When you are thinking about putting your business on the market, or have already done so, you may think you have considered all of the elements involved in a business sale, like finding a good business broker and making sure your financial records are in order. While a good business broker and complete financials are important, they aren’t the most important element of a business sale.

So, what is the most important element in a business sale? The answer to that question is simple.

Is someone willing to buy my business?

Have you thought about what a buyer is looking for when they are considering purchasing your business? Looking at your business from a buyer’s perspective is critical if you want to have a successful sale. Here are some points to consider:

First and foremost business buyers are going to consider price. The best way to attract good buyers is to price your business fairly right out of the gate. Negotiation games will drive potential buyers away, so talk with your business broker about how to price your business appropriately. A fair price is one that you can justify, either through your financial records or by other means specific to your industry.

The next major consideration? Will your business fit the life your buyer wants to have? Be ready to answer questions about the hours you put in, what kind of pay you take home, and what kinds of regular responsibilities they will need to accomplish on a daily basis.

Why are you selling your business? Buyers who ask why the business is for sale are looking for potential problems. Are you selling because you are ready to retire, or because you are trying to get off of a sinking ship? If you are trying to sell your business for health reasons (a subject that is obviously a private one) you may need to be prepared to disclose this detail if a buyer asks in order to dispel any doubts they may have about the business.

A buyer will also want to know what is included in the business sale, so this information should be ready as soon as you list your business. Are they buying a name, a customer list, inventory, equipment, etc.? The relationships you have built with your clientele and your suppliers are likely crucial to the success of your business, so a buyer will want to know that they can retain these relationships when they take over.

Lastly, a potential buyer will want to know if you are willing to help them get started. You are the person with the most expertise in your particular business, so a new owner will want to know that they have your support in making a successful transition. Are you willing to stay on for training? How long of a training period are you willing to do, or do you think the new owner will need? Would you be available on a consulting basis longer term and after the training period has ended?

What are potential buyers looking for? They are looking for a chance to own their own business, one they are confident about and that they were able to purchase at a reasonable price. If you as a seller can put yourself in the shoes of a buyer, you will have a much better vision of how your business needs to come across to potential buyers.

Are you a business seller who would like to know more about how to make your business appealing to potential buyers? Leave us a comment or question here, and we will be happy to assist you.

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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The negotiation table in a business deal can be tough, especially if you are a business owner who is deeply passionate about the business you have worked so hard to create.

The key to surviving the negotiation part of your business transaction is to be objective and employ the following strategies:

• Negotiate with your head, not your heart. Typically the first offer from a prospective buyer is low, but what you need to remember is this number is not the final price your business is going to sell for. The first offer is purely a starting point. A low-ball offer can send you over the edge, but you will need to restrain your emotions and try to see the offer in a positive light. Offers of any kind start the negotiation process.

• Let your broker do the talking. A business broker is a huge asset during the negotiation stage of your transaction. They are an objective third party, and will therefore be able to help you navigate your negotiation in an objective way.

• Always remember that you can walk away, and remember to use that fact to your advantage. If a buyer really wants to buy your business, then eventually you should be able to meet in the middle on price. If they are really low-balling you and refuse to budge, then it is always your call to walk away from the deal. Sometimes this works to motivate a buyer to come up on an offer, and sometimes it just means the deal is dead. Discuss these options with your broker to be sure you are making the decision to walk away based on an objective business decision, not because you were emotionally offended.

The most important pointer for a business seller in the midst of negotiations is this: Buying a business is an emotionless process. Your ability to understand this about the buyer will be the key to getting your business to the closing table.

Are you a business seller who has lost a deal during the negotiation phase because your emotions got the best of you? Would you like to know more about strategies that can help prevent the same circumstance in the future? Leave us a comment or question here, and we will be happy to assist you.

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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When you first became a business owner, the thought that was probably farthest from your mind was “How am I going to get out of this business?” While no one tries to have a pessimistic outlook on their livelihood, it is a reality that someday your position as the business owner is going to end.

How it ends and what you get out of the deal are entirely up to you.

There are typically four ways that business owners relinquish their position within the company. The first, and worst, is to simply lock the doors and walk away. This is never a good decision, as with proper planning all of your hard work and personal investment will not end up going to waste.

The second way to change ownership is to give the business to a member of the family. This can be successful, but only if that family member is ready to take over the business.

The third type of business transfer occurs when an owner gives or sells the business to an employee. This has benefits as an employee already knows the business, but rarely do employees have the cash to buy the business outright.

The fourth and most common way to transfer ownership is to sell the business on the open market. With this method a business owner typically gets a much better return than with any of the other methods.

There is a caveat, however. If you are suddenly faced with the need to sell your business, it needs to be in good shape.

The biggest secret in small business ownership is to plan your exit strategy from day one.

If you don’t currently have a pre-exit strategy, now is a great time to start. By preparing your business for sale today, you can be ready if the occasion should suddenly arise where you need to sell.  Some pointers to keeping your business sell-ready? Think like a buyer.

1. Buyers like businesses with cash flow that will give them the ability to make a living starting day one. Consult with a business broker to find out how to make cash flow a major selling point.
2. Buyers like businesses that are aesthetically pleasing. Keep the business in good shape by repairing and restoring what is needed on a regular basis.
3. Buyers hate surprises. Take care of any legal issues, government issues, and financial issues as quickly as possible.

When the time comes to sell your business, you will be glad you planned and prepared ahead of time. It will mean a less stressful transition in the end. Use the services of your business broker to get your business pre-exit ready, even if you are not ready to sell today.

Are you a business owner who doesn’t have an exit strategy of any kind? Would you like to know how to get your business in pre-sale shape? 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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I’m ready to sell my business, what records will I need to provide to my business broker and to potential buyers?

Think of the records needed for a business transaction this way.  You would like a potential buyer to pay top dollar for your business, and the quality and completeness of your records will be what makes this happen.  You will have to be able to prove to the buyer that the numbers you are claiming are the real numbers.

You don’t have to be ready to sell tomorrow to begin getting your financial record ducks in a row. The sooner you start getting your numbers together, the better.  Do your best to keep meticulous records.  The better your records, the better a buyer will feel about paying the price you are asking for.  Keep accurate financial records and statements, receipts from a cash register, and any records that can help you to prove your income and expenses.  Current and past tax returns will also be needed, so be sure you are caught up with your taxes.

When you begin working with your business broker, they will want to see your numbers in order to assist you in creating an accurate evaluation of the business, and therefore a realistic asking price. Your listing price will be based on a number of factors, but a big part will be provable cash flow – because that is what buyers are after. 

Is it impossible to sell my business if my records are a mess?

No, it will just take a little more work to get the records in order.  You will not be the first (or the last) client with less than adequate business records that your business broker has come across.  Give what you have to your broker, and by working together you can get the records in shape. You may also need the services of a business transaction accountant, so ask your broker if they think you will need additional help.

What if I have taken cash out of my business without recording it?  How do I prove that income?

It can be difficult to prove unreported income, so the best advice is to start reporting all income right now. Including all of your income is crucial if you want to get the best price for your business, although some businesses do sell even without all income reported.

The message here is an ounce of preparation will make getting your business on the market much easier – but all is not lost if your record keeping has been sub-par.

Are you thinking about selling your business but are worried about the state of your records (or lack of records at all)? Do you have more questions about what business buyers will want to see? 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

https://infinitybusinessbrokers.com

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It’s not over till…

We all know the phrase. As the owner of a small business you may not want to think about it – but you will eventually have to face the reality that your role as owner will end.

When facing this reality business owners typically think of a few broad categories. Will you meet an untimely end and leave the business in the hands of ill-prepared heirs? Will you lock the doors and walk away? Will you hand it over to a successor?

Don’t like the sound of some (or all) of those options? Here’s why they aren’t what’s best for you or your business.

If you own a family business, you may just think your children will take over when you decide to retire or if something happens to you. Perhaps they’ve even worked in the place since they were kids. The problem here? Have you asked them if they want your business? Are they capable of sustaining the business like you do? Do they have the same level of commitment and drive that has helped you grown the business to what it is today? Many, many family businesses fail when they get handed down to the next generation because the drive and passion does not transfer when mom or dad hands over the keys.

If you are thinking about liquidating your business assets and locking the doors come retirement time, you are potentially leaving an enormous amount of money on the table. An operating business is worth more than the value of the assets alone. You also need to consider your employees. If you lock the doors and walk away you will be taking away the income of your staff, income they rely on.  

What to do instead? Sell.

One of the best ways you can leave a business is by selling. Selling your business means the business gets to live on and remain a place for your employees to work. It also means you will get a financial return on your investment of time, energy and money. You can then use that return for your retirement or to invest in another venture – like a business your kids actually want.

We know that owning a business is life-encompassing, but you can’t let that stand in the way of planning an exit strategy. Having a plan in place, like reaching a certain age or financial milestone before selling, will greatly improve your chances for getting a big return on the investment you’ve made in your business. Don’t leave it up to the large female singer.

Do you own a business but don’t currently have an exit strategy in place? Would you like to know what businesses like yours have recently sold for? 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

https://infinitybusinessbrokers.com

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Positive feedback? Leave what they love alone.

When you are trying to sell your business, a good deal of your focus should be on boosting your bottom line to make the most money possible in your sale. There are a myriad of ways you can boost your numbers in that critical time between listing and selling, like cutting costs and ramping up marketing – but many small business owners overlook a simple way to utilize something every business has, customer feedback.

Customer feedback, including the positive feedback, is a way for your customer base to let you know how they feel about the goods and services you offer. The amount of positive feedback you receive is also a good barometer of how happy your customer base is with you. This is important because if your customer base isn’t happy, then they aren’t spending their money with you.

If selling your business is your ultimate goal, then paying attention to your positive feedback will be critical to the growth of your business and critical to it’s appeal to prospective buyers.

Why?

When business owners get ready to sell, they sometimes think about making changes that will appeal to prospective buyers. Changes that appeal to buyers can be a good thing, but a seller has to be careful that any changes they make don’t upset their customer base. Here’s an example of what we mean:

You have a small cafe that is popular with the local clientele. The decor is a bit old, but if you read the reviews of your business you find that the vast majority of your customer base regards the decor as part of your cafe’s charm. In a move to impress buyers who would be coming to your area buy a more modern cafe or restaurant, you undergo a major renovation to update your space. Buyers might like the new look, but your local customers will hate it and stop frequenting the business. This sharp hit to your bottom line, in addition to the added expense of the renovation will ultimately mean you get less for your business in the end.

The message here is you need to pay attention to the things your patrons like about your business, and then leave those things alone. Don’t make major changes to impress a buyer because the right buyer will understand why you’ve left the popular parts of your business untouched.

Making changes to keep your customers happy and coming back will add value to your business. Making changes will also show prospective buyers that you care about the growth and future of your business – just be careful that the changes you make appeal to your customers first.

Are you thinking about selling and are wondering what buyers will be looking for? Do you have questions about what types of changes would be appropriate? Ask us! Leave questions or comments here and we will be happy to help.

Ready to read What The People Want: Why Business Sellers Need To Pay Attention To Negative Feedback? Click here.

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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Negative feedback can be positive for your business.

When you are trying to sell your business, a good deal of your focus should be on boosting your bottom line to make the most money possible in your sale. There are a myriad of ways you can boost your numbers in that critical time between listing and selling, like cutting costs and ramping up marketing – but many small business owners overlook a simple way to utilize something every business has, customer feedback.

Customer feedback, especially the negative feedback, is a way for your customer base to let you know how they feel about the goods and services you offer. The amount of negative feedback you receive is also a good barometer of how happy your customer base is with you, and this is important because if your customer base isn’t happy, then they aren’t spending their money with you.

Negative feedback can be unpleasant, and it’s much easier to ignore than it is to face, but a smart business owner will take the negative feedback they get and use that information to make positive changes within their business – especially when selling that business is the ultimate goal.

How should you deal with negative feedback?

Have more than a handful of your customers complained about the customer service skills of your staff? Maybe some staff retraining or a staffing change would keep clients you might otherwise lose coming back. Have people complained about your prices? Perhaps re-running the numbers and making a few price adjustments will better cater to your customer base – and keep them spending money.

A caveat here – don’t respond to negative feedback with anger. Even if the feedback is inaccurate, throwing a tantrum and blasting back will cause way more harm than good to the image of your business. Remember that anything you post online is there forever, and not only your current and future customers will be reading it. Prospective buyers will as well.  

Making changes to keep your customers happy and coming back will add value to your business. Making changes will also show prospective buyers that you care about the growth and future of your business. No matter how unpleasant, face the complaints head on – then use that information to boost your bottom line.

Are you considering selling your business and are worried that bad customer reviews might hurt your chances of selling? Do you have questions about the types of things buyers look for? Ask us! Please feel free to leave comments or questions and we would be happy to help.

Ready to read What The People Want: Why Business Sellers Need To Pay Attention To Positive Feedback Too? Click here.

Michael Monnot

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

https://infinitybusinessbrokers.com

No Comments »