what should i know about selling my business Archives

How To Balance Confidentiality Versus Marketing Exposure: Thoughts For Sellers

Posted in Business Broker Why & How, Sellers Articles

Published August 1, 2024

Business brokers get a lot of questions from business sellers, and one of the most common topics revolves around how to bring in buyers without letting the world know that the business is for sale.

Why is this an important point? Confidentiality during a business transaction is paramount.

As a seller, you don’t want the competition, your staff, or your vendors to know the business is for sale until the deal is done. A competitor can exploit your status, employees may jump ship, and vendors might tell their other clients about your impending business sale.

Discretion and confidentiality, therefore, are the name of the game when it comes to selling your business.

As a small business owner, however, you may find this counter-intuitive. The way you have brought success to your business is by getting the word out there. You have used networking and marketing strategies to make sure that as many people as possible know about your business and what you can do for them. You have put out campaigns that may have included mailers, signs, posters, emails, and flyers. The more people you reach and the louder your message, the better.

So how do you balance the need to bring in buyers with the need to keep the whole thing under wraps? Don’t go it alone.

Confidentiality during a business transaction is one of the most important responsibilities that a business broker brings to the table. Trying to market your business yourself can lead to disastrous results, as it can be hard to know who to trust and who to disclose your sale status to.

Your business broker will be able to market your business in a variety of ways:

-A good broker has access to business-for-sale databases that are available to other brokers and even to those who are searching online on their own. These listings give a prospective buyer a good idea of your business and the numbers without knowing which business it is. If they are interested in finding out more, they will be required to sign a non-disclosure agreement before they are allowed to know any business or location specific details. You can even specify a list of those (like competitors or employees) who you would like to be kept from finding out your business status.

-Most brokers also have lists of prospective buyers, so when your business gets listed they will let those folks who’ve been looking for a business like yours know that it’s available.

-Business brokers also have contacts within the local business community, and are therefore able to let interested parties know about your business without giving any specific information that would let someone figure out which business is for sale.

-Depending on the type of business you have, certain types of marketing may work better than others. An experienced broker will know which methods will bring in the right buyers and which methods are a waste of time. They will be able to implement a marketing plan for your specific business accordingly.

The message here is the confidentiality of your business sale is of the utmost importance, but so is getting you a buyer and getting your business sold. By employing the services of a qualified and experienced broker you can have the best of both worlds.

Are you a business seller who has had issues with confidentiality? Do you have questions about how we can market your business successfully while keeping the whole transaction under wraps? Ask us! Leave us a comment or question here and we will be happy to help.

Michael Monnot

Why You Need To Think Of The Closing Table As A POSSIBLE Miracle

Published July 22, 2024

Business deals are really, really tough. A large amount of money is changing hands. Many people are involved. Schedules are fluid and frequently changing. Personalities clash. Someone is giving up their blood, sweat and tears to a complete stranger. Another person is buying themselves a job from a person they don’t know well enough to completely trust. It’s a tenuous balance to be sure.

When you buy or sell a business you might think you don’t need help, but the truth of the matter is that business deals are so inherently fragile that it can be almost impossible to see a closing table without someone in the middle. That person is a business broker, and you need a good one.

Business brokers work as intermediaries. They are a buffer between everyone involved and are worth their weight in gold. Their job is to protect and guide the transaction from start to finish, and to keep the relationship between the buyer and seller as amiable as possible.

People who own businesses and people who would buy a business are a tough bunch. Entrepreneurship is difficult and it takes someone with a tenacious personality and a lot of drive. Think type-A, organized and decisive. Guess what happens when you put two people with strong personalities in a room together and try to make a bunch of really big decisions? They clash.

Why are we telling you this? If you know going in that there are going to be conflicts, that it’s a completely normal part of the process and that you have your broker to get you through – the conflicts don’t seem as bad and world-ending.

There will be a lot of moments while you buy or sell a business where it will feel like the deal is dead, like you can’t get the details ironed out, like it’s a hopeless uphill battle. The good news is this isn’t true. You can get a deal done if you prepare yourself by having a lot of patience and by getting yourself the right help in the form of an experienced and qualified broker. Your closing table is an absolutely possible miracle.

Are you thinking about buying or selling a business and want to know what you should do when you feel like the deal has no hope of making it to the end? Would you like to know more about how business brokers work through a transaction? Ask us! Leave any questions or comments and we would be happy to help.

Michael Monnot

Messy Financials – Why They Shouldn’t Scare Buyers And Should Motivate Sellers

Published May 27, 2024

Owning a business is a lot of work. Day to day operations, issues that need to be resolved – it can be hard to keep up with everything. This usually means that keeping your financial records in order slides to the end of the list. It’s tedious, annoying, time consuming and sometimes feels like it can wait in the box under your desk in favor of something more pressing.

This procrastination can become a problem, however, if you find yourself in a situation where you need to sell your business. How can you prove to prospective buyers that the business is worth what you say it is if your records are a jumbled mess?

What about on the other side of the table? If you’re a business buyer you might have noticed that the financials you seem to see from small businesses can barely be called “financials” at all. A copy of a P&L that’s been faxed too many times, some scant numbers that seem to be derived from thin air – it can be hard to parse out how a business is actually doing.

Does poor record keeping always mean a business isn’t doing well? Absolutely not. What it does mean is a seller is leaving money on the table and a buyer has room to negotiate.

If you are considering selling your business, or if you aren’t planning on selling now (but you will be selling in the future) the time to straighten out your books is NOW. Pull out that box from under the desk and start working through it whenever you have a chance, or hire someone who can do that for you. Your business can only look its best on paper if your papers are in order. A business with clear, concise records can easily prove the value that you’re asking for. It also shows prospective buyers that you’ve been an organized owner, which translates to more faith in the business.

If you’re looking at businesses to buy don’t immediately pass over a business with messy books. Think of a business like this like a house with good bones that needs a little work. If that work has to come from you after you buy it – guess what? You can negotiate for a better price. Notice we said “good bones” – not all businesses that have issues keeping their records in order are in great shape otherwise. Seek the advice of your business broker and/or a business transaction CPA to figure out if this business is worth negotiating for.

The message here is that big box of jumbled records is fairly common in the small business world. If you’re a seller, get those records in order. If you’re a buyer, look for those opportunities to get a great deal.

Do you have questions about how to make your business look top notch to buyers? Would you like to know more about how to interpret messy records? Ask us! Leave any questions or comments and we would be happy to help.

Michael Monnot

Patience: How To Successfully Navigate Selling Your Business

Posted in Sellers Articles

Published March 14, 2024

Selling any business is a significant milestone. It often represents years of hard work, dedication and passion. Whether you’re looking to retire, pursue new opportunities or simply move on to the next chapter of your life – the decision to sell can be both exciting and daunting. Amidst the flurry of negotiations, due diligence and potential buyers one virtue is going to be the difference-maker: patience.

Patience is not merely the ability to wait but the capacity to maintain a positive attitude and sense of calm amid uncertainty. When it comes to selling your business, patience is essential throughout every stage of the process. From preparing your business for sale to negotiating terms with potential buyers, embracing patience allows you to navigate the journey with grace and resilience.

This is a good place to bring up the most crucial aspect of patience: setting realistic expectations. While it’s natural to hope for a quick and lucrative sale, the reality is that selling a business is often a complex and time-consuming endeavor. Think 9-12 months, on AVERAGE. The timeline for selling a business can vary widely depending on various factors including market conditions, industry trends and the size and complexity of your business. By tempering your expectations (and embracing the knowledge that this might take a while) you can approach selling with a realistic mindset and avoid unnecessary frustration or disappointment.

Patience also plays a crucial role in building relationships with potential buyers. Selling your business is not merely a transaction but a negotiation process that involves trust, communication and mutual understanding. Rushing the process or pressuring buyers can undermine trust and jeopardize the deal. Instead, take the time to cultivate relationships with potential buyers, understand their needs and motivations and address any concerns they may have. By demonstrating patience and attentiveness, you can foster a positive back-and-forth with buyers and increase the likelihood of reaching a closing table.

The journey of selling your business is rarely a smooth and linear path. Like any significant undertaking, it’s bound to have its ups and downs, setbacks and unexpected challenges. And it’s going to take TIME. During this process patience becomes your greatest ally – allowing you to maintain perspective, stay focused on your goals and persevere in the face of adversity.

Are you considering selling and want to know what a typical timeline for your type of business looks like? Would you like to know what businesses like yours have recently sold for? Ask us! Please leave any questions or comments and we would be happy to help.

Michael Monnot

Bad Advice From Strangers: Why You Really Need A Business Broker

Posted in Business Broker Why & How, Buyers Articles, Sellers Articles

Published February 5, 2024

We all do it. We have a question about something, so we pick up our phone and ask Google. Or Reddit. Or Facebook Groups. While some of the information you can glean from online sources can be useful, it is a terrible idea to take online advice as absolute fact if you don’t know the qualifications of the person giving you that advice. The chances of the anonymous person commenting on your post being an expert in their field is probably pretty slim.

This is particularly important in the sphere of the purchase and sale of small businesses.

Why? The small business marketplace is a small world, and as such there really aren’t that many professionals overall who specialize in the sale and purchase of small businesses – and there’s even fewer who actually know what they’re doing.

Aside from the fact that the professionals who help people buy or sell businesses, known as business brokers, are relatively few in number there is an entire cohort of part-time or fly-by-night imposters who don’t think they need special expertise to help someone with a business transaction. We’ve encountered real estate agents, attorneys, accountants – even dentists pretending they are business brokers that can help you sell or buy a business as their side gig.

What this means is the people (well meaning or not) who are giving you advice on how to use EBITA to value a business or how to properly market your business for sale via a Reddit thread are unlikely to have any idea what they’re talking about.

Business transactions are inherently delicate for a number of reasons. There’s a lot of money changing hands. One person is selling their blood, sweat and tears while another is buying themselves the job they’ll be doing for the foreseeable future. Complex contracts are involved. Everything needs to be done under a veil of confidentiality so the business can stay in one piece.

A transaction involving so many moving pieces needs a careful hand to guide it. Someone who is experienced, qualified, has the industry connections and know-how, understands the possible pitfalls and has the integrity to keep everything above board. That person is a business broker, and probably not the person commenting in your Facebook Group.

What you need in the place of anonymous online advice is a conversation with a practicing, experienced and qualified business broker. Talking with a real person who knows what they’re doing will be exponentially better for you path to business ownership or your business sale than taking terrible advice from people who have no clue what they’re talking about. Calling a business broker can save you from untold amounts of agony by going into the business transaction process with real, factual information.

Do yourself and your future a favor. Don’t take advice from anonymous groups and call a business broker instead.

Have you fallen into the rabbit hole of online advice about buying or selling a business and can’t tell the good advice from the bad? Do you have questions about how a business broker can help you through the transaction process? Ask us! Please leave any questions or comments and we would be happy to help.

Michael Monnot

Embrace The Digital: Why Small Businesses Need To Cater To Gen Z & Millennials

Published January 2, 2024

Most entrepreneurs aren’t young. There’s a large cohort of small business owners (and those looking to join their ranks as business buyers) who grew up before the start of the digital age. You know who you are. You ask the kids in your life to fix things on your phone. You prefer walking into a store and cash over digital purchases and Tap to Pay.

Most small business brick-and-mortar stores reflect this. Sure, you’ve got a business Facebook page – but no one can see what you’ve currently got on your shelves, read a proper menu provided by you or order something online and have it promptly shipped. Even for those businesses that do have an actual website they are often rarely updated, have clunky ordering systems and aren’t mobile-friendly.

If all of this is resonating with you – guess what? You need to embrace the digital age so you can attract the next generation of customers. Gen Z and Millennials are of working age, earning money and your future bread and butter. You need to be actively looking for ways to attract them away from huge retailers that make buying a one-click affair. These generations value small businesses, but you have to make it easy and meet them where they are.

How?

First and foremost you need a virtual presence. Your business Facebook page won’t cut it. You need a proper website that has all the information one would get if they walked into your physical business. What do you sell? When are you open? Where are you located? What is your business all about? How do they buy from you online? What’s currently in stock?

You also need social media channels. Instagram, X (Twitter) and the like are important if you want to reach the newest consumers to the market. You also need to update your virtual presence ALL THE TIME. If your last business Facebook post was in 2018, we’re looking at you.

If you aren’t super tech-savvy, you don’t have to be. There are many, many services out there from free website templates you can put together yourself to full-service digital companies that will run everything for you. Digital marketing is where your focus should be, so if you can afford it pay for all the help you can get.

If you are considering selling your business, a virtual presence is going to be crucial if you want to attract younger buyers who will care a lot about whether or not you exist online. If you’re buying a business, you need to look at ways you can revamp the marketing strategy of a business that doesn’t have much of a virtual presence from day one.

The message here is simple. The next generation of working and money-spending people are online, so that’s where you need to be too.

Are you a business owner who hasn’t updated your digital marketing in a while? Are you looking at businesses to buy and want to know more about how to revive a business without a virtual presence when you take over? Do you have questions about how to reach the newest cohort of customers and want to see businesses that are currently doing this well? Ask us! Leave any questions or comments and we would be happy to help.

Michael Monnot

Don’t Communicate Without An Intermediary: Why You Should Keep Your Broker In The Middle

Posted in Business Broker Why & How, Buyers Articles, Sellers Articles

Published December 11, 2023

If you’re in the middle of the process to buy or sell a business, it can be tempting to contact the other side without using your business broker.

Why?

Say you just have one simple question, and to get that question answered you would have to call your broker, your broker calls the other broker, they ask their clients and then the answer gets passed back to you in reverse order.

This might seem incredibly inefficient, but the system is in place for a reason.

Let’s use the same example. You only have the one question, so you skip the intermediaries and call the other side. The conversation starts out innocently enough, but then your one question turns into five more, and as you continue asking the person on the other side becomes very offended by your questions, gets angry, hangs up and then decides not to move forward with the deal. Your one question just cost the whole transaction.

Business brokers, also known as business intermediaries are there for one reason, to protect the transaction. This is an incredibly important role, as without an intermediary most deals wouldn’t make it to closing.

Business transactions are inherently complicated, as someone’s hard work and someone else’s money are about to be exchanged. Like it or not, both buyers and sellers in business transactions have a lot to lose, and many seemingly innocent questions and statements can be misconstrued as offensive and can cause deals to fall apart and both sides to lose money.

Another major pitfall of going around the intermediaries? In almost all business transactions, there is a training period that occurs shortly after closing. Want to know what’s not fun and is seriously unproductive? When a buyer and seller hate each other and then have to work together.

Don’t make the mistake of trying to go around the intermediaries in the process. Your broker is there to act as a buffer and is there to help you, so keep them in the middle and you will have a far better chance at transaction success.

Are you a buyer or seller who has questions about the role of a business broker in your transaction? Ask us! Please leave a comment or question here, and we will be happy to assist you.

Michael Monnot

Are You A Business Seller? What Are You Going To Do After The Closing Table?

Published December 4, 2023

If you own a business, we know you’ve already thought about it. The endgame. Retirement from small business ownership. Travel. New adventures.

Sure, we’ve all had the daydreams. If you are seriously considering selling your business, these daydreams are going to need to take on a more concrete form. Have you sincerely thought about what you are going to do when you leave the closing table?

What do business sellers do when they’ve sold their business? It varies. Some fully retire, some go back to the 9 to 5 game. Others take up volunteer efforts. The most common thread we see, however, is that someone who has owned their own business isn’t very good at sitting around.

If you haven’t had the chance to really consider your post-owner life, here’s what we see most business sellers do – they buy a new business.

Although it might seem crazy, business sellers do typically end up heading right back into entrepreneurship. Most take a bit of time off to do all those things that owning a business won’t let you do – like going on a three week vacation – but then that entrepreneurial itch starts up again.

If this sounds like you, then considering what kind of business you may want for your next venture is something you can do long before you sell the business you have. Maybe you are interested in a different industry, maybe you want to work in the same field but you have another location in mind.

Whatever your thoughts on the matter are, it is a good idea to have a conversation with your business broker about your post-sale goals. This will give you first-crack at any great businesses coming up for sale and allow you to decide how much of the proceeds you would make for the sale of your current business that could be used for the purchase of a new one.

If selling your current business is something in your future plans, think about your post-sale goals. Perhaps a new business would be the best plan for you!

Are you a business seller who is considering buying another business? Are you curious about the businesses that are currently on the market that might be an option for you? Ask us! Please leave us a question or comment here, and we will be happy to assist you on your next entrepreneurial chapter.

Michael Monnot

Honesty Is The Best Policy: Why Creative Financials Are A Bad Idea

Published November 20, 2023

When you put your business up for sale, you obviously want to present the work you’ve done and your assets in the best light. What you don’t want to do is overdue it. It is incredibly important to avoid the mistake of trying to make the business look good by falsifying, leaving out, or misrepresenting your financial information. Not only can these “creative” financials be illegal, it is always incredibly unethical.

As a buyer, you obviously don’t want to end up with a business whose numbers are no where near what was described.

For both sides of the transaction, the due diligence phase will be the great equalizer. This part of the transaction is where the buyer gets to go over the books. If you are a seller who has tried to tweak your numbers, this is where your tactics will be discovered. When buyers find out that the numbers aren’t true, the deal will more than likely fall apart.

Here are some common instances of creative number tweaking that sellers should avoid and buyers should look out for:

Don’t try to over value any assets in the business. If you bought the kitchen hood five years ago, you are not going to be able to put today’s retail price for the new model on your asset list. Be realistic, and use the help of your business broker and your transaction accountant to put price tags on the business assets. Only use a business transaction CPA for this, as a CPA unfamiliar with the ins and outs of a business transaction will always give you values that don’t jive with the current business market.

Don’t undervalue any liabilities, tax debts, etc. This will cause the net worth of the business to appear much larger than it actually is. The buyer will more than likely find out, and then they will be unable to trust anything you say moving forward.

As a seller, the temptation might be there to make your business appear more stable or profitable than it already is, but what you need to know is even unprofitable businesses sell. If a buyer is ready, willing and able to make the necessary changes you have been unable to make, your business will be a great buy for them.

As a buyer, you need to be vigilant during the transaction process, especially during the due diligence phase. If something seems wrong, it probably is. The same holds true for businesses that appear too good to be true. Use the services of a business broker and a business transaction accountant to help you decide if the numbers really are what the seller claims they are.

The conclusion? Be honest and deal-killing issues will not arise later.

Are you a buyer who is suspicious of the numbers you were presented with? Are you a seller who is concerned about revealing your true numbers to buyers? Talk to us today! Please feel free to leave us a question or comment here, and we will be happy to help.

Michael Monnot