Owning a small business is often a family affair, where children grow up working in the family business and sometimes take over the reins when mom and dad decide to retire.

While this idyllic business model might seem smart and straightforward, some aspects of your children’s role in your business can be detrimental to the financial return you get on that business if you ever decide to sell.

Here are three things to consider when you think about your kids and the future of your business:

Making Your Kids Work For Free

Having your children as staff members who only earn tips might save you on your payroll today, but it can dramatically affect the value of your business. Any potential payroll for any underpaid or unpaid staff will need to be adjusted and will affect the amount a buyer is willing to offer. This also goes for family business situations where family members earn way more than fair market value for the job they do. The solution? Pay family members a fair market wage for the work that they do today so you can keep future buyers from taking that amount off the top.

Only Trusting Your Kids To Do The Job Right

It can be difficult to find good employees, so some small business owners make their children responsible for almost everything. Leaning so heavily on your children can make your life easier today, but if your children have no intention of taking over the business when you retire their massive role in the business can cause major issues with a new owner.  If you sell, your kids probably won’t continue on as employees because their loyalty is to you, not to the business itself. This will leave a massive void in the business that a potential buyer will see as a massive issue. How can you solve this problem? Keeping your entire staff, or at least some key players, cross-trained in everything that makes the business run will help with the transition to a new owner.

Using Your Children As Your Only Retirement Plan

More often than they should, family businesses that get handed down to children falter or fail completely. Why? The drive and passion you have for your business is yours alone. As we said before, in many cases children are loyal to their parents, not to the business itself. If your kids don’t want your business but do want to continue the entrepreneurial legacy of your family, a good path can be to sell your business and then use that money to invest in a business that your kids are actually passionate about.

Do you own a family business where one (or all three) of these considerations might become an issue down the road? Do you have questions about how payroll adjustments are calculated in negotiations? Protect the future return on your business investment and contact us today.

Michael Monnot

941.518.7138
Mike@infinitybusinessbrokers.com
12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

https://infinitybusinessbrokers.com

No Comments »

If you are considering selling your business, you need to do everything you can to make sure you are putting your business in the best light. Fix broken equipment, put your financial records in order, revamp your web presence, expand your marketing – it’s a long list. A first impression with potential buyers can make or break a deal, so here’s an addition to the list you may not have considered:

You need to keep your political opinions to yourself.

It can be very tempting in this highly charged and politically divisive climate to wear your political views on your sleeve, but if you own a business and are considering selling any time in the near future – you just can’t. 

Wait, don’t business leaders take a political stand all the time? Why can’t I?

Sure, some big companies take a political stance on issues they consider important (think Starbucks and hiring refugees, for example), but what these companies have that you don’t is an enormous customer base and media exposure enough to bring on new patrons who believe in their political ideology.

As a small business you can’t afford to potentially alienate half of your client base or to potentially offend half of the buyers who come in the door. Even if a buyer agrees with your political opinions, how does putting your opinions ahead of the best interest of the business look to someone who is about to write you a very big check? If you’ve been willing to drive off half of your revenue, what other risks have you taken that could potentially affect the next owner and their ability to remain profitable?

Keep personal political opinions to yourself and only share them with your non-business circle. If you share something political on social media, make sure it cannot be accessed by anyone who is a potential client or customer. Keep political statements off of your billboards, out of your ads and off your website. Lastly, don’t bring up your political affiliation or political beliefs in meetings with potential buyers. 

The welfare of your business should be your first priority, no matter how angry politics makes you. Put your neutral business-self in front and leave the politics at home.

Do you have questions about what buyers consider when they look at potential businesses to buy? Feel free to leave any questions or comments here and we would be happy to help.

Michael Monnot

941.518.7138
Mike@infinitybusinessbrokers.com
12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

https://infinitybusinessbrokers.com

No Comments »

Anyone who owns a business wants to make more money than they already do, but adding to your bottom line becomes crucial when you are considering putting your business on the market – now or in the future. A growing business will always be more appealing to a buyer than a business that isn’t, and surprisingly simple changes can help boost your numbers in this critical time.

It might seem obvious that one of the easiest ways you can boost your numbers is by cutting costs, but some costs happen so routinely that they may not even occur to you as an owner. For instance, what do you pay for your merchant services? These subscription-type services are something your business needs, but if you take a closer look you might find you are paying far too much. Services like these often contain hidden and unnecessary fees – and if you signed a contract for service you could be hit with a hefty cancellation fee if you find something better and want to switch. Do a bit of research to see if all of your recurring expenses are giving you the most for your money.

A second surprising way you can improve your bottom line is by keeping your inventory in check. How much inventory do you have on hand? What inventory control mechanisms do you have in place? Many small businesses don’t think they need inventory management, they just order new inventory when something runs low. Neglecting your inventory can have disastrous effects on your bottom line, however, because excess inventory eats up your cash. Excess inventory, especially inventory that probably won’t sell, can even decrease the amount of money you are able to get for your business. Keeping proper tabs on what you’re buying will keep you from ending up in a situation where you are sitting on a pile of inventory that won’t ever sell – and business buyers won’t want.

Cutting costs by minimizing unnecessary expenses and streamlining your inventory process can all add value to your business in the critical time before you sell. Even if selling is on the distant horizon, these types of changes will at least help your bottom line – so why not?

Have you thought about selling in the near future and have questions about the process? Would you like to know more about boosting your bottom line in the run up to a business sale? Contact us today and we would be happy to help.

Michael Monnot

941.518.7138
Mike@infinitybusinessbrokers.com
12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

https://infinitybusinessbrokers.com

No Comments »

When you are in the thick of selling your business, you will be answering buyer questions, broker questions, attorney questions, accountant questions…the list goes on. It is also important that you ask a few questions of your own, especially of the person who may buy your business.

What kinds of things should a seller ask a buyer?

The person buying your business will be taking over for you and hopefully continuing all of the hard work you’ve put in during your time as owner. It is important to find out a few things about this new person, especially if you are going to be offering seller financing. You will need to be able to trust that this buyer has what it takes to keep the business open long enough to pay you back. Here are a few of the questions a seller should ask any potential buyer:

Have you ever owned a business before? If yes, then what happened to that business? This question will help to establish that this is a person who knows the kind of commitment of their time and energy business ownership requires. If the buyer has never owned a business before, don’t be tempted to write them off. Many people have the drive necessary to own their own business. Remember that at some point you were a rookie business owner too. 

Do you have any experience in this industry? Why do you want to own a business in this industry? It is always ideal, although not absolutely necessary, to buy a business that is within your knowledge base because it allows you to start with experience under your belt instead of at the ground floor. This question will help you determine from the get-go what kind of training and consultation periods are going to be required for this buyer.

How do you plan to finance this business? Would you require seller financing for this business? Are you a cash buyer? These questions should have already been asked and answered by the business brokers involved long before your first meeting with a buyer, but it is always good to get an answer straight from the source, especially because circumstances may have changed since the question was last asked.

As you move through the process of selling your business, just remember that you have the right to ask questions too.

Are you a business seller who is curious about the kinds of questions a seller should be asking? Do you have questions about what kinds of answers you should be looking for? Please leave us a comment or question here, and we will be happy to assist you.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

http://www.InfinityBusinessBrokers.com

No Comments »

If you are a business seller, get ready for a low-ball offer.

It is more than likely that you will get at least one offer that you consider far too low. The key to turning a low-ball offer into a successful sale? Attitude.

It can feel pretty insulting when a complete stranger takes a look at the the business where you’ve invested you blood, sweat and tears and comes back with what you would consider a ridiculously low offer.

Business is an impersonal game, and when you sell your business you will need to take your emotions out of the game if you want to be successful.

Don’t look at a low-ball offer as an insult, look at it as a starting point. The listing price of your business should never be the very minimum that you are willing to take, it too is a starting point for buyers.

The business transaction process is called a process for a reason. There will be a lot of back and forth between the parties involved over everything from the closing date to the bottom line. If you go into the process with the goal of getting to the closing table, you will be far more successful than if you go in with the attitude that everything must go your way. Also realize that not all buyers are going to think that coming in too low would offend a seller, so keep a good-faith attitude throughout the process about the other side.

Once the initial offer is in play, you can begin the process of negotiating for a price that is acceptable for both parties. This is a great time to be using the services of a business broker because they can do the impersonal negotiating for you.

During these initial negotiations you will be able to tell pretty quickly if what you have is a serious buyer who is truly motivated to buy your business. If they are a serious buyer, they will be inclined to back up their offer with the reasoning they used to arrive at that price, and will be willing to meet you somewhere in the middle. If they aren’t, then you can move on.

Again, it is critically important that you treat all offers, at least initially, as serious offers and that you deal with all parts of the business selling process without getting your emotions involved. Keep you eye on the goal of getting to that closing table and you will have a much more successful transaction.

Are you a business seller who keeps getting low-ball offers? Are you having a hard time staying objective? Please feel free to leave us a comment or question here, and we will be happy to help you get to the closing table successfully.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com
12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

http://www.InfinityBusinessBrokers.com

No Comments »