by Jennifer Bishop Jenkins
hether you are buying an established grooming business or selling one, there are many details to address in such a process. The following is a checklist of tasks, processes and tips to consider for both buyers and sellers, though all may not apply to every situation.Buyers
Obtain your own EIN (Employer Identification Number). Make sure the new company is operating under a new EIN immediately, especially for all payroll and withholding.
Acquire a business license. You will need a business license in order to operate through the appropriate local government. Check to see what the local ordinances are and who requires it (e.g., city, county, state).
Decide what you want to retain. This could include the business name, physical design, staff, equipment, procedures, etc. Be sure to come to a written agreement about what will be left behind and what condition it will need to be in.
Do a detailed walk-through of the space. It is also helpful to take notes and photos to aid in addressing any concerns before purchase.
Schedule expert inspections. This would include electrical, plumbing, fire safety, structural engineer, etc. at the very minimum.
Open a business bank account. You will need a separate business bank account from your personal bank accounts, and do not pay personal expenses from your business account. This can cause a lot of issues when it comes to paying your taxes.
Obtain your own bookkeeper or CPA. It is advisable to hire a professional, but if you plan to keep your own books, make sure you have access to all accounts and information that you will need to complete your taxes.
Re-negotiate leases. If leasing, check with the building owner to see if they’re willing to re-negotiate, hopefully for reductions in rent. You will likely also have to budget for a security deposit.
Consider startup costs. Unless it is a straight-up turnkey exchange, there will be costs for improving the space, advertising and possibly re-branding.
Be prepared for inspection. Even if you are taking over an established business, you will likely be inspected by local regulatory authorities. Any inadequacies they find, you will be responsible for, even if caused by the previous owner.
Call your new clients. Introduce yourself and ask questions to show you care about them and their pets. Take notes in these conversations until you learn your new clientele.
Install new locks on all the doors. Even if you are moving to a whole new space, you will need new locks on all exterior doors at the minimum.
Start marketing yourself. Send out email blasts (if your new software allows it), post on social media, and if you can get the former owner to introduce you, all the better.
Sellers
Don’t overvalue your business. Don’t go with your gut—consult a professional. There are services that do these kinds of objective valuations for a living.
Cancel your LLC after the sale. Also make sure that the buyer has their own new LLC (or other legal entity) in place.
Be prepared to turn over all assets of the business. This could include equipment, client lists, signage and PR materials, furniture, etc.
Close your bank accounts. However, do not close your account until you have everything such as deposits and refunds in the business’s name cleared.
Inform staff and personnel. Discussions with both the new buyer and any current staff you have must be held individually with all personnel involved regarding their future with the new owner, if any.
Call your clients. You want the new owners to be successful, so start them off on a good note with your clients by letting them know about the transition.
Give the new owner a detailed history of the business. This includes culture, procedures, scheduling, services, methods, philosophy and style of the business as you have conducted it. The new buyer will run it as they see fit, but this will ease the transition, especially for existing clients and staff.
Owning your own business or selling your existing business is an exciting venture, but it also carries great responsibility and duties.
Both Parties
Work with a lawyer to create a Sales Agreement. What property and equipment are included in the sale? If the space is a rental, what will be the new lease arrangements or obligations? What will happen to any debts, liabilities or assets of the business in the transfer to new ownership? What will be the future of any current staff or employees?
Transfer business software and customer data. All the customer data stored on paper records and software systems will need to be transferred to the buyer with a separate, new account or to the new software system of their choosing.
Transfer social media accounts and website. This is especially important if the same name and branding are being continued under new ownership.
Transfer all utility and service contracts. This could include electric, internet, trash collection, towel services, fire safety equipment, etc.
Have a CPA prepare the financial documents. Homemade accounting will not suffice in a transaction of this importance.
Choose a date for the sale that works well with accounting. One example of a helpful date might be the end of a quarter or fiscal year, such as December 31st.
Owning your own business or selling your existing business is an exciting venture, but it also carries great responsibility and duties. Expect there to be a learning curve on both ends, but developing a good relationship with the buyer/seller and abiding by all laws and ordinances can help you build a path to financial stability and independence.
The information provided in this article is for general informational and educational purposes only and does not constitute legal advice. The author is not a lawyer. For specific legal advice, please consult a licensed attorney in your jurisdiction.