It can be truly agonizing when you face the decision of whether or not to sell your business, but the agony of this question can be compounded if your decision to sell comes at the same time as a major growth decision.

What if your business is at a turning point where growth has to happen? Should you invest the capital in a business you are seriously considering selling, or should you pass the buck to the new owner? Here are a few things to consider when trying to make this choice:

Are you growing the business and investing the capital to service already existing customers with a model you have already used and proven?

An example here might help. Say you have a small dress shop, and some of the dresses you make in your in-house manufacturing facility are sold at local boutiques. One of the boutiques has recently expanded the amount of your dresses that they will carry due to high demand, and they would like to have you fill much larger orders for them on a regular basis. This increase in orders would mean that you have to expand the manufacturing part of your business substantially, likely by opening a second location.

In this situation, it is probably best to spend the capital and invest in the new manufacturing, then sell the business later. You are going to be serving an already existing customer (the boutique) using and already proven model (your dresses in high demand).

Are your ideas for growth dependent on new customer acquisition and retention using a new and unproven model?

Here’s another example to illustrate this point. This time you own a bakery, and since your sales have been a bit stagnant you have decided that you want to open a second small location in a newly revitalized part of the city.

In this situation, it would likely be best to sell the bakery as-is and let the new owner try out the second location. The new bakery location will require a new customer base and a new (and unproven) location.

Do the answers to these questions apply to every case? No, absolutely not. Businesses are very complex, and as such, every business is different in its needs for the future. Have a talk with an experienced and qualified business broker about whether or not the market will respond to your future investment in the business. It may be better to sell now if the market won’t give you back what you’ve invested.

Are you a seller stuck in the “to sell or not to sell” game? Do you have questions about whether or not your future plans will pay off in a sale? Please feel free to leave us a question or comment here, and we will be happy to help.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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When you own a business and are preparing to sell, a big part of your focus is probably on the endgame. What are you going to do with all of that capital? Buy a huge boat? Start a collection of sports cars? If you want to continue the entrepreneurial spirit, as we suspect many of you do, you can buy or invest in another business.

I just sold my business, why on earth would I buy another?

It may surprise you to hear this, but many former business owners jump right back into business ownership soon after they sell. Let’s face it, entrepreneurs are a special breed, and the fact that you work for yourself and decide your own fate everyday is what drives you. Re-entering the 9 to 5 or sitting idle in retirement probably doesn’t sound very appealing to you. Perhaps what you need is a change of business location, or perhaps a different industry all together.

If you are getting ready to sell, ask yourself “If I had to buy another business, what kind of business would I buy?”. If you find your answer to that question very appealing, then perhaps another business is for you. Ask your business broker about what kinds of businesses are currently available in areas you find interesting.

I sold my business to retire, there is no way that I want to work those hours anymore!

If you don’t find the exercise of considering owning and running another business appealing – then instead you can make a very big impact on the entrepreneurial community in your area, stay active enough to quell your own entrepreneurial drive, and share the wealth of knowledge you’ve gained as a business owner over the years. How? You can become an investor.

Think back to your younger-new-business-owner self. You would have done anything to have today-you as a mentor and investor, right? Talk with your business broker about what kinds of investment opportunities are out there. You can be a silent partner, a part-time owner – the depth of your involvement is entirely up to you. The place you call home will benefit greatly from your continued contribution to the small business community.

Are you a seller who is curious about investing? Do you want to know what industries are available to buy in your area? Ask us! Please leave a comment or question here, and we will be happy to help.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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If you are considering selling your business, whether now or in the near future, the part of your business that will be instrumental in the success of your sale will be your financial records.

Why?

Every buyer who considers your business will probably see your financial information long before they ever see the inside of your location. Your books will speak for your business, so they need to make that critical first impression. 

You will need to have the financial core of your business ready for buyers in a concise and ready to read format. Make sure everything is legible. A copy of your tax return that has been recopied so many times you can barely read it is not going to work.

Another major issue we come across is owners who have a huge box of unorganized and miscellaneous pieces of paper. These sellers want buyers to somehow divine the bottom line of their business from that collection of information. It’s not going to happen.

If you are someone who doesn’t have the know-how or time to turn that box into something usable, ask your business broker for help. They will know professionals who can make heads or tails of your numbers in a way that will really speak to potential buyers.

What information do I need to have ready?

You will need:

• Your past three years of tax returns.
• Profit and Loss statements (P&L’s) for the past few years
• An up-to-date balance sheet
• Any contracts, like client contracts or vendor contracts
• A copy of your lease
• Relevant documentation that shows revenue or costs
• Employee contracts
• Insurance information
• Documentation that shows cash flow

Once you have this information assembled and put together in a way that will make sense to buyers, you will be well on your way to a successful sale.

Are you a business owner who has a giant box of financials you’d rather not deal with? Do you have questions about your current financials and whether or not they are buyer-friendly? Please feel free to leave us a comment or question here, and we will be happy to assist you with creating great-looking financials.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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When you begin the process of selling your business, you may begin to think about the questions you will get from buyers. Knowing ahead of time what you may be asked is helpful because it allows you to think about how you want to answer questions about your business that will put your business in the best light.

A big caveat here – it is critically important that you not be offended by the questions that are asked, the number of questions that you are asked, or by how quickly a buyer wants answers. This is likely one of the biggest financial decisions that a buyer will make, so (1) they are nervous and want to be comforted by your answers to questions, (2) the will ask a lot of questions, and (3) they will want prompt answers to all of those questions.

Most sellers are initially only prepared for the very basic questions, like “What do you make in a year?” or “Why are you selling?”, but there are many more you should be ready, willing, and able to answer.

Here is a small sample of the most common questions a buyer may ask you:

Are you willing to offer seller financing, and if so what are you looking for in terms of a down payment?

What are the reasons that you are selling? Is it an economic issue? Is the business losing money? Is there a change (new legislation/a big new competitor/is the road moving) coming that will cause the business to falter? Is it a personal or health reason?

Are you willing to offer a substantial amount of training? Will you stay on for a period of time? What period of time would you be willing to work?

What do you really make? What is the full list of perks you take home, like a phone or car that is paid for by the business?

If you weren’t selling, what would you implement to keep the business growing? What are the changes you would make if you had the time and money to do so? Why haven’t you already implemented these ideas?

Are there any skeletons in the closet? What are the things you hope buyers don’t find out? Am I in for any surprises?

What kind of hours do you work? Do you take vacations? What are your day-to-day responsibilities?

Think about these types of questions beforehand, as well as trying to think like a buyer and come up with a few of your own. The more prepared you are with answers, the better you and your business will look in the eyes of a buyer.

Are you a seller (or someone who is thinking about selling) and you want to know about what kinds of questions someone might ask who is shopping for a business in your industry? Ask us! Leave a comment or question here, we would be happy to help.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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We know, your business is your baby. We’ve owned businesses too. We completely understand the blood, sweat and tears – the money and time invested – these things have value to a business seller.

The problem here is this – a business buyer doesn’t see your business the way you do. They see an investment opportunity, and as such, they are only going to be willing to pay for the numbers they can see, and the parts of the business that will give them a return on their investment.

How do you as a seller bridge this gap between what you see and what a buyer sees?

Be rational and realistic. Talk with you business broker about where they think you should be priced and then listen to their advice. The point of listing your business should be to sell it, and setting your listing price too high will keep you from ultimately reaching that goal.

Once you’ve decided on a realistic listing price and also the target number you really want for your business, stick to it.

Here’s what happens. You list your business for a completely rational price, you get a great offer from a buyer that comes close enough to your target price that you are willing to move ahead with the deal. Then you start to think, “well, if they are willing to pay this price, I bet I can get them to pay more” or “these buyers don’t understand the true value”. This last minute greedy-push-back by sellers does only one thing – it kills the deal.

It is completely normal to second guess your decision to sell and the money involved as the closing table looms in the near future, but you have to remember the numbers you decided on were good numbers, so remove your emotions from the situation and stick to them.

If you want to make it to closing and get the return on your business investment you’ve been waiting for, keep this goal in mind during negotiations. Let reality and rationality prevail.

Are you trying to sell your business, but your deals keep falling through? Are you concerned that you may have priced your business too high? Please feel free to leave us a comment or question here, and we will be happy to help you reach your goals.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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We’ve all heard the stories in recent years of school teachers losing their jobs because of an inappropriate Facebook comment, but what many small business sellers fail to realize is their personal online image is crucially important to the image of their business in the community and to the buyers they are trying to attract.

“My Facebook account is private, so why does it matter?”

Even with privacy settings in place, it is not very hard for someone searching your name to get access to at least a few pictures and perhaps even a few of your posts. Think of your personal profile information this way – would you tell every customer or prospective buyer coming through the door everything you’ve posted on Facebook over the years? Probably not.

“All I have is a business Facebook page.”

You need to think about absolutely everything that has ever been posted on this wall as well. Some owners make politically-motivated posts, or some rant about the competition. Neither will look very professional in the eyes of a buyer, and they will be left wondering if you as the owner are less than professional about other areas of the business too.

“I don’t do social media, so this doesn’t apply to me.”

Nothing could be farther from the truth. This article by Steve Cody (http://www.inc.com/steve-cody/7-reasons-you-need-manage-your-online-presence-more-carefully.html) highlights all the areas that small business owners need to consider when thinking about what their online presence says about them and their businesses. Regardless of your active participation (or no participation at all) you have an online presence that needs to be managed.

If you are serious about selling your business, take a good, hard look at what your personal online presence says about both you and your company. Make changes now before you’ve lost the opportunity for good first impressions with buyers.

Are you thinking about selling and are wondering how your online presence may affect your sale? Do you have questions about what kind of access to your personal online information buyers will have? Ask us! Please leave us a comment or question here, and we will be happy to help.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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The adage that it takes about 10,000 hours to master any kind of craft is true of any industry, and as a small business owner you’ve probably seen this first hand. Ten thousand hours works out to about five years of full time work, and if you’ve owned your business that long or longer we’d bet you feel you really know the business and the industry inside and out.

Now the time has come to sell your business and you are looking for some help. You find a business broker who is willing to work on the cheap – and he’s a brand-new broker so you think you’ve got someone who’s fresh in the industry, that can’t be a bad thing, right?

We have just one question to ask you – were you the master of your industry right out of the gate? Did you make mistakes back then you never would today with the knowledge and experience you now have under your belt? Hiring a rookie broker is like hiring rookie you from all those years ago when you first became a business owner.

Who would you rather have handling one of the biggest financial transactions of your professional life? Rookie you, or you today? We’re pretty sure you would choose you today, because practical experience always trumps “fresh”.

The same is true with business brokers. You want an experienced pro, not the new kid on the block. How can we say this with such confidence? We see the ramifications of hiring a rookie broker all the time.

Like any industry, there are the rookies and then the brokers who have been around long enough to make a real name for themselves in their region. A seasoned vet will have working relationships with other brokers in the area (meaning a larger pool of ready-to-buy buyers), a new broker will not. We’re not saying that it’s a great thing that many newbies have a hard time getting cooperation from other brokers, but it does happen. This industry sees many budding brokers fail and move on to other careers, so the vets will typically only cooperate if you’ve already proven your staying power.

Another major reason to stay far away from a rookie broker? They make lots of mistakes. Big ones. Mistakes like these:

Treating your business listing like a listing for a house and disclosing that your business is for sale to the whole world. You will probably lose employees, vendors and clients – let alone the headaches of constantly having tire-kicking “buyers” traipsing through your business and disrupting normal operations.

Letting you price your business however you please, without any understanding of the multiples, comparable sold businesses, the market or your numbers (which are so much more than what appears on the bottom of your tax return). The purpose of listing a business should be to sell it, and improper pricing can lead to listing purgatory.

Using a one page P&L and your last tax return as your only marketing materials distributed to buyers. Look at last year’s tax return. Does the number on the bottom line truly describe your business in its entirety? Nope, of course it doesn’t. Only an experienced broker knows what works and what doesn’t when it comes to a marketing package.

Don’t make the mistake of having a rookie broker handle your transaction. Hire an experienced, knowledgeable and qualified business broker instead.

Are you a business seller who has questions about the differences between a new broker and a seasoned vet? Ask us! Please feel free to leave us a comment or question here, and we will be happy to help you.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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Let’s look at a scenario where a small business owner has come to you, as a friend, for advice.

He is considering selling his business, but isn’t sure that the time is right.

His business is currently very profitable, and although his health is good – retirement needs to be in the picture sooner rather than later.

The economy looks good, and business is booming.

Should he stay in the game to maximize his earning potential or should he sell while the business is at its peak? Could he make more if he stays in the game for two more years and then cashes in?

What would you advise this business owner to do?

You would probably advise him to stay in the game, why leave a business that is making you serious money, right?

We left out a major detail here, it’s 2007… Now what would you tell this owner to do?

The point of this exercise is to highlight that the best advice in this situation, the advice to sell, can only be given with the power of hindsight. In 2007 this business owner likely had no idea of the economic disaster that was about to come his way. For the businesses that survived the recession, and many did not, it has taken many years to get back to their 2007 numbers if they have at all.

Sometimes the best thing you can do for the investment in your business is sell while the selling is good. Gambling with what the future might hold for your business could end up meaning what it did for those who were trying to sell their businesses in 2008 as opposed to those who were able to sell in 2006. It is far easier to sell a business that is doing well than one that has taken a major hit or is in a downward slide.

This decision can be an agonizing one, but if selling your business is something you are considering doing in the foreseeable future, now might be the best time.

Have a serious talk with an experienced and qualified business broker about how your industry is doing, what comparable businesses in your area are currently selling for and about whether it would be advisable to sell your business now while the chances of making a great return on your investment are really quite good.

Thinking about selling, but you’ve been waiting for the right time? Curious about what other business sellers in your industry were able to get for their businesses? Ask us! Please leave a comment or question here, and we would be happy to help you with any selling questions.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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