The last year has been interesting – and with the economy, markets and housing prices growing at a great clip it can be a bit reminiscent of the pre-2008 bubble. If you are a business owner who is considering selling now or in the near future, this possible pre-bubble climate could make you nervous. You never know when the next 2008 might hit, and for those entrepreneurs who weathered the 2008 storm a very big question might be: How do I decide the best time to sell, especially if the market might take another tumble?

First and foremost, if you are making the moves necessary to get your business on the market but it isn’t quite there yet – don’t panic. If you’re not planning on selling today but would like to in the next 5 years – don’t panic. See a trend? The market is going to do what the market is going to do. Rather than worrying about something you can’t control – focus on the things you can.

Be flexible.

You might have plans for when you’d like to sell your business, but the small business market rises and falls on it’s own – and it doesn’t care what those plans are. Flexible business sellers watch the trends and adjust accordingly. Are businesses in your industry a hard sell right now? Maybe waiting out the market for a bit longer is the smart move. Is your industry currently a hot sell? Maybe you need to get your business listed now while the market is in your favor. You need to be willing to go with the flow if you are going to have the most successful sale you can.

Don’t spend all of your cash.

You don’t need a major remodel in order to sell your business. The new owners are going to change what is important to them, and your remodeling choices will more than likely not be the same as what they choose – so don’t waste the money. The average listing is 9-12 months, so you need to keep that cash on hand – just in case the market starts to fall and your business needs that money to stay afloat.

Marketing, marketing, marketing.

No matter what the economy looks like, businesses that stop marketing are businesses that will end up dead. No one wants to buy a business that isn’t trying to grow and gain new customers. You should always keep retooling and tweaking your marketing strategy until the day you hand the new owner the keys. Another reason you should always have an eye on growth? If the market sours and you need to keep your business a while longer in order to maximize the amount you are able to get in a sale – you haven’t taken your foot off the gas and hurt the business you now need to create income.  

The message here is no matter what the market does (or doesn’t do), remain optimistic about your business and it’s future. Keep marketing and growing, save your cash and be realistic and flexible with your decisions about when to sell.

Are you considering selling and want to know what the market currently looks like for a business in your industry? Would you like advice about when the best time to sell might be? Please leave any 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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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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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 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:

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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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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