A Lesson From Shark Tank: You’d Better Know Your Numbers



If you’ve seen the show Shark Tank, then you know the typical drill. An entrepreneur knows their concept inside and out, but can’t get an investment from the Sharks because they can’t answer basic financial questions. Guess what? This happens in the small business market too.

 

If you take a step out of your business seller’s mindset and take a look at what buyers see in the market, you might be shocked.

 

Most listings for businesses for sale contain sketchy financial information at best, and if they contain any semblance of numbers at all they typically don’t make sense and don’t jive with the price the sellers are asking.

 

 

Where do these discrepancies come from?



While in a few cases the discrepancies come from good old fashioned dishonesty, for the most part the lack of consensus in numbers occurs because the seller simply doesn’t know. Small business owners are great at what they do, but in some cases they are not great at accounting or organizing their financial information.



We come across business owners more often than we should who can’t answer questions like “which product or service is the most profitable?” or “what is the cost to acquire a new client?”. If you are considering selling at any time in the near future, then you need to make the effort to get a handle on your financials long before you are being asked to justify a price.



What things should I be looking at?



Profitability of Products or Services



Many business owners who haven’t broken down the numbers may just assume that the most expensive item or service that they offer is the most profitable – but this is probably not the case. By tracking your products and services individually and then comparing them to the breakdown of what it costs you to provide that product or service, you may discover that your bread and butter comes from a low price item or service that you sell more than anything else. If not just for selling your business, this breakdown will also be immensely helpful when deciding where to put your marketing efforts.



Expenses



Small business owners are famous for paying for expenses out of pocket and never writing it down, or for jamming receipts for expenses in a box under the desk and never looking at them again. When selling your business, you may even think that disguising some of your expenses will make the business look more appealing and more profitable to buyers. This isn’t the case. First of all, there are a few expenses that will get added back before you set a listing price. Second, a business with very low expenses will look suspect to a discerning buyer. Really nailing down your expenses will not only help with selling your business, it will likely allow you to see where your money is going and give you an opportunity to streamline those expenses.





Don’t be a Shark Tank cautionary tale. If you are looking to sell, you need to get your financial ducks in a row, if not for buyers but for your own use to strengthen your numbers, focus your marketing efforts and streamline your expenses. Having a good handle on where your business is and where it needs to be will be instrumental in the negotiation process of your business sale. Strong and organized documentation of all of your financial information will also be very helpful in attracting buyers who are accustomed to the sketchy financials that are typical in the business scene.

 

Are you thinking about selling but are guilty of shoving receipts in a box? Do you have absolutely no clue what it costs you to aquire a new client and want help getting your ducks in a row before listing your business? Please feel free to leave questions or comments here!

 

 

 

Michael Monnot

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

 

 

 


The End Of 2017 And 2018 Ahead – BizBuySell’s 4th Quarter 2017 Insight Report



BizBuySell’s 4th Quarter 2017 Insight Report shows record highs in the business marketplace, with small business transactions up 27% over the previously record-breaking 2016 numbers. The market has been steadily growing since the recovery for small businesses began in 2013, but 2017 marks a large jump in the number of businesses changing hands.

 

 

Why the big jump?

 

To put it simply, money. Small business revenues are up in most industries, with the economy at large continuing to grow. More businesses are coming on the market, with baby boomer owners choosing to retire and cash out of their businesses while the selling is good. More buyers are also taking the plunge into entrepreneurship with lending options that dried up in the wake of the 2008 recession slowly coming back to life. Added together, today’s market is a boon for business sellers, with many businesses selling for more than they would have two or three years ago – a whopping 14% more.

 

It’s also a good time for business buyers. They might be paying a premium for businesses, but the businesses they are getting are typically in very good financial shape. The same could not be said post-2008 as the glut of faltering businesses on the market meant you could get a good deal – but you had your work cut out for you.

 

Will the good times continue?

 

In the short term, probably. The last quarter of 2017 showed continued growth, with 23% more closed transactions and a 12% increase in median sales price over the same quarter of 2016. Levels that strong will likely continue well into 2018, but those who survived the meltdown of 2008 are beginning to fear another bubble.

 

The smart move?

 

If you own a business and were planning on selling in the foreseeable future, now is the time. The market may continue to climb or we may be quickly approaching the peak. There are buyers with money and your business is in the black, so the safest bet is to sell while the selling is good. This is also true if you were considering selling so you could buy a different business. The businesses on the market today are healthy, so a serial entrepreneur would be smart to take the large profit from a sale today and invest in a new opportunity now. The same is true for first time buyers – businesses are healthy and are a great buy.

 

Want to know what the market looks like for your industry in particular? Do you have questions about when you should sell? Are you thinking about buying a business and want to know what’s currently available? Contact us today.

 

 

 

Michael Monnot

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

www.InfinityBusinessBrokers.com


How Business Sellers Can Learn From Facebook’s Problems



Mark Zuckerberg has had a rough couple of weeks. The lack of trust in his business practices landed him in the hot seat before Congress, and that’s never a good place to be.

 

While the leader of a gargantuan company like Facebook might not have much in common with a small business owner who is looking to sell – there is a major lesson that can be learned from the recent Facebook debacle that can help a seller get to a closing table successfully.

 

 

The major lesson? Trust and honesty are key.

 

A business buyer is going to write you a very big check, and for that check they are expecting to get exactly what you told them they were buying.

 

All small businesses are complex, and as such those businesses have issues – big and small. There is never a perfect business, but it certainly would be easy to sell if it was – so many sellers make the mistake of trying to create an illusion that their business is perfect.

 

We get it, issues feel like failures and might decrease the amount of money a buyer is willing to give you. Hiding flaws, however, is a big mistake for a couple of reasons. First, if you had been honest and upfront with issues, buyers may have accepted those issues as part of the deal. If the issues come out later, then you’ve lost the trust of those buyers – and your chances of making it to closing will be slim to none.

 

Think you can hide those skeletons in the closet? Think again. A major part of any small business transaction is due diligence, where a buyer gets to go through every aspect of your business with a fine toothed comb. If there’s a problem, they’re going to find it, so it’s a far better strategy to be open and upfront. Maintaining trust in a business transaction is key simply because it’s a complicated process with a lot of money changing hands.

 

The same goes for things you might be slightly embarrassed about and so you gloss over them or don’t mention them in discussions and negotiations. You need to clearly communicate what your business is, how it makes it’s money, how it works day-to-day and what any problems might be. Omitting information or choosing to make light of things a buyer really needs to know is both unethical and a deal killer.

 

Transparency is crucial to your ability to sell. Trying to hide skeletons or not clearly communicating the aspects of your business a future owner needs to know will surely kill your deal – so play it smarter than Facebook and keep your buyer’s trust. 

 

Are you considering selling your business, but are worried about the skeletons in the closet? Would you like to know what types of issues buyers are usually willing to overlook? Please feel free to leave any questions or comments here.

 

 

 

Michael Monnot

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

www.InfinityBusinessBrokers.com

 


Selling Your Business? Get With The Times And Get Online



Getting your business ready to sell? You’ve probably been busy assembling your financial records, fixing broken equipment and the like – but have you considered the virtual presence of your business?

 

 

Today’s consumers spend more and more time online, and business buyers are no different. They will want to see that your business is embracing the digital age and is primed for growth in the digital marketplace – so is it?

 

If you’ve got no online presence to speak of or all you’ve got is a poorly maintained business Facebook page – you need to act now.

 

Any business on the market should have a decent website, and a quick and simple website is fairly easy to do. Services like Squarespace and Wix let you pick an already well-designed template, buy a domain name, insert your own information – and poof, your business is part of the digital age.

 

It doesn’t need to be complex. The contact information for your business, the location and the hours. A blog where you add updates about the products or services you offer. Menus, lists of products or services offered and their prices. It really is that simple.

 

Is having a website really that important? Absolutely, yes it is.

 

When a business buyer looks at a business with no online presence they are going to wonder what else the current owner has let slide. If you haven’t even bothered to tap into the digital marketplace then you haven’t been utilizing every tool at your disposal to help your business grow.

 

Another digital marketing avenue you should consider is reviews. Anyone considering buying your business is likely going to look you up on review sites, so ask your customers to post reviews about you. Negative reviews should be taken as constructive criticism – no matter how crazy they seem – and you should respond to negative reviews in a calm, positive manner to ask the unhappy reviewer what you could do to fix their issue. This is a good idea on two fronts. One, it will show anyone reading the bad review that you care and tried to remedy the situation and two – you might be able to turn that negative review into a positive one.

 

If you are selling your business, embrace the digital age. It will show potential buyers that you care about the future and growth of your business and that you have taken the steps to market your business in both the physical and online world.

 

Are you thinking about selling your business and don’t currently have a website? Would you like to know how to improve your online reviews? 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

www.InfinityBusinessBrokers.com



Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

5111-E Ocean Blvd
Siesta Key, FL 34242

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

9040 Town Center Parkway
Lakewood Ranch, FL 34202




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