No Founder Is Bigger Than The Biz He Runs!

A well-written article in ET today, many inside nuggets of the dealings at JET Airways, many lessons for family run/controlled businesses. Even if there is a competent team but without any significant decision making power, it is a team like the Lion in the cage. 

This is the company I built from scratch, I have shed blood and sweat for this company, how can I give control of this to someone else? 

Shall I exit? 

He talks to them all, but finally listens only to himself. He refuses to relent or cede control.

The only suitor with a comprehensive offer walked off never to return. 

Above are some of the quotes and findings while speaking to different stakeholders with the knowledge of JET Airways. Click the link below to read this insightful article 

https://economictimes.indiatimes.com/industry/transportation/airlines-/-aviation/jet-airways-naresh-goyals-folly-how-to-crash-a-business/articleshow/68930916.cms

It’s not surprising that many small business owners expect their children to continue running and expanding their business. After all, the founders of a business have dedicated many years to build it and continue running it. By the time they are ready to retire and let someone else manage the operation, the business is intertwined with many of the family expectations and traditions. IndiaBizForSale transaction advisory team comes across many such promoter driven businesses which are not suited for a profitable exit or investment in the company; the second line of the management is almost not there. Our team strive hard to share the best practices and corrective actions, ultimately the management team has to plan and execute these. The newer generation in the business is generally bit more aligned with this approach.

The new age business life cycle is the progression of a business and it phases over time, and is most commonly divided into stages: Idea, Startup, Growth, maturity, and decline/or repeat. The business life cycle of most businesses is very different (much shorter) than businesses launched in the past. 

You can read more about the life cycle of new age businesses at this link https://www.citigroup.com/citi/citizen/community/data/guide10_eng.pdf published by Citibank. 

“Now what?” you may ask. Whatever path you choose, make it a point to share your experiences and encourage other small business owners in their endeavors. Ask anyone who has ever started a small business — from that point on, his or her life was never quite the same. They look a little closer when they go to a new restaurant, see a new ad, or hear about a new product. They are more alert to ingenuity, customer service, value, product quality, and performance. Most likely, you will be too. And, best of all, you will be able to share your experiences with others. Encourage, teach, support and advise them to learn all they can about small business. Your knowledge can be their springboard. Share it openly and often. Our economy depends on entrepreneurs and is counting on you to help expand the growing tradition of small business opportunities. Excerpts from Citibank guide. 

Re: Jet Airways, we wish all the best to JET Airways team (22,000+ individuals) to find the SILVER Lining very soon amongst these dense clouds of uncertainty.

 

5 critical steps to scale up a Retail Franchise Brand

CNBC covered an enterprising journey and critically successful steps taken by Hearty Mart by Nadeem Jafri, Ahmedabad.  The article is beautifully written giving insightful tips on how to scale retail franchise network.

Step 1: Target Existing Market First– The current market of operations is the best place to look for growth ideas.

Step 2: Integrate Ideas- Devise an effective strategy to tap the market, forward-backward integration, vertical-horizontal growth, same customer-new customers and more.

Step 3: Get The Funding Right- Capital infusion without breaking the bank is need of an hour, for a right business there are many who want to invest and join.

Step 4: Define Roles And Control- Put in place a proper control system that monitors the working and behaviour of different stakeholders.

Step 5: Create A Suitable Legal Contract- legal contract is essential to safeguard business operations and IPR, defining clear role, responsibilities and financial implications.

Growth is achieved only when everyone in the system works in tandem to reach a common goal. James Cash Penney has wonderfully conveyed this thought: “Growth is never by mere chance; it is the result of forces working together.”

Read More here: https://www.cnbctv18.com/retail/5-critical-steps-to-scale-up-a-retail-brand-2750861.htm

HeartyMart

Buy a Small Business – Make a Big Investment

“Do Something Today That Your Future Self Will Thank You For”

Are you looking for new and exciting investment opportunities for your money? You are not alone. Investors all over the world today are on the lookout for something more engaging and entrepreneurial than traditional investment options like stock, bond, shares, deposits and mutual funds?

Did you know? Putting money in a business is the new age mantra to making your money work hard while experiencing a deeper and more fulfilling engagement in your investment. We have worked closely with thousands of business owners, investors and business buyers over the last 5 years, and in this article, we share with you the various ways in which you can benefit by investing in a small business or buying one.

  • Multiplier Effect – Invest in the equity of a small business to get attractive capital gain. What does this mean? Essentially, an investment made for capital gain does not pay out a steady stream of income. Instead, it waits for the value of the business to multiply so that the value of the investment made by the investor also multiplies proportionally. This implies a longer gestation period, but also a much larger return potential. For example, you can invest in a small business whose value will potentially double or even triple in a few years. When this happens, your investment also doubles!
  • Periodic Returns – If you are interested in immediate, periodic payments instead, go for debt investment in a small business. A debt investment is like a loan, but an investment all the same. A predefined interest rate is agreed upon between the business owner and the investor, and annualized pay-out streams of repayment are disbursed periodically. The upside? You do not have to wait for the business to start minting good money, and a debt investor usually has preference above all other investors! This post can help you decide if you should buy a business or invest in one.
  • Diversified Portfolio – As Warren Buffet once said, when it comes to investment, “one should never put all one’s eggs in one basket.” Instead of only sticking to the conventional investment options, bring a fresh flavor to your portfolio by investing in a high-growth small business. Let your money work hard for you as you reap the benefits of a diversified investment basket.
  • Network Effect – Not all returns are tangible. Apart from the direct monetary rewards of investing in a small business, you can also grow your professional network through your interaction business promoters, consultants, deal professionals and co-investors in the business. Unlike other investments which tend to be passive, investment in a small business is a high-involvement one that also makes your journey exciting and the returns manifold. Don’t miss this interesting post that tells you why business partnerships matter.

At IndiaBizForSale.com, we provide first-time investors with thorough support and handholding and also help you connect with professionals to help you with the transaction and risk-management. We have thousands of businesses on our platform which can be filtered by industry, location, asking price, credibility and so on.

Pursuing Ownership in a Small Business Towards the End of the Financial Year

If you are looking to dive into entrepreneurship and run your own business, you have two choices before you – one, to start the business from scratch – which is the more traditional approach, and two, to buy an existing business – which is the new age mantra for starting a business quickly and easily.

Did you know? Buying an existing business can lead to a better visibility of immediate cash flow, proven financial history which makes it easier to secure loan and investment, established network of customers and suppliers, well-defined market for products and/or services, and an experienced team to rely on.

As a prospective buyer, you may believe that all months of the year are equally important when buying a business, but the truth is that some months of the year are more favorable than others. The last couple of months in a financial year are often believed to be the most favorable months for buying a business.

Let us tell you why?

  1. Visibility of Last Year’s Performance – The potential buyer gets a very good idea about annual sales, operating profit and net profit of the small business being sold. More than three quarters of performance available makes it easy to extrapolate annual financial performance. This also makes it easier to perform due diligence of assets, liabilities and other financial accounts.
  2. Cashflow Overview – Potential buyer has reasonably a good idea about the surplus cash flow that his existing business or profession is likely to generate during the year. Payments related to buying a business can synchronize the timings of cash flow generation and utilization.
  3. Tax Benefits – There are possible tax saving opportunities if a loss-making business is acquired and merged with a profitable business. It becomes easy to quantify possible reduction in tax liability if the loss-making business is acquired towards the end of the financial year.
  4. Motivation of Business Sellers – Business sellers are likely to be more motivated to make a transaction around this time of the year and make a fresh start in the new financial year.

As we draw the curtains on Financial Year 2017-18, it is an excellent opportunity to close a business transaction (Mergers & Acquisitions, Business Exit, Raise funds, Investment Opportunities) that you have been waiting for or to start preparing for a great deal in the next year. Remember, it’s never too late or too early to seize a business opportunity – make the best of your time and resources!

Credit: This article is written by Prof. Mayank Patel, he is the valuation and financial planning expert at team indiabizforsale.com’s advisory service arm. He is a professor at EDI, Gandhinagar. He is also a qualified investment advisor. 
B. E. (Electrical), M.B.A.(Finance), PGD in Treasury & Foreign Exchange Management, CFA(USA).