10 Accounting Mistakes That Will Cost Your Business Big Bucks

10 Accounting Mistakes That Will Cost Your Business Big Bucks

In the world of business, accounting mistakes can be costly. It could be something as small as an oversight in record keeping. Or something larger like not properly reconciling loan accounts when accounting errors occur can have a serious impact on your bottom line. As a business manager, you need to be aware of common accounting mistakes and how to avoid them.

Improper Record-keeping

Is one of the most common accounting mistakes. Without proper records, it is difficult to get an accurate picture of your financial situation. This could cause you to make decisions based on inaccurate information. To avoid this mistake, make sure you have a reliable record-keeping system in place. In return, this will enable easy tracking and updating of financial data.

Inadequate Checks and Balances

This is another common error when it comes to accounting. It’s important that all transactions are properly checked and verified before being entered into your books so that you don’t end up with incorrect or misreported figures. Make sure that all entries are double-checked by someone other than the person who initially made them and ensures that there are systems in place to catch any errors before they become too costly.

Changing a Closed Period

A closed period refers to a set time frame where no further modifications should take place within an accounting system. Allowing changes to take place during this period can lead to incorrect reporting and inaccurate financial statements, which could lead to costly errors in the future. To avoid this issue, make sure that all changes are made prior to the end of a closed period and that no further modifications are allowed until after the closed period has ended.

Skipping bank reconciliations

Bank reconciliations are essential for keeping track of cash flows and verifying that the balances in your books match those appearing in your bank statements. Without performing regular reconciliations, it can be difficult to spot discrepancies or missing payments and this could lead to costly errors down the line. So make sure to set aside time to do regular reconciliations and keep your financial statements up-to-date.

Not reconciling loan accounts

Loan accounts need to be properly reconciled on a regular basis in order to ensure accuracy and avoid discrepancies. Without doing this, it’s easy for errors to go unnoticed, leading to incorrect reports and inaccurate financial statements.

Overstating revenue

Inflating revenue numbers can lead to incorrect financial statements and inaccurate projections, which could result in costly errors down the line. It’s important to make sure all revenue numbers are accurate before entering them into your books so that you don’t overstate your income or incur penalties for incorrect reporting.

Undeposited funds on the books

Undeposited funds can be tricky to manage if they remain on the books for too long, and this could lead to both accounting errors and delays in cash flow. It’s important to ensure that all undeposited funds are moved off the books as soon as possible in order to prevent costly mistakes.

Balance sheet items on the profit and loss statement

This is another mistake that can be easily avoided. Items on the balance sheet should never appear on the profit and loss statement. As this could lead to incorrect reporting and inaccurate financial statements. Make sure you keep these two accounts separate in order to ensure accuracy and avoid costly errors.

Over-relying on automation

This is another mistake that business managers should be aware of. While automation can be a great tool for streamlining and simplifying the accounting process. It’s important to keep in mind that these systems are not infallible. Automation can lead to errors in the data and incorrect reporting if not monitored properly. So it’s important to double-check the accuracy of your financial records before entering them into your books.

Not using your accounting software properly

Accounting software can be a powerful tool for managing finances. But only if you use it correctly. Make sure you understand how to navigate the system and enter data accurately in order to avoid costly mistakes. If you’re not sure how to use the system properly, consider taking a course or hiring an accountant who can help you get the most out of your software.

In conclusion, accounting errors can be costly and time-consuming to fix. It’s important to ensure that all of your financial records are accurate in order to avoid problems down the line. By avoiding the common mistakes discussed above, you can help ensure accuracy and protect your business from potential issues associated with inaccurate data or misreported information. If you need more information, contact us today! Here at Startup Tandem, we make sure that our clients’ finances are managed correctly and without errors.

Do You Know Who Your Tax Analyst Is?

Do You Know Who Your Tax Analyst Is?

For many business owners, the tax analyst is the person who comes in at the end of the year and tells them how much money they owe (or are getting back). But there’s so much more to this important role! Tax analysts are responsible for reviewing tax liability. Also,  tax practices for a company, ensuring compliance with tax codes, and identifying opportunities for tax savings. In other words, they’re an essential part of keeping your business on the right side of the law. While saving you money. So, do you know who your tax analyst is?

The Importance of a Tax Analyst

A good tax analyst will have a thorough knowledge of federal, state and local tax laws and codes. They will use this knowledge to help prepare company tax filings, monitor compliance with tax codes, and identify opportunities for tax savings. In short, they play a vital role in ensuring that your business is operating within the bounds of the law and taking advantage of all available opportunities to save money. Also, a tax analyst can be a valuable resource when it comes to tax planning for your business. They can help you make strategic decisions about how to allocate your resources in order to minimize your tax liability and maximize your savings.

What Does a Tax Analyst Do?

A tax analyst’s specific duties will vary from company to company, but there are some commonalities. Typically, a tax analyst will:

-Review financial statements to identify taxation opportunities and risks

-Coordinate with other departments (such as accounting or legal) to ensure compliance with relevant laws

-Prepare documents for submission to regulatory authorities

-Assist with audits by providing documentation or answering questions

-Analyze changes in taxation laws and regulations to identify potential impacts on the company

-Make recommendations on strategies to minimize taxation liabilities

-Assist with the preparation of annual tax returns

-Maintain current knowledge of taxation developments through continued education or professional development activities.

All of these tasks are important in ensuring that your business is compliant with tax codes and taking advantage of all available opportunities to save money on taxes.

Choosing a Tax Analyst

When choosing a tax analyst, it’s important to select someone who has the necessary skills and knowledge to meet your needs. Ideally, you should choose someone who is:

Licensed and certified: Look for someone who is licensed by the IRS as a Certified Public Accountant (CPA) or enrolled agent. This designation ensures that they have the necessary education and experience to provide quality tax services.

-Experienced: Choose someone with extensive experience working with businesses of all sizes. They should be familiar with the ins and outs of corporate tax law and have a proven track record of helping businesses save money on their taxes.

-Knowledgeable: Look for someone who is up to date on the latest changes in tax law. This will ensure that they are able to provide you with the most accurate and helpful advice possible.

The Bottom Line

Tax analysts play a vital role in ensuring that businesses are operating within the bounds of the law and taking advantage of all available opportunities to save money. If you don’t already have a trusted tax analyst on staff, now is the time to find one. Here at Startup Tandem, we offer services of the highest quality, with CPAs and tax analysts that will exceed your expectations. Visit us today to learn more about how we can help you save money on your taxes!

We hope this article was helpful in giving you a better understanding of the role of a tax analyst and why they are so important to businesses. If you have any questions or would like to learn more about our services, please don’t hesitate to contact us. We would be happy to discuss your specific needs and see how we can help you save money on your taxes!

How to Make a Hybrid Model Work for your Business

How to Make a Hybrid Model Work for your Business

Steps to make a hybrid model work for your business

Last week we showed you how to retain employees, with methods beyond just a good compensation. This week’s topic ties into this, using what we’ve learned over the pandemic about remote vs. in-person work and what’s best for the business and employees.

In this blog, we will discuss questions to ask to make sure you choose the best model for your company.

Avoid Expensive Employee Turnover

Question 1: Can your employees be optimally productive?

While most employers found that their employees were just as productive at home, this varies by industry and employee. It’s important to note that each workplace has a different level of collaboration, and highly collaborative cultures are harder remote, though far from impossible. 

Employees have different home environments and may be more productive going into the office or at least occaisionally going to a coworking space. Know each person in order to meet their needs, so they can be their best for the company.

If you do choose remote only, you will want to check in with your employees both as a team and individually, weekly. Calls and e-mails in between will help with keeping the motivation and urgency up, and collaboration and communication flowing smoothly.

Lastly, give your employees tools to collaborate (applications like Zoom, Miro, Google docs/Microsoft Word docs in OneDrive, etc.). This will enhance teamwork, potentially even more than the in-person atmosphere did.

Question 2: What’s the cost-effective choice?

For small businesses and startups, the overhead of paying rent for office space is simply not economical. If your competitor(s) is(are) a remote organization, they already have a huge advantage over you. You could use that money toward more compensation, benefits, events, and/or coworking space memberships and still have money saved. 
Remote work is certainly here to stay. A Standford study conducted in June of 2020 found that 42 percent of employed Americans were working from home full time (Bloom, 2020). This year, the American Opportunity Survey found that 58 % of workers have the opportunity to work from home at least one day a week and 35% of workers have the option to work from home five days a week (McKinsey, 2022). This is the new norm and employees, and clients may expect at least this type of hybrid of the two – remote AND in-person.

Question 3: Does everyone want a hybrid model?

Make sure you poll your employees about their wishes if your company is implementing a big change. During the pandemic, many workers did not like the forced nature of working from home. If they have a say, they are more likely to buy into the idea, even if they don’t get their ideal work situation. When it comes to a hybrid model, there are many different work schedules to consider: week by week (one week in the office, one week remote), synchronized schedule (people share office spaces and only a few people are in the office on a given day) and choice (employees can choose between the office or remote).

Question 4: Are there times when everyone can meet?

An advantage to fully remote work is that you can bring in talent from multiple states or countries. The disadvantage is that communication can be more challenging with different time zones. There are two things to consider here: 1) making sure that employees have the tools they need to work independently on their own time and 2) embracing asynchronous communication, which is that you cannot expect your employees to respond immediately. Do make it clear what the communication expectations are, though (e.g. emails are answered within 24 hours, calls within 4 hours, etc.).

Question 5: Do you have the IT, cybersecurity, and online community tools needed to be partially or fully remote?

Give your employees tools to collaborate (applications like Zoom, Miro, Google docs/Microsoft Word docs in OneDrive, etc.). This will enhance teamwork, potentially even more than the in-person atmosphere did.

Question 6: What do you need to be compliant?

You must pay taxes to the state in which the work is performed, so this gets tricky if you have employees in many different states. For certain corporations and LLCs, you may need to apply for foreign qualification to do business in the states your employees are in.A permit could be required for each employees’ home occupation, although this mostly applies to governmental agencies. “Tax nexus” may come up if you have a tax presence os are “doing business” in another state.

This could include sales, income or other tax types. Classify your workers as independent contractors (if they and their job duties qualify) to reduce payroll taxes and other labor costs. A couple other imperatives are workers’ compensation and unemployment insurance. Cybersecurity is also a good idea in order to prove you have kept data private and secure. Since everyone has their own phones and laptops, it is important that servers are online and secure (such as Google confidential emails, Microsoft 360 and DropBox). A password keeper such as LastPass is also important to share within the company yet keep passwords complex enough to be hacker-proof.

How Can Startup Tandem HR Help?

If you ask yourself these questions, you will discover which is best for you: remote-only, in-person only, or a hybrid of the two. 
When it comes to keeping the culture fun and exciting, Startup Tandem provides human resources consulting services to help you, no matter if you choose remote-only in-person only, or a hybrid of the two. Head over to our blog to read about How to retain employees? or Avoid Expensive Employee Turnover – Startup Tandem.


Bloom, N. (2020). How working from home works out. Stanford University. Retrieved August 22, 2022, from https://siepr.stanford.edu/publications/policy-brief/how-working-home-works-out

McKinsey & Company. (2022). American Opportunity Survey, 3rd edition. McKinsey & Company. Retrieved August 22, 2022, from https://www.mckinsey.com/featured-insights/sustainable-inclusive-growth/future-of-america/american-opportunity-survey

What is an IPO?

What is an IPO?

What is an Initial Public Offering (IPO)

IPO stands for initial public offering. An IPO means that a privately held company offers its company shares for the first time to the public by listing the stock on the national exchange. This action allows companies to raise equity capital through new stock issuance.

what is an ipo

Why Do Companies Goes Public?

There are many reasons a company wants to go public; one of the main motives is to raise huge capital during the company’s growth stage. Usually, during this stage, companies require fast funds to meet the demand of the growing business.

By going public, companies have one thing in mind, which is to raise funds constantly. The expansion of a business is limitless compared to being privately held. Besides that, it also strengthens the business brands and credibility.

The Pros and Cons of IPO

Some of the key pros are:

  • The ability to raise equity capital
  •  Strengthening the brand and credibility of the company
  • Possible increase in the company valuation by taking advantage of the share trades by the public
  • Creating visibility and publicity
  • And an exit opportunity.

Every IPO brings a set of risks such as:

  • Market pressure on the share price
  • Potential loss of control in the business growth and ownership
  • The need to expose lengthy financial information to the public
  • The cost involved to go public. 

Process and Compliance of IPO 

For a private company to go public, it takes six months to a year to complete. It is a lengthy process that is required by the SEC.

  • To find a suitable investment bank: The purpose of the bank is to provide sound advice and other services like underwriting. Typically, an investment bank is chosen based on
    • The Credibility
    • Reputation
    • Quality of services,
    • Expertise in a specific industry favorable to the company
    • Type of distribution the bank does.
  • To perform due diligence and filings: The bank’s role as the underwriter is to act as a broker between the company and the public. Usually, the underwriting comes with a selected commitment level by the bank.
  • The best commitment will be the ‘firm commitment’ whereby the bank buys the whole shares from the company and sells them to the public.
  • The other type of commitment will be the ‘best efforts’ where the bank doesn’t guarantee the fund amount raised for the company but merely sell the stocks on behalf of the company. ‘All or none’ commitment requires the whole stock issuance to be sold, or the agreement will be canceled.
  • The bank will share the risk of an IPO with other banks through a ‘syndicate of underwriters. Whereby the bank will ally with different banks to sell the IPO.
  • The bank will then draft the engagement letter, letter of intent, underwriting agreement, registration, and red herring document.
  • Pricing: The bank will submit the paperwork for SEC approval. Once approved, the bank and the company will discuss the pricing of the stock. A few factors must be considered when fixing the price, including the current economic condition and the company’s goal.
  • Stabilization: Under this step, the bank will have to provide analyst recommendations followed by after-market stabilization. Then to create a market for the stocks issued.
  • Market Competition Transition: Under this final step of the IPO process, the market competition will start after 25 days of the cooling period as per the SEC’s guidelines. This means the public will transition from relying on mandates and prospectus for the stock’s information to market forces after the cooling-off period.

The required form to be completed for an IPO is the SEC’s S-1 form, which can be found on the SEC website. (https://www.sec.gov/files/forms-1.pdf). SEC will determine if a company is eligible to go public by verifying the information on the form. 

Is IPO a good Exit Strategy?

IPO is a good exit strategy if the IPOs are successful. Many startups prefer IPO, which can quickly raise huge equity capital for the necessary business expansion. Once the stock reaches the secondary market (generally after the cooling-off period whereby the public can sell their shares), the market forces begin to impact the value of the stock.

When there is high trading activity on the stocks, there is a possible increase in the price per share. This strengthens the value of the company and increases the public interest.

There are three approaches under the IPO exit strategy:

  1. Flipping: This happens when investors start liquidating or selling their shares after acquiring them. Usually, the share price is higher when it reaches the secondary market, leading to further inflated prices when the shares are in demand. The market makers, underwriters, and even the company do not encourage this approach.
  2. Long term investment: Under this tactic, investors who acquired shares at the lowest price would benefit from high profit if and when the shares are held longer, taking advantage of the rising share price in the long run. This is a typical scenario in large-cap growth stocks.
  3. Observation of the lock-in period: Usually, there will be a lock-in period for shares held by private investors. According to the SEC, private investors cannot liquidate their holdings entirely during the lock-in period (usually between three months to two years). This is to mitigate any sharp fall in the value of the stock, thus controlling the share price by moving down sharply.

How can Startup Tandem help?

IPO is the quickest and most efficient way to fund a company’s growing needs and effectively grow the business’s size. Even though the process of going public can range from six months to a year and requires adherence to complex regulations, it is worth it as the possibilities for expansion are prominent and endless. Companies who wish to use IPO as an exit strategy, especially startups, could benefit from the market forces on the valuation of the business in the long run.

Startup Tandem has licensed advisors to help you during the process. If this is an exit strategy you have been thinking of, we can help you during your assessment to determine if indeed this is the best option for your business during this economic time. Learn more on how to choose the best exit strategy here.

Steps to Retain Employees

Steps to Retain Employees

How to retain employees?

Last week we showed you how the most important step in avoiding expensive turnover is to hire the right person, including but not limited to values, personality, soft skills, diversity, and inclusion. The next step is to keep these employees with 

In this blog, we will discuss steps to make sure you retain employees as you continue to grow your business.

Steps to retain employees

Step 1: Compensation and Benefits

Dan Price, CEO of Gravity, (a credit-card-payment-processing company in Seattle), decided in 2015 to pay his employees a MINIMUM of $70,000 per employee. He justified this with social science research linking sufficient levels of income to greater well-being, combined with findings that benefits of happiness carried over from the personal to the professional sphere. Additionally, Seattle has a pretty high cost of living. He even cut his salary from $1.1 million to $70,000 a year (Ryans, A., Pahwa, A., Tao, L., Summers, T., Oh, W.-Y., and Chang, Y., 2015). 

Gravity cut retention in half. But from this case, we learned that money is not everything. Money did not drive some people at Gravity, and they even disliked the pay increase because it felt like a handout, not based on their performance. So, while it’s competitive to pay your employees well, an important consideration is to include an element of “pay for performance” in their compensation packages.

Finally, total rewards for your employees do not end at compensation. Meaningful benefits are more important than just the following compliance. Of course, as employers, there are mandatory benefits to provide your employees, such as Social Security, Medicare/Medicaid, Unemployment, Workers Compensation, and Disability. But when you ask the people what they want, it looks very different.

A Harvard Business Review study conducted in 2017 provided 2,000 American employees, ages 18 to 81, a list of 17 benefits and asked them to weigh them when deciding between a high-paying job and a lower-paying job with more perks (Jones, K. 2017). The top benefits that would tip the ladder were better health, dental, and vision insurance, followed by flexibility and improved work-life balance. The last two highest scoring benefits were more vacation time and work-from-home options.

Step 2: Culture

Last week we talked about how hiring the right person, who is aligned with your company’s culture and values, is the most important thing you can do as an employer to avoid attrition. But how do you keep them aligned? It might sound like a turn-off, but performance reviews are the answer.

Performance reviews need to be:

1) your employees evaluate their work performance and

2) include culture and values alignment in this process to reengage and refocus their energies.

Creating a culture of recognition will also keep employees on board. People want their colleagues to catch them “doing good.” Consider creating a “kudos” system – where employees can recognize each other publicly on an app like slack or even systematically through email. Verbal praise also helps employees feel appreciated.

Step 3: Training and Development

This is the most ongoing step and should never end for your employees if you want them to stay. Training and development not only give them the skills and knowledge they need for the job but also help them feel appreciated and invested in. Just like you want your employees to believe in the company, they want you to believe in them.

There’s no need to reinvent the wheel. We look to companies with a proven track record, even when working with your small business. For example, as of 2019, Southwest had a 96% retention rate, 44 consecutive years of profitability, and no layoffs in its history.

They have various training programs that start early with college internships and a Technology Direct College Hire program. Southwest Airlines University provides virtual and in-person training to not only increase skills for the job and to foster personal growth and development. “Days in the field” provides on-the-job training aimed at the future in which they can experience other departments they may want to grow into. Lastly, “leadership development” assists with individual development as well as that of the company. Instead of hiring from outside for management and c-suite positions, employees are simply promoted from within after completing this rigorous training. This is retention at its finest.

How Can Startup Tandem HR Help?

If you follow these simple steps, you can retain your employees for years to come. Although it may take some time and money to implement culture and training programs up front, the cost is minimal compared to turnover and/or implementing these programs down the road.

Startup Tandem provides human resources consulting services to help you develop and implement culture and training programs that fit your specific business needs and budget. Read more about how To avoid expensive employee turnover or How to Avoid a Wrongful Termination Claim – Startup Tandem.


Jones, K. (2017, February 15), The Most Desirable Employee Benefits. Harvard Business Review. Retrieved August 15, 2022, from https://hbr.org/2017/02/the-most-desirable-employee-benefits#:~:text=The%20next%20most%2Dvalued%20benefits,paying%20job%20with%20fewer%20benefits.

Robertson, K. (2022, June 24). Southwest Airlines Reveals 5 Culture Lessons. Human Synergistics. Retrieved August 15, 2022, from https://www.humansynergistics.com/blog/culture-university/details/culture-university/2022/06/24/southwest-airlines-reveals-5-culture-lessons

Ryans, A., Pahwa, A., Tao, L., Summers, T., Oh, W.-Y., and Chang, Y. (2015, August 12). The $70k CEO at Gravity Payments. Harvard Business Review. Retrieved August 15, 2022, from https://store.hbr.org/product/the-70k-ceo-at-gravity-payments/816010

Choose the best exit strategy for your business

Choose the best exit strategy for your business

How to choose the best exit strategy for your business?

Every entrepreneur has one target in mind when starting their business, to grow and to be profitable in the long run. Many entrepreneurs start a business to multiply its and other stakeholders’ investment. It has been more common lately to see a company go thru an IPO or acquisition as an exit strategy. This blog will discuss how to choose the best exit strategy for your business.

As discussed in our blog, starting a successful business in an inflated economy, you have the opportunity to create innovative products or services to solve a problem that arises during hardship times. As an entrepreneur, you have the power to influence and change the current ecosystem by building a great startup. So why think about an exit?

How to choose the best exit strategy

Reasons why an exit strategy is needed

Many factors can contribute to an exit:

  • The business has been running at a loss for a while now
  • Legal reasons such as massive lawsuits
  • The demise of the owner (usually sole proprietorship)
  • Merger & Acquisition looks appealing
  • IPO to multiply investors’ money

What makes an exit a bad strategy?

A lousy exit usually involves poor strategy adaption. When a business owner decides to halt the business, choosing the right exit strategy is vital. Poor strategy management may cause financial losses and even steer the business brand away from its values. Business owners can choose the suitable method based on the business needs; every element of the strategy implementation is essential for a smooth exit process and optimizing business outcomes.

Most common exit strategies

There are a few exit strategies that we will discuss here. The most common ones are:

  1. Transferring the business to another family member or a neutral person
  2. Merger and Acquisition
  3. Business liquidation
  4. Bankruptcy filing
  5. Selling the company to a partner or an interested investor
  6. IPO (Initial Public Offering)

Exit Strategy 1: Transfer the business to a family member

Why choose this exit strategy?

As a business owner if you decide to retire, one of the most common ways to exit the business is by transferring to a family member. Business owners like this exit strategy as they are able to keep the business with family and pass it on from generation to generations to come.

Factors to consider when exiting this way.

It is prevalent to inherit a business from a family member. Usually, this type of business is more mature and established in the economy. The transferee should evaluate some factors before beginning the transfer. First of all, the soundness of the acquiring party. It is crucial to ensure the new owner has the mental and financial ability to take over the business and sustain its values and profitability. It can often become a challenge for both parties to have the same business practices mindset. Both parties should try to reach a common ground where the transfer can be done smoothly while ensuring the legal aspect of the transfer has been taken care of.

Exit strategy 2: Mergers & Acquisitions (M&A)

Why choose this exit strategy?

This M&A strategy is most common among startups and business owners. It can be a preferred strategy as the owner can set their terms, continue to hold control, and influence the price of the acquisition. 

Factors to consider when exiting this way.

There are two outcomes from this type of transaction: either businesses merge and maintain equal interest and holdings, or the acquiring party becomes the major stakeholder of the merged entities. When the latter happens, the appointed CEO will be from the acquiring side, and significant changes can be made to the structure and processes of the other company. This strategy requires internal and external expertise to complete each transaction area and weigh the outcome of such activity. Some of the crucial part that will decide whether to continue with the strategy is the projected profitability, the size of the debt, and any ongoing legal issues that might fail the purpose of the M&A transaction. More on this topic soon!

Exit strategy 3: Business Liquidation

Why choose this exit strategy?

Business owners are ready to liquidate their business and move to the next venture. This may sound very appealing to a business owner if the passion for the business is lost. If the entrepreneur does not have any family members or partners to sell the business to, then liquidating the business is the preferred stategy to exit.

Factors to consider with this exit strategy.

It may sound simple and easy, but it is critical to inspect and ensure you create a proper checklist for each business area. Liquidating a business translates to permanently shutting down the business, so it is essential to ensure the business values and brands stay positive in the market and that such a decision will be profitable. Business owners often seek external services to help analyze and compile the necessary data to adapt the exit strategy successfully.

Exit Strategy 4: Bankruptcy Filing

Why choose this exit strategy?

Almost all business owner tries to avoid this type of exit. Filing for bankruptcy often relates to the inability to sustain the business profitably while the level of unpaid debt is snowballing. To avoid being sued or the possibility of losing not only business but personal assets, many owners’ resorts to this avenue. It takes a thorough process to qualify for the filing.

Factors to consider with this exit strategy.

Business owners should weigh the outcome and the consequences so that it will appear beneficial for choosing this exit strategy. We recommend seeking professional services to advise and assist in consolidating the business for filing purposes. 

Exit Strategy 5: Selling the business to a partner or investor.

Why choose this exit strategy?

The exit strategy above is pervasive, especially among startups and small businesses. For example, many small entrepreneurs create business pages on social media such as Facebook to market their products and services. In time, the pages might have gathered a large number of followers, which might pique others’ interest in buying over the page with the acquired followers. It is easy for an interested investor to market their business with an established page with more significant followers by just changing the page’s name and other details while maintaining visitors’ traffic. 

Factors to consider with this exit strategy.

Suppose business owners wish to sell their business, especially the ones with established brands. In that case, they should carefully review the circumstances and potential loss of future profit by analyzing the company’s value at the time of the sale.

Sometimes, it will include a royalty income in the sale agreement. There are many angles to be looked into before effecting any deal to achieve the best outcome. 

Exit Strategy 6: Initial Public Offering (IPO)

Why choose this exit strategy?

An Initial Public Offering (IPO) is also a desirable exit strategy for entrepreneurs and investors. This exit strategy can substantially multiply the investment of private investors and business owners, making it very desirable.

Factors to consider with this exit strategy

Many factors can affect an IPO, such as market conditions can influence how profitable this exit strategy can be. Other reasons companies go for IPO include brand strength, liquidity, company success, and improved market valuation. We will write more on this strategy next week.

How can Startup Tandem help you?

As a business owner, you should partner up with a team that can help you choose the best exit strategy for your business and support you in the process that comes with it. All of these exit strategies need finance advisory and legal support.

The advisory team at Startup Tandem is available to help you prepare your company to achieve the desired exit. Startup Tandem advisory can help you value your company by using the discounted cash flow or LBO model and provide advice on any transaction to achieve the best exit possible for you and your investors.

Startup Tandem has developed a network of businesses and individuals that come together to help startups and small businesses. Reach out if you need referrals or if you need to discuss any of these exit strategies more in depth.

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