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

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Immune From Burn-Out, The Serial Entrepreneur

Posted in Sellers Articles

Published November 14, 2016

No matter what you do for a living, you will probably get tired of doing what you are doing.

 

If you are truly in love with the business you own and have a deep passion for what you do, these momentary periods of feeling burned out will likely pass.

 

If you aren’t driven by a deep passion, then the burn-out you experience can be more severe and can lend itself to a big, big problem. Many small business owners who get to the burn-out stage stop caring about the business they run – and as a result the business falters.

 

 

 

No longer caring can tank your business investment incredibly quickly, which isn’t good for you, your investment or any employees you might have.

 

Instead of taking your foot off the gas and watching what you’ve created evaporate before your eyes, you can take a more productive route – become a serial entrepreneur.

 

What is a serial entrepreneur? This is someone who views business ownership not as a lifetime commitment, but as a series of investments built toward a goal of personal success.

 

A serial entrepreneur looks for businesses that are ripe for growth and takes on the challenge of implementing as many strategies as possible to maximize that initial investment with the end goal of reaching a certain threshold. Once that threshold is reached, a serial entrepreneur sells that business and looks for the next opportunity.

 

Life as a serial entrepreneur gives you all of the advantages of business ownership, like control of your schedule and your own destiny without the possibility of burn-out. If you do get tired of one of your business investments, then the time has come to move on.

 

Are you a business owner on the verge of burn-out? Do you want to know more about becoming a serial entrepreneur? Ask us! Leave 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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Sneaky, Sneaky – Why A Business Seller Really Needs A Business Broker

Posted in Sellers Articles

Published October 19, 2016

 

 

If you are on the road to sell your business, you probably already know the importance of confidentiality when it comes to maintaining the integrity of your business. If you don’t, here’s why it is completely and totally necessary:

 

When the average person hears that a business is for sale, it immediately conjures the image that the business is in some kind of trouble – possibly teetering on the brink of failure. This is, of course, not reality – but this dangerous false perception can cause real havoc within your business if the word gets out that you are trying to sell. Think about what your employees will think if they think the business is about to close the doors. Think about what your competition might do if they think you are about to go under. You can lose vendors, contracts, future customers. Not good.

 

This is why, instead of trying to sell your business on your own, you really need a good business broker at your side. One of the major responsibilities of a business broker is maintaining that all important confidently – and therefore the integrity of your business.

 

How do we as brokers maintain confidentiality?

 

We ask questions, do our homework and we make people sign legally binding confidentiality agreements.

 

What kind of questions do we ask? The kind that will weed-out the sneaky, sneaky people who have no business knowing that your business is for sale.

 

We get a list of people from you that you don’t want knowing the business is for sale, like your current or former staff or a big competitor. We get the full name and physical address of anyone who wants to sign a non-disclosure agreement for your business. We “Google” people to find out if they really are who they say they are. We have multiple ways to research prospective buyers, and we use those research tools. By doing our homework, we ensure that your confidentiality stays in place.

 

Doing our homework also means we catch sneaky people, and we catch them all the time. Staff members who pose as someone else to find out if the for-sale rumors are true. The owners of competing businesses who have their parents or siblings call, pretending to be buyers. Real estate agents posing as business brokers calling on behalf of someone on the don’t-disclose list.

 

Our diligence when it comes to confidentially is what keeps your business safe. A buyer on their own probably isn’t going to know the industry well enough to know when someone is posing as someone they’re not. You aren’t going to have the time to properly vet curious potential buyers – you need to run your business and prep it for sale, both of which take enormous amounts of time and energy. Don’t go it alone and risk irreparably damaging your business. Having a good broker at your side is essential to keep confidentiality in place.

 

Do you have more questions about the importance of confidentiality or how we go about keeping it in place? Would you like to know more about other parts of the business selling process? Ask us! Please 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

 

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Is My Business Ready To Sell?

Posted in Sellers Articles

Published May 18, 2012

Is Your Business Ready to Sell? Some Questions to Ask.

 

 

What are some key factors that will help sell your business? Here are some questions to ask regarding the saleability of your business:

1. Has the business grown over the past year? Two years? Three years? Growth is good.

2. What is the forecasted growth for this year? Next year? Five years? Projected growth is good.

3. When do your customers pay you? Prior to receiving the goods or service? 50%/50%? After completion of the job? The less accounts receivable, the better.

4. Do you have a business plan? Business plans addressing all aspects of the business are good.

5. How much revenue does your largest customer generate? A diverse revenue base is good.

6. How many hours does the owner work? The less hours worked by the owner, the better.

7. How much revenue does your largest product or service generate? Again, a diverse revenue base is good.

8. How frequently do your customers buy your product or service? The more frequent, the better.

9. How incentivized is your management team to stay? Continuity is good.

10. How much employee turnover do you experience? The lower, the better.

 

Do you have more questions about how to get your business ready to sell? Would you like to know what kinds of questions buyers will ask? Please feel free to leave nay questions or comments here and we would be happy to help.

 

 

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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How Much Is My Business Worth?

Posted in Sellers Articles

Published March 6, 2012

How much can I get when I sell?

 

 

Every business owner wants to know the answer to that question.  The issue is how to arrive at an accurate amount that will provide your business with the best chance of being sold at the best price.  Our definition is based on reality:  The business is worth what someone is willing to pay for it provided it is an amount that you, the owner, will accept.  When selling a business, the challenge is to first determine a realistic price range.

 

Factors That Determine Value  The primary driver of a business’ worth is the amount of Owner Benefit (“OB”) it produces.  That is the amount you realize as the owner and the amount a buyer will expect to also make.  It is net profit plus certain expenses which are “added back” to the profit amount.  These add backs are tax benefits, owner personal benefits and certain other types of expenses.

 

Tax benefits consist of Depreciation and Amortization expenses (“paper only” expenses), business trips, a business vehicle and similar expenses. Personal benefits include health and life insurance as well as any other personal expenses charged to the business.  In addition, certain other expenses of a one-time (non-recurring) nature are also considered a benefit item. An example would be clean up expense from a broken water pipe.  When put together it is Profit + Tax Benefit Expenses + Personal Benefit Expenses + certain other Expenses = OB

 

Sold Business Databases

Once the OB is established, it, along with your business’ sales amounts, are used to research large databases of sold like businesses to determine how your business compares to them. The databases Infinity Business Brokers uses are not available to the public. The research produces OB and Sales multiples that are applied to your business.  For example, in Florida, Hair Salons are selling for 1.3 X Owner Benefit or 40% of Gross Sales.   Infinity Business Brokers also factors in any impact from the financial records, competition, industry trends, etc. to finally arrive at the expected price range.  (“Businesses sell for 2 times earnings” is a myth.  Every type of business sells at it own multiples!)

 

Price Reality Check

Once a potential asking price is established it must pass a reality check.  Business brokers call this check the “Acid Test”.

There must be sufficient OB to accomplish three things:

1.Provide the buyer’s required salary.
2.Provide for any debt service used to purchase the business.
3.Provide for an acceptable Return On Investment (ROI) on the cash paid.  This amount is usually 20%, which represents a five-year investment payoff.

 

For example, a business is asking $500,000.  A buyer will put 20% ($125,000) down and finance $375,000 at 6.5% for 20 years producing an annual debt service of $33,551.  He requires a salary of $100,000/year and wants a 20% ROI on his $125,000 cash ($25,000/year).  The OB must be at least ($100,000 + $33,551 + $25,000)  $158,551.

 

We can accurately establish the real and saleable worth of your business!

 

Would you like to know how much you might be able to get for your business? Are you curious what businesses like yours have recently sold for? Leave us any questions or comments here and we would be happy to help.

 

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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What You Should Know – Selling Your Business: What Can I Do To Help My Business Sell?

Posted in Sellers Articles

Published March 5, 2012

What Can I Do To Help Sell My Business?

 

You can cooperate fully with us and any other professionals that you are using. A buyer will want up-to-date financial information.  If you use an accountant or bookkeeping firm, you can work with them on making current information available.  If you are using an attorney, make sure he or she is familiar with the business closing process and the laws of your particular state.

 

You might also ask if their schedule will allow them to participate in the closing on very short notice.  If you and the buyer want to close the sale quickly, usually within a few weeks, unless there is an alcohol or other license involved that might delay things, you don’t want to wait until the attorney can make the time to prepare the documents or attend the closing.  Time is of the essence on any business sale transaction.  The failure to close on schedule permits the buyer to reconsider or make changes in the original proposal.

 

And finally, your team of advisors must all be working towards the common goal of selling your business for the best price and terms available in the marketplace, and closing the sale as quickly as possible!  Only by being as cooperative as possible with our firm, can we best handle your business interests.

 

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

 

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What You Should Know – Selling Your Business: What Do I Do When Someone Wants To Buy My Business?

Posted in Sellers Articles

Published March 5, 2012

What Happens When There Is A Buyer For My Business?

 

 

When a buyer is sufficiently interested in your business, we will help in the preparation of an offer or proposal.  This offer or proposal may have one or more contingencies.  Usually, they concern a detailed review of your financial records and may also include a review of your lease arrangements, franchise agreement (if there is one) or other pertinent details of the business.  The buyer’s proposal will be presented to you for your consideration.  You may accept the terms of the offer or your may make a counter-proposal.  You should understand, however, that if you do not accept the buyer’s proposal, the buyer could withdraw it at any time.

 

We will submit all offers to you for your consideration.  At first review, you may not be pleased with a particular offer; however, it is important to look at it carefully.  It may be lacking in some areas, but it might also have some pluses to seriously consider.  There is an old adage that says, “The first offer is generally the best one the seller with receive.”  This does not mean that you should accept the first, or any offer – just that all offers should be looked at carefully.

 

When you and the buyer are in agreement, we will work with both of you to satisfy and remove the contingencies in the offer.  It is important that you cooperate fully in this process.  You don’t want the buyer to think that you are hiding anything.  The buyer may, at his point, bring in outside advisors to help them review the information.  When all the conditions have been met, final papers will be drawn and signed.  Once the closing has been completed, money will be distributed and the new owner will take possession of the business.  As your business broker professional, we will work with you throughout the entire sales process.

 

Are you curious about the typical time frame for the transaction process with a business like yours? Would you like to know more about how to handle initial offers? 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

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What You Should Know – Selling Your Business: Do I Have To Finance The Sale Of My Business?

Posted in Sellers Articles

Published March 5, 2012

Why Is Seller Financing So Important To The Sale Of My Business?

 

Surveys have shown that a seller, who asks for all cash, receives on average only 70 percent of their asking price, while sellers who accept terms receive on average 86 percent of their asking price.  That’s a difference of 16 percent!  In many cases, businesses that are listed for all cash just don’t sell.  With reasonable terms, however, the chances of selling increase dramatically and the time period from listing to sale greatly decreases.  Most sellers are unaware of how much interest they can receive by financing the sale of their business.  In some cases, it can greatly increase the amount received.  And, again, it tells the buyer that the seller has enough confidence that the business can, indeed, pay for itself.

 

Are you considering selling your business but are hesitant to offer seller financing? Do you have questions about how seller financing would work? Please leave questions or comments here and we would be happy to help.

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

 

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What You Should Know – Selling Your Business: How Long Does It Take To Sell My Business?

Posted in Sellers Articles

Published March 5, 2012

How Long Does It Take To Sell My Business?

 

 

It generally takes, on average, between nine to twelve months to sell most businesses.  Keep in mind that an average it just that.  Some businesses will take longer to sell, while others will sell in a shorter period of time.  The sooner we have all the information needed to begin the marketing process, the shorter the time period should be.  It is also important that the business be priced properly right from the start.  Some sellers, operating under the premise that they can always come down in price, overprice their business.  This theory often backfires, because buyers often will refuse to look at an overpriced business.

 

It has been shown that the amount of the down payment may be the key ingredient to a quick sale.  The lower the down payment, generally 40 percent of the asking price or less, the shorter the time to a successful sale.  A reasonable down payment also tells a potential buyer that the seller has confidence in the business’s ability to make the payments.

 

Are you thinking about selling but are worried about the time table to get to closing? Would you like to know how quickly businesses like yours are selling? Ask us! Leave questions or comments here, and we would be happy to help.

 

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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What you Should Know – Selling Your Business: What Can Business Brokers Do?

Posted in Business Broker Why & How, Sellers Articles

Published March 5, 2012

Selling your business is a major decision!  You have devoted your time, money and energy to building, running and operating your business.  It may well represent your life’s work.  You have decided that now is the right time to sell, and you want the very best professional guidance you can get.  This is when working in tandem with a professional business broker can make the difference between just getting rid of the business and selling it for the very best price and terms!

 

Below is one of the most common questions asked by sellers.  The response is based on both experience and knowledge.  If you have any questions that we have not covered please don’t hesitate to contact us.

 

What Can Business Brokers Do – And, What Can’t They Do?

 

Business brokers are the professionals who will facilitate the successful sale of your business.  It is important that you understand just what a professional business broker can do – as well as what they can’t.  As your business broker we can help you decide how to price your business and how to structure the sale so it makes sense for everyone – you and the buyer.  We can find the right buyer for your business, work with you and the buyer, every step of the way until the transaction is successfully closed.  We will also help the buyer in all the details of the business buying process.

 

A business broker is not, however, a magician who can sell an overpriced business.  Most businesses are saleable if priced and structured properly.  You should understand that only the marketplace could determine what a business will sell for.  The amount of the down payment you are willing to accept along with the terms of the seller financing can greatly influence not only the ultimate selling price, but also the success of the sale itself.

 

Are you thinking about selling your business and have questions about what a business broker will bring to the table? Would you like to know what businesses like yours have recently sold for? Please feel free to leave questions and comments here and we would be happy to help.

 

 

 

 

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

9040 Town Center Parkway
Lakewood Ranch, FL 34202



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