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

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

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

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