Buying and Selling Businesses: Deal Killers

Posted in Buyers Articles, Sellers Articles

Published May 4, 2017

Whether you are in the market to buy a small business, or you are a small business owner who is looking to sell, it is important to understand the reasons that business transactions fall apart in order to avoid this issue yourself.

 

 

Business deals can be destroyed by either side, so whichever side of the fence you are on, avoid these pitfalls:

 

The Buyer’s Side

 

As a buyer, you need to be sure that you really want to buy a business. Are you really ready to take on the responsibility and work that it takes to run a small business? Do you have the support of your spouse and family? Owning a business will mean sacrifices for your family too, even if it is just in terms of the time that you would be able to spend with them.

 

Another reason that buyers have trouble getting to closing is unrealistic expectations. Do you understand how businesses are priced? Do you understand the buying process? Many new buyers go into the process believing that buying a business is a lot like buying a house, but nothing could be further from the truth. Talk to a business broker about your expectations early on in the game, as it will prepare you for the realities of a business transaction before you get there.

 

Do some research on your own to be sure you understand small business ownership and operations. You will want a good grasp on small business ownership before you get to the closing table. You do not want to be faced with a crash course your first day as a small business owner. If you have any doubt in your mind, it might be wise to resolve those doubts before you begin the business buying process.

 

The Seller’s Side

 

Many sellers put their business on the market purely out of curiosity. They want to see what the market is like, and really don’t have any legitimate reason or motivation to sell. This is a big mistake, as it alienates any good potential buyers that come your way.

 

The major issue that keeps businesses on the market forever is the price. Many business sellers have completely unrealistic expectations about the price and the market for their business. Use a business broker to alleviate this issue, as they will be able to properly evaluate your business based on the current market.

 

In the same line as price, as a seller you may need to accept seller financing as a part of any potential deal. Although it does occasionally happen, most of the time buyers do not come to closing with all the cash up front. If you are serious about selling your business, accepting seller financing will get you more potential buyers than if you refuse to do so.

 

Another major deal killer is dishonesty. As a seller, you should not try to hide the negative aspects of your business from buyers, as they will likely figure these issues out on their own during the due diligence phase. Failing to disclose that the business is in bad shape, that there is a major competitor moving in, or that you are dealing with a serious environmental issue are sure fire ways to make a deal fall apart.

 

Be sure that all owners of the business are in agreement about the sale, and check with your business broker and attorney about any legal ramifications of selling your business. You will not want any legal surprises the day before closing.

 

Keep the Deal Alive

 

Business transactions are inherently complicated, so it is important to remember some key points. First, honesty is the best policy. Second, trust the judgment of your business broker. Third, keep your expectations in the realm of reality. Lastly, be patient with the process. If all parties are serious about getting the deal done, any potential problems can ultimately be resolved.

 

Are you a business buyer who has questions about the process to find and buy a business? Are you a business owner who wants to know when the right time to sell would be? Please 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

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The Secret To Selling Your Business: The Pre-Exit Strategy

Posted in Sellers Articles

Published May 1, 2017

 

When you first became a business owner, the thought that was probably farthest from your mind was “How am I going to get out of this business?” While no one tries to have a pessimistic outlook on their livelihood, it is a reality that someday your position as the business owner is going to end.

 

How it ends and what you get out of the deal are entirely up to you.

 

There are typically four ways that business owners relinquish their position within the company. The first, and worst, is to simply lock the doors and walk away. This is never a good decision, as with proper planning all of your hard work and personal investment will not end up going to waste.

 

The second way to change ownership is to give the business to a member of the family. This can be successful, but only if that family member is ready to take over the business.

 

The third type of business transfer occurs when an owner gives or sells the business to an employee. This has benefits as an employee already knows the business, but rarely do employees have the cash to buy the business outright.

 

The fourth and most common way to transfer ownership is to sell the business on the open market. With this method a business owner typically gets a much better return than with any of the other methods.

 

There is a caveat, however. If you are suddenly faced with the need to sell your business, it needs to be in good shape.

 

The biggest secret in small business ownership is to plan your exit strategy from day one.

 

If you don’t currently have a pre-exit strategy, now is a great time to start. By preparing your business for sale today, you can be ready if the occasion should suddenly arise where you need to sell.  Some pointers to keeping your business sell-ready? Think like a buyer.

 

  1. Buyers like businesses with cash flow that will give them the ability to make a living starting day one. Consult with a business broker to find out how to make cash flow a major selling point.
  2. Buyers like businesses that are aesthetically pleasing. Keep the business in good shape by repairing and restoring what is needed on a regular basis.
  3. Buyers hate surprises. Take care of any legal issues, government issues, and financial issues as quickly as possible.

 

When the time comes to sell your business, you will be glad you planned and prepared ahead of time. It will mean a less stressful transition in the end. Use the services of your business broker to get your business pre-exit ready, even if you are not ready to sell today.

 

Are you a business owner who doesn’t have an exit strategy of any kind? Would you like to know how to get your business in pre-sale shape? 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

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Going to Market: What Business Sellers Should Know

Posted in Business Broker Why & How, Sellers Articles

Published April 19, 2017

“I’m ready to put my business on the market, how should it look?”

 

 

Is your business in the kind of shape it needs to be in order to sell? Most owners think that the business is fine as-is. This is typically not the case. If you would like to get top dollar for your business, it needs to be appealing to a potential buyer. While the aesthetics, like cleanliness and fresh paint do a lot for a first impression, the “guts” of your business are what really need to be appealing to a buyer. 

 

How do you make the “guts” of your business more appealing?

 

First, get everything in order. If your financials are a mess or are nothing more than a few boxes stuffed with papers, you will need to sit down with your business broker or business transaction accountant and get them worked out. A buyer will need to be able to understand your numbers if you want them to make a fair offer for the business.

 

Once you have an offer on the table, the examination of your numbers hasn’t ended, it has just begun. What happens after an offer is made is a process called “due diligence”. In this stage the buyer will get a chance to comb over all aspects of the business, and then they have the opportunity to decide if they would like to proceed to the closing table. If your business has any issues that are unresolved, they will most likely come to light during this time, and will drive a buyer away. Solve potential problems before a buyer finds them. This will help keep buyers from walking away.

 

Another way to make your business look like a great opportunity to potential buyers is to use the services of a business broker. There are multitudes of issues that can kill a deal, and in order to be aware of what those are, you need the help of someone who has been through the process many times before. The experience of your broker during the marketing and due diligence aspects of a business sale will be instrumental in securing the very best price and a successful closing.

 

Have any questions about how we would help get your business into “sale shape”? Have you tried to sell a business and lost a deal because of unresolved issues? Please feel free to share your experiences or questions here. We look forward to speaking with you.

 

 

 

 

Michael Monnot

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

https://infinitybusinessbrokers.com

 

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Selling Your Business: What Records Do You Need to Have Ready?

Posted in Sellers Articles

Published April 12, 2017

I’m ready to sell my business, what records will I need to provide to my business broker and to potential buyers?

 

 

Think of the records needed for a business transaction this way.  You would like a potential buyer to pay top dollar for your business, and the quality and completeness of your records will be what makes this happen.  You will have to be able to prove to the buyer that the numbers you are claiming are the real numbers.

 

You don’t have to be ready to sell tomorrow to begin getting your financial record ducks in a row. The sooner you start getting your numbers together, the better.  Do your best to keep meticulous records.  The better your records, the better a buyer will feel about paying the price you are asking for.  Keep accurate financial records and statements, receipts from a cash register, and any records that can help you to prove your income and expenses.  Current and past tax returns will also be needed, so be sure you are caught up with your taxes.

 

When you begin working with your business broker, they will want to see your numbers in order to assist you in creating an accurate evaluation of the business, and therefore a realistic asking price. Your listing price will be based on a number of factors, but a big part will be provable cash flow – because that is what buyers are after. 

 

Is it impossible to sell my business if my records are a mess?

 

No, it will just take a little more work to get the records in order.  You will not be the first (or the last) client with less than adequate business records that your business broker has come across.  Give what you have to your broker, and by working together you can get the records in shape. You may also need the services of a business transaction accountant, so ask your broker if they think you will need additional help.

 

What if I have taken cash out of my business without recording it?  How do I prove that income?

 

It can be difficult to prove unreported income, so the best advice is to start reporting all income right now. Including all of your income is crucial if you want to get the best price for your business, although some businesses do sell even without all income reported.

 

The message here is an ounce of preparation will make getting your business on the market much easier – but all is not lost if your record keeping has been sub-par.

 

Are you thinking about selling your business but are worried about the state of your records (or lack of records at all)? Do you have more questions about what business buyers will want to see? Leave any questions or comments 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

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Did She Sing? Planning Your Business Ownership Exit

Posted in Sellers Articles

Published March 30, 2017

It’s not over till…

 

 

We all know the phrase. As the owner of a small business you may not want to think about it – but you will eventually have to face the reality that your role as owner will end.

 

When facing this reality business owners typically think of a few broad categories. Will you meet an untimely end and leave the business in the hands of ill-prepared heirs? Will you lock the doors and walk away? Will you hand it over to a successor?

 

Don’t like the sound of some (or all) of those options? Here’s why they aren’t what’s best for you or your business.

 

If you own a family business, you may just think your children will take over when you decide to retire or if something happens to you. Perhaps they’ve even worked in the place since they were kids. The problem here? Have you asked them if they want your business? Are they capable of sustaining the business like you do? Do they have the same level of commitment and drive that has helped you grown the business to what it is today? Many, many family businesses fail when they get handed down to the next generation because the drive and passion does not transfer when mom or dad hands over the keys.

 

If you are thinking about liquidating your business assets and locking the doors come retirement time, you are potentially leaving an enormous amount of money on the table. An operating business is worth more than the value of the assets alone. You also need to consider your employees. If you lock the doors and walk away you will be taking away the income of your staff, income they rely on.  

 

What to do instead? Sell.

 

One of the best ways you can leave a business is by selling. Selling your business means the business gets to live on and remain a place for your employees to work. It also means you will get a financial return on your investment of time, energy and money. You can then use that return for your retirement or to invest in another venture – like a business your kids actually want.

 

We know that owning a business is life-encompassing, but you can’t let that stand in the way of planning an exit strategy. Having a plan in place, like reaching a certain age or financial milestone before selling, will greatly improve your chances for getting a big return on the investment you’ve made in your business. Don’t leave it up to the large female singer.

 

Do you own a business but don’t currently have an exit strategy in place? Would you like to know what businesses like yours have recently sold for? Please 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

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What The People Want: Why Business Sellers Need To Pay Attention To Positive Feedback Too

Posted in Sellers Articles

Published March 27, 2017

 

Positive feedback? Leave what they love alone.

 

 

When you are trying to sell your business, a good deal of your focus should be on boosting your bottom line to make the most money possible in your sale. There are a myriad of ways you can boost your numbers in that critical time between listing and selling, like cutting costs and ramping up marketing – but many small business owners overlook a simple way to utilize something every business has, customer feedback.

 

Customer feedback, including the positive feedback, is a way for your customer base to let you know how they feel about the goods and services you offer. The amount of positive feedback you receive is also a good barometer of how happy your customer base is with you. This is important because if your customer base isn’t happy, then they aren’t spending their money with you.

 

If selling your business is your ultimate goal, then paying attention to your positive feedback will be critical to the growth of your business and critical to it’s appeal to prospective buyers.

 

Why?

 

When business owners get ready to sell, they sometimes think about making changes that will appeal to prospective buyers. Changes that appeal to buyers can be a good thing, but a seller has to be careful that any changes they make don’t upset their customer base. Here’s an example of what we mean:

 

You have a small cafe that is popular with the local clientele. The decor is a bit old, but if you read the reviews of your business you find that the vast majority of your customer base regards the decor as part of your cafe’s charm. In a move to impress buyers who would be coming to your area buy a more modern cafe or restaurant, you undergo a major renovation to update your space. Buyers might like the new look, but your local customers will hate it and stop frequenting the business. This sharp hit to your bottom line, in addition to the added expense of the renovation will ultimately mean you get less for your business in the end.

 

The message here is you need to pay attention to the things your patrons like about your business, and then leave those things alone. Don’t make major changes to impress a buyer because the right buyer will understand why you’ve left the popular parts of your business untouched.

 

Making changes to keep your customers happy and coming back will add value to your business. Making changes will also show prospective buyers that you care about the growth and future of your business – just be careful that the changes you make appeal to your customers first.

 

Are you thinking about selling and are wondering what buyers will be looking for? Do you have questions about what types of changes would be appropriate? Ask us! Leave questions or comments here and we will be happy to help.

 

Ready to read What The People Want: Why Business Sellers Need To Pay Attention To Negative Feedback? Click here.

 

Michael Monnot

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

https://infinitybusinessbrokers.com

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What The People Want: Why Business Sellers Need To Pay Attention To Negative Feedback

Posted in Sellers Articles

Published March 16, 2017

Negative feedback can be positive for your business.

 

 

When you are trying to sell your business, a good deal of your focus should be on boosting your bottom line to make the most money possible in your sale. There are a myriad of ways you can boost your numbers in that critical time between listing and selling, like cutting costs and ramping up marketing – but many small business owners overlook a simple way to utilize something every business has, customer feedback.

 

Customer feedback, especially the negative feedback, is a way for your customer base to let you know how they feel about the goods and services you offer. The amount of negative feedback you receive is also a good barometer of how happy your customer base is with you, and this is important because if your customer base isn’t happy, then they aren’t spending their money with you.

 

Negative feedback can be unpleasant, and it’s much easier to ignore than it is to face, but a smart business owner will take the negative feedback they get and use that information to make positive changes within their business – especially when selling that business is the ultimate goal.

 

How should you deal with negative feedback?

 

Have more than a handful of your customers complained about the customer service skills of your staff? Maybe some staff retraining or a staffing change would keep clients you might otherwise lose coming back. Have people complained about your prices? Perhaps re-running the numbers and making a few price adjustments will better cater to your customer base – and keep them spending money.

 

A caveat here – don’t respond to negative feedback with anger. Even if the feedback is inaccurate, throwing a tantrum and blasting back will cause way more harm than good to the image of your business. Remember that anything you post online is there forever, and not only your current and future customers will be reading it. Prospective buyers will as well.  

 

Making changes to keep your customers happy and coming back will add value to your business. Making changes will also show prospective buyers that you care about the growth and future of your business. No matter how unpleasant, face the complaints head on – then use that information to boost your bottom line.

 

Are you considering selling your business and are worried that bad customer reviews might hurt your chances of selling? Do you have questions about the types of things buyers look for? Ask us! Please feel free to leave comments or questions and we would be happy to help.

 

Ready to read What The People Want: Why Business Sellers Need To Pay Attention To Positive Feedback Too? Click here.

 

 

 

Michael Monnot

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

https://infinitybusinessbrokers.com

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Make More Money When You Sell Your Business: 2 Surprising Ways To Improve Your Bottom Line

Posted in Sellers Articles

Published March 15, 2017

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. 

 

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? Please leave any questions or comments 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

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Worried About The Market? Deciding The Best Time To Sell Your Business

Posted in Sellers Articles

Published January 3, 2017

The last year has been interesting – and with the economy, markets and housing prices growing at a great clip it can be a bit reminiscent of the pre-2008 bubble. If you are a business owner who is considering selling now or in the near future, this possible pre-bubble climate could make you nervous. You never know when the next 2008 might hit, and for those entrepreneurs who weathered the 2008 storm a very big question might be: How do I decide the best time to sell, especially if the market might take another tumble?

 

 

 

First and foremost, if you are making the moves necessary to get your business on the market but it isn’t quite there yet – don’t panic. If you’re not planning on selling today but would like to in the next 5 years – don’t panic. See a trend? The market is going to do what the market is going to do. Rather than worrying about something you can’t control – focus on the things you can.

 

Be flexible.

You might have plans for when you’d like to sell your business, but the small business market rises and falls on it’s own – and it doesn’t care what those plans are. Flexible business sellers watch the trends and adjust accordingly. Are businesses in your industry a hard sell right now? Maybe waiting out the market for a bit longer is the smart move. Is your industry currently a hot sell? Maybe you need to get your business listed now while the market is in your favor. You need to be willing to go with the flow if you are going to have the most successful sale you can.

 

Don’t spend all of your cash.

You don’t need a major remodel in order to sell your business. The new owners are going to change what is important to them, and your remodeling choices will more than likely not be the same as what they choose – so don’t waste the money. The average listing is 9-12 months, so you need to keep that cash on hand – just in case the market starts to fall and your business needs that money to stay afloat.

 

Marketing, marketing, marketing.

No matter what the economy looks like, businesses that stop marketing are businesses that will end up dead. No one wants to buy a business that isn’t trying to grow and gain new customers. You should always keep retooling and tweaking your marketing strategy until the day you hand the new owner the keys. Another reason you should always have an eye on growth? If the market sours and you need to keep your business a while longer in order to maximize the amount you are able to get in a sale – you haven’t taken your foot off the gas and hurt the business you now need to create income.  

 

The message here is no matter what the market does (or doesn’t do), remain optimistic about your business and it’s future. Keep marketing and growing, save your cash and be realistic and flexible with your decisions about when to sell.

 

Are you considering selling and want to know what the market currently looks like for a business in your industry? Would you like advice about when the best time to sell might be? Please 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 »



Business Sellers – You Don’t Have The Best Business Ever

Posted in Sellers Articles

Published November 15, 2016

 

 

We all do it. We all think our kids are the smartest or the cutest. We all think we’re the best drivers on the road. An arrogantly positive view of yourself and your life are just part of human nature.

 

This arrogance becomes a big problem, however, when the time comes to sell your business. Why? Whether you realize it or not – you don’t have the best business ever.  If you really want to sell your business, you will have to consider this reality.

 

Your business is a huge part of your life. It’s what you do everyday. It’s where you put all of your blood, sweat and tears. You’ve built it and grown it to where it is today, and you likely remember every step and the purchase of every stick of furniture.

 

Selling your business means you have to take that deep emotional attachment to your business and put it aside so you can make some very rational decisions. Decisions like how much to list the business for. Like whether or not to accept a decent, but not ideal, offer from a buyer. These decisions can be really tough when your heart is still firmly attached to your business baby.

 

Step one of dealing with this part of selling your business is to realize that it’s coming and that your business is only perfect because it’s yours. Mentally preparing yourself will be crucial to maintaining your rationality during the entire selling process. Here are a few things you should consider:

 

  • Buyers are going to offer less for the business than you think it’s worth and they are going to find things about your business they consider problems.
  • You aren’t going to get back every penny you’ve ever invested.
  • You are going to have to hand the keys to someone else and walk away.
  • You are going to have to relinquish all control.
  • The next person might change everything.
  • The next person might fire all of your staff.
  • The business will no longer be yours.

 

If merely reading those last few sentences was excruciating for you as a future business seller, it is really important to keep a few things in mind:

 

  • Negotiations are part of the deal. Low offers are starting points for a conversation, not a personal slap in the face. Buyers will use any issues with the business as leverage during a negotiation, but you would too, if you were in their shoes.
  • You are going to have to be realistic about your listing price. Your reward for maintaining a realistic outlook on price? Your business will be better poised to sell in a competitive market.
  • Handing the keys to a new owner is not a one-sided transaction. They get the keys and you get a very big check that you can use to start a whole new and exciting chapter of your life.  
  • Relinquishing control is a good thing because it means you relinquish all of the stress too. The business might no longer belong to you, but the stuff that currently keeps you up at night is now someone else’s problem.
  • The next person might change everything and fire all of your staff, but more than likely then won’t. They bought a functioning business, it would be foolish to fix what isn’t broken.

 

The point here is it is very important to take a step back from your emotional attachment and rose colored glasses if you want to be a successful business seller. Your business isn’t perfect and isn’t worth 10 times what you should be asking. Negotiations are going to happen. Mentally preparing yourself ahead of time will help immensely for the road ahead.

 

Are you someone who has considered selling your business, but think you might have problems with letting go? Would you like to know what businesses like yours are currently selling for? Ask us! Please feel free to leave 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 »



Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

9040 Town Center Parkway
Lakewood Ranch, FL 34202



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