If you are trying to sell your business, you may already realize what a stressful process this can be. You have to assemble all of your records, answer a constant stream of questions, deal with new requests from prospective buyers – all while trying to maintain your business in good working order.

You’ve worked hard at your business – invested time, money and energy. To you, the value is more than money. The business is an extension of your life.

The problem is, to any buyer walking through the door your business is just one of many, and the numbers on the bottom line mean more than anything else.

What happens when these vastly different views of a business collide? In some instances the result is a low-ball offer, where a buyer makes an offer so low a seller won’t even consider it, and oftentimes makes a seller unwilling to even negotiate with that buyer.

The low-ball offer is just a reality of having your business on the market, so if you are trying to sell your business, you’d better be ready to get one – and also be ready to keep your composure if it happens.

Many sellers see a low offer as a personal offense, but you have to remember that the only person who sees your business the way you do – is you.

You really shouldn’t be insulted by low-ball offers. Be happy you got an offer at all. The reality of the business market is your final selling price will be somewhere between your initial listing price and the first offer from a buyer. If you listed your business at the absolute rock-bottom price you are willing to take, that is a mistake, as is demanding that you get a full-asking price or there’s no deal. You need to be realistic and you also need to have thick skin.

Any offer, even a ridiculously low one, can be a starting point for negotiations.

Low-ball offers are typically from two kinds of buyers. The first are tire-kickers who low-ball sellers just to see if they can get a business for a steal. Most of the time this type of buyer never actually buys a business, they just shop around indefinitely. You will know if a low-ball offer is from this kind of buyer if the number is obscenely low, if the reason for the low offer is from way out in left field or if they have no explanation for the low offer at all.

The second type of buyer who makes a very low offer is a buyer who is looking for a deal. They low-balled you on the value of your business because they feel that you need to prove your asking price, but they want to get the deal rolling. For this type of buyer it is important to remember that your listing price is a jumping off point, not a non-negotiable price tag.

No matter what kind of offer comes in, consider it a step in the right direction. You will quickly be able to figure out if a buyer is serious or is just shopping around.

Are you a seller who wants to know how to handle a low-ball offer? Do you have questions about what makes an offer reasonable or how to begin negotiations? Ask us! Please leave us a comment or question here.

Michael Monnot

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

http://www.InfinityBusinessBrokers.com

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Should I wait?

If you own your own business and have thought about selling in the near future, you are probably watching the markets fluctuate with apprehension – especially if you are a business owner who survived the downturn of 2008. Business is booming right now, and your business is probably doing better than it has in years – but business was booming in 2007 too.

It can be excruciatingly difficult to pull the trigger and sell your business when there’s no real way to know if you’re leaving a bunch of money on the table because you’ve sold too soon. The healthy state of the economy is driving up the sale prices of businesses every quarter, but we all know we’re closing in on the top of that upward trend.

What to do? Sell now while the selling is good. Business owners that didn’t go under after the 2008 slide had to take what they could get from the tiny pool of buyers who still had capital to buy a business. Many scrambled to find buyers in their industry when there were no buyers to be had. If you leave some money on the table because you sold six months or a year before the market reached it’s peak you can comfort yourself by knowing that you didn’t have to sell after the tide turned and prices slid.

Taxes and regulations for business and industry are likely going to change, but only the future knows how those changes will affect small businesses. The economy is booming, and has been for quite a while. Housing prices are at bubble-like levels again, and many investment groups have slowed their rate of investing. A downturn is in the tea leaves – so if your tentative plan is to sell in the next five years – sell now.

Are you a business owner who is on the fence about selling? Would you like to know what businesses like yours are currently selling for? Ask us! Please feel free to 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

www.InfinityBusinessBrokers.com

1 Comment »

Owning a small business is often a family affair, where children grow up working in the family business and sometimes take over the reins when mom and dad decide to retire.

While this idyllic business model might seem smart and straightforward, some aspects of your children’s role in your business can be detrimental to the financial return you get on that business if you ever decide to sell.

Here are three things to consider when you think about your kids and the future of your business:

Making Your Kids Work For Free

Having your children as staff members who only earn tips might save you on your payroll today, but it can dramatically affect the value of your business. Any potential payroll for any underpaid or unpaid staff will need to be adjusted and will affect the amount a buyer is willing to offer. This also goes for family business situations where family members earn way more than fair market value for the job they do. The solution? Pay family members a fair market wage for the work that they do today so you can keep future buyers from taking that amount off the top.

Only Trusting Your Kids To Do The Job Right

It can be difficult to find good employees, so some small business owners make their children responsible for almost everything. Leaning so heavily on your children can make your life easier today, but if your children have no intention of taking over the business when you retire their massive role in the business can cause major issues with a new owner.  If you sell, your kids probably won’t continue on as employees because their loyalty is to you, not to the business itself. This will leave a massive void in the business that a potential buyer will see as a massive issue. How can you solve this problem? Keeping your entire staff, or at least some key players, cross-trained in everything that makes the business run will help with the transition to a new owner.

Using Your Children As Your Only Retirement Plan

More often than they should, family businesses that get handed down to children falter or fail completely. Why? The drive and passion you have for your business is yours alone. As we said before, in many cases children are loyal to their parents, not to the business itself. If your kids don’t want your business but do want to continue the entrepreneurial legacy of your family, a good path can be to sell your business and then use that money to invest in a business that your kids are actually passionate about.

Do you own a family business where one (or all three) of these considerations might become an issue down the road? Do you have questions about how payroll adjustments are calculated in negotiations? Protect the future return on your business investment and contact us today.

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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If you are considering selling your business, you need to do everything you can to make sure you are putting your business in the best light. Fix broken equipment, put your financial records in order, revamp your web presence, expand your marketing – it’s a long list. A first impression with potential buyers can make or break a deal, so here’s an addition to the list you may not have considered:

You need to keep your political opinions to yourself.

It can be very tempting in this highly charged and politically divisive climate to wear your political views on your sleeve, but if you own a business and are considering selling any time in the near future – you just can’t. 

Wait, don’t business leaders take a political stand all the time? Why can’t I?

Sure, some big companies take a political stance on issues they consider important (think Starbucks and hiring refugees, for example), but what these companies have that you don’t is an enormous customer base and media exposure enough to bring on new patrons who believe in their political ideology.

As a small business you can’t afford to potentially alienate half of your client base or to potentially offend half of the buyers who come in the door. Even if a buyer agrees with your political opinions, how does putting your opinions ahead of the best interest of the business look to someone who is about to write you a very big check? If you’ve been willing to drive off half of your revenue, what other risks have you taken that could potentially affect the next owner and their ability to remain profitable?

Keep personal political opinions to yourself and only share them with your non-business circle. If you share something political on social media, make sure it cannot be accessed by anyone who is a potential client or customer. Keep political statements off of your billboards, out of your ads and off your website. Lastly, don’t bring up your political affiliation or political beliefs in meetings with potential buyers. 

The welfare of your business should be your first priority, no matter how angry politics makes you. Put your neutral business-self in front and leave the politics at home.

Do you have questions about what buyers consider when they look at potential businesses to buy? Feel free to 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

No Comments »

Anyone who owns a business wants to make more money than they already do, but adding to your bottom line becomes crucial when you are considering putting your business on the market – now or in the future. A growing business will always be more appealing to a buyer than a business that isn’t, and surprisingly simple changes can help boost your numbers in this critical time.

It might seem obvious that one of the easiest ways you can boost your numbers is by cutting costs, but some costs happen so routinely that they may not even occur to you as an owner. For instance, what do you pay for your merchant services? These subscription-type services are something your business needs, but if you take a closer look you might find you are paying far too much. Services like these often contain hidden and unnecessary fees – and if you signed a contract for service you could be hit with a hefty cancellation fee if you find something better and want to switch. Do a bit of research to see if all of your recurring expenses are giving you the most for your money.

A second surprising way you can improve your bottom line is by keeping your inventory in check. How much inventory do you have on hand? What inventory control mechanisms do you have in place? Many small businesses don’t think they need inventory management, they just order new inventory when something runs low. Neglecting your inventory can have disastrous effects on your bottom line, however, because excess inventory eats up your cash. Excess inventory, especially inventory that probably won’t sell, can even decrease the amount of money you are able to get for your business. Keeping proper tabs on what you’re buying will keep you from ending up in a situation where you are sitting on a pile of inventory that won’t ever sell – and business buyers won’t want.

Cutting costs by minimizing unnecessary expenses and streamlining your inventory process can all add value to your business in the critical time before you sell. Even if selling is on the distant horizon, these types of changes will at least help your bottom line – so why not?

Have you thought about selling in the near future and have questions about the process? Would you like to know more about boosting your bottom line in the run up to a business sale? Contact us today 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

No Comments »