions which the company can only make if all shareholders agree.
• The shareholders agreement can contain provisions which deal with the company’s future funding requirements – what happens if personal guarantees are required from the lender, who is required to give these?
• Shareholder advances – the agreement can document these, any security that the company provides to the shareholders for the advances and the terms of repayment.
• If the company is obtaining life insurance in respect of its shareholders/directors then the agreement can contain the provisions around the requirements to have the insurance and what happens to the proceeds.
• The agreement can record the agreement of the shareholders in relation to the distribution of profits.
• The shareholders may want special provisions which apply if a third party wants to buy a shareholder’s shares – for instance, the third party can be required to purchase all of the shares in the company if the other shareholders require this (tag along rights). It can also provide that if a third party wants to purchase all
• of the shares in the company than all of the shareholders must agree to sell their shares to the third party (drag long rights).
• Other types of provisions which can be included are call options – where one shareholder has the right to buy another shareholder’s shares or put options which require a shareholder to sell their shares in certain circumstances.
• The shareholders may want to have control over who is going to be a director and the agreement can contain limitations on the rights of the shareholders to appoint and remove directors.
• If a shareholder/director plays a vital role in the operation of the business the agreement can provide what happens when that shareholder/director leaves – do they have to sell their shares? Can the other shareholders sell their shares or require the business to be sold?
• Decision making – the agreement can contain specific provisions as to who makes what decisions.

There is no one sized fits all Shareholders Agreement. A shareholders agreement must be tailored to meet the circumstances of your company. Think of your shareholders agreement as an investment – an investment which could save your shareholders money.

Contact Lizandra Bailey at Fortune Manning if you would like more information about Fortune Manning's Fixed Price Packages for Shareholders Agreements.

Article Source: BuyaBiz

Sales Person Wanted - HUNTERS ONLY (Must Not be Pushy)

Having been involved in sales and marketing within the franchise sector, some people think that franchisors are only about driving sales. To me good business is about sustainable profit. Profit and good cash flow is what we all should be managing at all times, no matter what the market is doing.

Pushy Sales Person
Yet it never ceases to amaze me how many people think that it’s rude to ask questions of a potential customer that will assist them to make a decision to purchase. “I don’t like to be a pushy sales person” people tell me. “I hate it when I go into a business to enquire about something and a sales person gets pushy with me!” I’m not talking about being annoying, I’m talking about helping a potential customer to find a solution to their problem. If we treat their queries as "just an enquiry," they will more than likely continue their enquiries until they get all their answers.... with your competition! My observation is they usually purchase from the last place they enquired with……. So if you’re the first business they enquire with,  why wouldn’t you endeavor to make sure they don't go anywhere else?  If you treat your potential customers one or two question as "just an enquiry," you are in fact making them work harder to find a solution.


Find Solutions
Why not work harder to find a solution for them, which will then in turn give you the sale.
Sales should = Profit.

After all, why do we market/advertise in the first place? Is it to drive people to our business just to tell them the price of our product/service? I see so many businesses do this. They are spending money on advertising which creates awareness, only to dismiss a potential sale as a tire kicker!

Don’t be scared of what might happen
In so called challenging times why do so many business owners tell me business is quiet? If I sit in their business for even half a day and count how may times the phone rings, or ask how many quotes/proposals they are working on I find a signicant about of $$ on the drawing board, that if it all came to fruition would cause the owner another problem… I'm talking about being under resourced with staff to be able to manage the work load.


But is that such a bad problem to have? I don’t think so!

Greg Longstaff
Business Development Consultant
Franchise Network Specialist
greg@salesmarket.co.nz
+64 9 3077860