Why Sky-High Pricing is a Big Mistake When Selling Your Business



It can be really difficult to see a business that you have built from the ground up objectively, but there is a crucial decision that you will need to make as a business owner that will need to made without emotion- pricing your business.

 

As business brokers, we see it all the time. A new business comes on the market and it is priced ridiculously high. It might be a great business, but most of the time a business that has a crazy price will get no traction on the market and will stay listed forever.

 

When a business first hits the market it can create a lot of action from buyers, but those buyers can be permanently driven away if the price is too high.

 

Why do people list their businesses too high?

 

Usually one of two things has happened:

 

1. They got some bad advice. There are great professionals like business brokers and business transaction accountants that can help a business owner price their business right. There are, on the other hand, lots of professionals who know little to nothing about the buying and selling of businesses who give terrible pricing advice. This is usually not intentional, as they are using the knowledge they have to put a price tag on a business. The problem is that most of the time this price is way too high. Your regular CPA that you use for your tax returns or the business attorney that handled a labor dispute do not know enough about the business market to give you the right kind of advice. Seek the advice of a qualified business broker who will know how to price your business the right way- to sell.

 

2. They wouldn’t listen. Even though you have put all of your blood, sweat and tears into your business, a buyer is only interested in numbers you can prove. Your business broker will help you use comparable businesses that have already sold, the numbers you have on the books and other pricing qualifiers to help you set your asking price realistically. Pricing only becomes an issue if you as the seller refuse to listen to the advice. A good broker will not let you demand any price you want, they will refuse the listing if you decide that it is your unrealistically high price or “the highway”. Be very wary of a broker who will let you list your business for whatever you demand- you will end up staying on the market indefinitely.

Are you a business seller who made the mistake of pricing your business too high? Have you asked for advice on setting the price but got an answer you didn’t agree with? Please feel free to leave us a question or comment here, and we will be happy to help you with finding the right price for your business.

 

Michael Monnot

941.518.7138
Mike@infinitybusinessbrokers.com
1910 Park Meadows Drive, Suite 202
Fort Myers, FL 33907

http://www.infinitybusinessbrokers.com


Buying a Business: How Long Does It Take?



“How long does it take to buy a business?” This is a very common question that we, as business brokers, get.

 

Prospective buyers typically want to know two things; how long it will take them to become business owners and how much money they are going to need to spend.

 

These are not the questions you should be asking if you are thinking about buying a business.

 

Here are the two questions that first time buyers should be asking:

 

Are you ready to buy a business?

Just wanting to own a business and the reality of actually being ready are two totally different things. The answer to the “are you ready?” question is almost entirely based around one thing- money. Do you have the money ready and available to buy and run a business? You should really have at the very least 50% of a purchase price if a seller is offering seller financing, and all cash or third-party financing already in place if seller financing is off the table.

 

What kind of business should you actually buy?

Many new business owners walk into business ownership under the mistaken assumption that anyone can own and run any type of business. Nothing could ever be farther from the truth. To keep your business profitable, you will need to be able to both navigate and compete in the market you are in. If you have little to no relevant experience in your business, there is likely no way for you to stay competitive.

 

Once you have answered these two questions, then you can ask “how long does it take?”. The answer to that question is typically about six months for a new buyer to enter the market, find and purchase a solid business.

 

Don’t make the mistake of asking the wrong questions. Talk with your business broker about what your financial means are and what type of business would best suit the practical experience you have. Starting with the right questions will make you a more successful business owner in the end.

 

Are you thinking about buying a business? Do you have questions about seller financing and the best type of business for you? Leave us a comment or question here, and we will be happy to help you.

 

Michael Monnot

941.518.7138
Mike@infinitybusinessbrokers.com
1910 Park Meadows Drive, Suite 202
Fort Myers, FL 33907

http://www.infinitybusinessbrokers.com


Are You a Baby Boomer Looking to Retire? Some Things to Consider Before Selling Your Business



As confidence in the economy starts to grow, many Baby Boomers have thought the time may be approaching to sell their small business and get ready to enjoy retirement. There are a few important considerations any business seller needs to make before putting their business on the market.

 

Here are a few tips to help you get ready to retire from business ownership:

 

Ideally you should really begin to prepare your business for sale the day you open the doors, as a good exit strategy is always good business practice. You should always think of your business as an investment instead of as a way to get a paycheck because this mindset helps you to think more long term.

 

If you haven’t had an exit strategy from day one, it is never too late to start, and the sooner you do, the better. An optimum amount of time before a sale would be three years, as this would give you time to implement value-building strategies and have the effect of these strategies show up in your numbers.

 

If your business is larger than a one man shop, then you should make sure that you build and maintain a well-trained staff and a quality management team. A new owner will need a strong team in place to make for a successful transition, and having these key personnel already in place will be a strong selling point.

 

Unless your business is brand new, you may need to give the physical appearance an update. Just like cleaning, painting and staging a home helps the sale, so will a fresh coat of paint in your establishment. As brokers, the most common feedback we get from prospective buyers is that a business was dirty, so thoroughly clean or hire a professional cleaning company to do it for you. It is also a good idea to make any minor repairs that are necessary, as anything a potential buyer sees that needs to be fixed will come off the top of the price they are willing to pay.

 

Lastly, and probably most importantly, hire the right kind of people to help you sell your business. You will need someone, a professional business broker, who can properly market to buyers and help you decide on an asking price. Trying to sell a business is a full-time job, and you don’t want to take that time away from your business while it is on the market, because a lack of attention on your part will surely hurt the value of your business.

Are you someone who is getting ready for retirement? Do you need help getting your business ready to be listed or do you have questions about your options? Please feel free to leave us a comment or question here, and we will be happy to help you get ready for retirement.

 

Michael Monnot

941.518.7138
Mike@infinitybusinessbrokers.com
1910 Park Meadows Drive, Suite 202
Fort Myers, FL 33907

http://www.infinitybusinessbrokers.com


How to List and Sell Your Business Now



The process is more simple than you may think.
We will initially conduct a short phone interview to gain insight into your business such as general revenues, how income is to be proven, products/services offered…Afterwards we will send a request for data specific to your business and will follow that up with either a meeting or more lengthy phone conversation.

Our goal is to ask all of the right questions that a buyer will ask, incorporate our findings into a buyers memorandum that will consist of important data for a buyer, recasted financials, a strength and weakness analysis and much more all used to properly sell your business.

Many times brokers send minimal information. I have seen anything from a simple name and website given to the tax returns sent. Most buyers do not possess the skills to properly read and recast financial statements and is not the first impression you want to give a potential buyer but rather when a buyer receives our marketing package they often know rather quickly if this is the right business for them.

Why list your business now?

We have an increasingly growing data base with buyers from all over the world, a direct marketing program, we have a large network of brokers that we cooperate with, attorneys and CPAs referring their buyers and we have been selling good businesses in much less time than the average typical timeframes and often for above average multiples.

Contact us to sell your business now.

Michael Monnot

941.518.7138
Mike@infinitybusinessbrokers.com
1910 Park Meadows Drive, Suite 202
Fort Myers, FL 33907

http://www.infinitybusinessbrokers.com


The Benefits of Seller Financing: Business Buyers & Business Sellers



Seller financing, sometimes referred to as owner financing, is common in the small business market.

Why?

It is a great option for all parties involved.

 

For Buyers:

The absence of extra costs and fees make it a better deal than traditional lending for business buyers. When using traditional lending, like a bank loan, there are higher costs. Banks tack on origination fees, document fees and fees for credit checks.

Also, you will likely get a more favorable interest rate than you would from traditional lending institutions when borrowing from a business seller. You also avoid any penalties for paying off your loan early, like you might encounter from a bank. Most sellers are happy to get their money back faster than expected.

 

For Sellers:

By offering seller financing, a business seller is making their business very appealing to buyers. When you offer to keep some skin in the game, you are telling potential buyers that you have faith in the long term success of the business. If you didn’t, you wouldn’t get paid. It also tells buyers that you are ready and willing to help properly train them and help ensure their own success.

Owner financing also brings in more prospective buyers when you list your business for sale. Although they exist, all-cash buyers are typically few and far between, and traditional financing can be very hard to get for the purchase of a small business. By offering to finance part of the purchase price, you are opening your business to a greater pool of potential buyers, thereby increasing the likelihood that your business will sell.

 

Do you have questions or concerns about seller financing? Please feel free to leave a comment or question here, and we will get you the answers you need.

 

Michael Monnot

941.518.7138
Mike@infinitybusinessbrokers.com
1910 Park Meadows Drive, Suite 202
Fort Myers, FL 33907

http://www.infinitybusinessbrokers.com


Business Buyer’s Mistakes: Avoid These Blunders



If you are new to business ownership, or are considering buying a business for the first time, it is important that you understand the ins and outs of the business buying process; otherwise you might end up making a very costly mistake.  Here are some typical blunders that inexperienced entrepreneurs make:

Using your own name for the business:

You should not put any kind of legal contract or business agreement in your own name, nor should you make the business name the same as your legal name. When you purchase a business, you will need to set up a LLC or corporation to protect your personal assets from litigation related to the operation of your business.

Buying a business you know nothing about:

First-time business ownership is hard enough without having to start at ground zero. If you have always wanted to buy a restaurant, but have never worked in one, it would be a big mistake to choose that industry. Choose a business in an area where you have experience because as the owner of a business, you need to know what the business needs.

Not doing your homework:

Why is the business for sale? Is it just because the owner is retiring, or are they jumping off a sinking ship? You will have the due diligence phase to determine what, if any, the problems are, and then you will have the opportunity to amend your offer or walk away from the deal all together. This is a critically important step, as you don’t want to discover problems after the business is already yours.

Trying to rebrand too soon:

Unless you are buying a business with a horrible reputation, a new owner should tread carefully with regards to changing the business. You bought the business because it was an established company with a good reputation, and you don’t want to drive away customers familiar with the brand by immediately dismantling everything they know about the business. The established image may have more to do with the bottom line than you know, so make changes slowly.

Running out of money:

It may take several months to get a business transitioning to a new owner profitable again, so leave yourself enough operating capital to keep the doors open. Many new owners walk into a functioning business and immediately spend far too much on unproven improvements, digging themselves a very deep financial hole in the process.

Not understanding the importance of marketing:

You may have bought an already established business, but that doesn’t mean that you can forgo marketing and promoting the business. Many established businesses already have a customer base, but keeping those customers coming back and bringing new ones in is a responsibility that now falls to you. Advertising needs to be a top priority as the new owner.

The most important thing you can do as someone who wants to become a business owner is find the right help. If this is a process you’ve never gone through before, find a good business broker to help you along the way. Having assistance through this process will save you from making many of the mistakes that first-time business buyers make, mistakes that can be very costly.

Are you thinking about buying a business for the first time, but want to avoid the blunders listed above? Do you have additional questions about the business buying process? Contact us or leave a question here and we will be happy to assist you on the road to business ownership.

 

Michael Monnot

941.518.7138
Mike@infinitybusinessbrokers.com
1910 Park Meadows Drive, Suite 202
Fort Myers, FL 33907

http://www.infinitybusinessbrokers.com

 


Don’t Check-Out: Why Running Your Business Needs to be Priority #1 While It’s Up for Sale



You may have your business listed on the market, but that doesn’t mean that your responsibility as owner has stopped- on the contrary, this is the time your business needs you to be at the top of your game.

The typical time period for a business to go from listed to sold can be 9 to 12 months, so allowing yourself to check-out is out of the question. The worst mistake a business owner can make is to let the responsibilities of the business go. You might be ready to move on to the next phase of life, you might be counting the money you hope make, you might be dreaming about retirement- but the time to focus on these thoughts is after the sale, not before.

What can happen if you stop paying attention to your business?

The most obvious answer is that the business will suffer. It may seem to an owner on the way out that the business is no longer their problem, but this is not the case. Here’s why:

Your business might not sell. Sometimes you are ready to sell, but there is not a buyer ready to buy. Sometimes after a time on the market, an owner will pull a business off the market for personal reasons. Perhaps you have priced your business too high. Whatever the reason, you don’t want to be left with a business in a hole that you will have to dig yourself out of.

Buyers look for businesses that are profitable, and ultimately  a business that is on the rise. If you let your business slide, it may appear to potential buyers that you are trying to unload a failing business when this couldn’t be farther from the truth.

How am I supposed to focus on my business if I’m trying to sell it?

Hire a good business broker. A business broker can focus on all the aspects of your business sale while you focus on keeping your business profitable. This will ultimately help the final sale price of your business because a profitable business will bring in more money in the end.

The key to a successful sale is a successful business.  Use the resources of a business broker so you can focus on keeping your business in the black.

Are you thinking about selling your business, but have questions about what a business broker can do for you? Leave us a comment or question here, and we will be happy to assist you with your business sale.

 

Michael Monnot

941.518.7138
Mike@infinitybusinessbrokers.com
1910 Park Meadows Drive, Suite 202
Fort Myers, FL 33907

http://www.infinitybusinessbrokers.com

 



Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907




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