The adage that it takes about 10,000 hours to master any kind of craft is true of any industry, and as a small business owner you’ve probably seen this first hand. Ten thousand hours works out to about five years of full time work, and if you’ve owned your business that long or longer we’d bet you feel you really know the business and the industry inside and out.

Now the time has come to sell your business and you are looking for some help. You find a business broker who is willing to work on the cheap – and he’s a brand-new broker so you think you’ve got someone who’s fresh in the industry, that can’t be a bad thing, right?

We have just one question to ask you – were you the master of your industry right out of the gate? Did you make mistakes back then you never would today with the knowledge and experience you now have under your belt? Hiring a rookie broker is like hiring rookie you from all those years ago when you first became a business owner.

Who would you rather have handling one of the biggest financial transactions of your professional life? Rookie you, or you today? We’re pretty sure you would choose you today, because practical experience always trumps “fresh”.

The same is true with business brokers. You want an experienced pro, not the new kid on the block. How can we say this with such confidence? We see the ramifications of hiring a rookie broker all the time.

Like any industry, there are the rookies and then the brokers who have been around long enough to make a real name for themselves in their region. A seasoned vet will have working relationships with other brokers in the area (meaning a larger pool of ready-to-buy buyers), a new broker will not. We’re not saying that it’s a great thing that many newbies have a hard time getting cooperation from other brokers, but it does happen. This industry sees many budding brokers fail and move on to other careers, so the vets will typically only cooperate if you’ve already proven your staying power.

Another major reason to stay far away from a rookie broker? They make lots of mistakes. Big ones. Mistakes like these:

Treating your business listing like a listing for a house and disclosing that your business is for sale to the whole world. You will probably lose employees, vendors and clients – let alone the headaches of constantly having tire-kicking “buyers” traipsing through your business and disrupting normal operations.

Letting you price your business however you please, without any understanding of the multiples, comparable sold businesses, the market or your numbers (which are so much more than what appears on the bottom of your tax return). The purpose of listing a business should be to sell it, and improper pricing can lead to listing purgatory.

Using a one page P&L and your last tax return as your only marketing materials distributed to buyers. Look at last year’s tax return. Does the number on the bottom line truly describe your business in its entirety? Nope, of course it doesn’t. Only an experienced broker knows what works and what doesn’t when it comes to a marketing package.

Don’t make the mistake of having a rookie broker handle your transaction. Hire an experienced, knowledgeable and qualified business broker instead.

Are you a business seller who has questions about the differences between a new broker and a seasoned vet? Ask us! Please feel free to leave us a comment or question here, and we will be happy to help you.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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Let’s look at a scenario where a small business owner has come to you, as a friend, for advice.

He is considering selling his business, but isn’t sure that the time is right.

His business is currently very profitable, and although his health is good – retirement needs to be in the picture sooner rather than later.

The economy looks good, and business is booming.

Should he stay in the game to maximize his earning potential or should he sell while the business is at its peak? Could he make more if he stays in the game for two more years and then cashes in?

What would you advise this business owner to do?

You would probably advise him to stay in the game, why leave a business that is making you serious money, right?

We left out a major detail here, it’s 2007… Now what would you tell this owner to do?

The point of this exercise is to highlight that the best advice in this situation, the advice to sell, can only be given with the power of hindsight. In 2007 this business owner likely had no idea of the economic disaster that was about to come his way. For the businesses that survived the recession, and many did not, it has taken many years to get back to their 2007 numbers if they have at all.

Sometimes the best thing you can do for the investment in your business is sell while the selling is good. Gambling with what the future might hold for your business could end up meaning what it did for those who were trying to sell their businesses in 2008 as opposed to those who were able to sell in 2006. It is far easier to sell a business that is doing well than one that has taken a major hit or is in a downward slide.

This decision can be an agonizing one, but if selling your business is something you are considering doing in the foreseeable future, now might be the best time.

Have a serious talk with an experienced and qualified business broker about how your industry is doing, what comparable businesses in your area are currently selling for and about whether it would be advisable to sell your business now while the chances of making a great return on your investment are really quite good.

Thinking about selling, but you’ve been waiting for the right time? Curious about what other business sellers in your industry were able to get for their businesses? Ask us! Please leave a comment or question here, and we would be happy to help you with any selling questions.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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It may seem counter-intuitive at first to position and market your business in such a way that your biggest competitor will want to buy you, but these strategic acquisitions are good news for a business seller. Who better to purchase your company than a bigger fish in your industry’s pond?

They will have the available capital, they know and understand your industry, and it is a big compliment to your business if they want to bring you into their fold.

How can a business owner position their company to attract this kind of buyer?

Branding

Building your brand should be a big part of any business owner’s goals, but if you are looking to get noticed by the competition you will need to have a brand that can contribute effectively to the market position of a competitor. To do that you will need to hold a decent market share.  You also need to be able to describe your brand effectively in those key first meetings with a strategic buyer. What does your brand say?

Your Team

In any growing and successful operation there is a core team that makes the business the well-oiled machine that it is. A strategic buyer is going to want this core team to remain in place, allowing for a seamless transition and putting aside any fears that you are the only glue that holds the company together.

The Future

Strategic buyers typically don’t buy companies that are in an asset-sale/liquidation/downward spiral, they want a business with a strong future. You should always have your eye on the future of your business, but when you are positioning yourself to be acquired you should be in the process of developing and building your business for the days ahead. This forward-thinking direction will be very attractive to strategic buyers.

Your Sales

This is a number you should always know,  as it will be a figure on the top of the priority list for a strategic buyer. This number will speak directly to the amount of market share you hold, and the amount of market share that they will be acquiring if they buy you out.

Growing, Growing, Growing

As we mentioned before, the strategic buyer is typically looking for a business on the way up, not on the way down. Have the narrative of your growth and your projections ready to discuss, as well as knowing how your growth compares to the industry average. Do you know the size of the market you are in?

If you are considering selling your business, looking to a strategic buy from your competition might be a good move. Talk with your business broker about this type of buyer and whether this type of buyer would be right for your business.

Are you a business buyer who is horrified with the thought of your biggest competitor buying your company, but are curious about what the numbers might look like for you if they did? Would you like to know more about positioning your business to attract this type of buyer? Please leave us a comment or question here, and we will be happy to help you with strategic buyers.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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Small business ownership is usually a family affair. In many cases, some or even all of the employees are made up of relatives of the ownership. This family business set up has its advantages, in that ownership knows and can trust the staff. Also, in cases where the family members either don’t take a paycheck or work only for tips, this can keep payroll costs down.

This may sound like a win-win situation, but no one stays the owner of a business indefinitely. For many family businesses, owners tend to be lackadaisical about their eventual departure because they assume that the next generation will just take over when mom and dad decide to retire. If this isn’t the actual future of your business, then you as an owner have some serious considerations to deal with.

What if the kids decide to take their own path?

It is not uncommon for children to choose a different career than their parents, so although your kids may be dedicated to the business now with you as the owner, it may not be the path they consider when looking long-term.

Sit down with your family and have a very serious discussion about your eventual departure as owner of the business. Ask your children if they really want to own the business themselves. Find out if their passion lies elsewhere.

What if an owner knows that their children are not going to be able to keep the business afloat when they are running it by themselves?

We see this situation from time to time where a very driven and detail-oriented owner hands the business over to their not so driven and terribly disorganized child in the hopes of some kind of retirement. What invariably happens in this situation is the now “retired” parent is forced to stay in a major role within the business in order to keep their other loyal employees in a job and keep all of their years of hard work from going down in flames.

If you feel that your child won’t be able to take on the responsibility, do everyone a favor and tell them upfront that they will not be inheriting the business. It might be better for the legacy of your hard work and for your children if you sell the business and then use some or all of the money to invest in another opportunity where they will have the passion and drive to succeed.

If you have a family business, it is a good idea to address these concerns long before the day you want to hand over the business to someone new. Some other issues you will need to address (like what your lack of payroll will do to the value of your business to buyers) can be found here in “Making the Kids Work For Free: Why the Family Business Looking to Sell Needs to Think Ahead”.

Are you the owner of a family business who is trying to decide what the future of your business should be? Do you have questions about what your options are? Please feel free to leave us a comment or question here, and we will be happy to help.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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If you ask most small business owners, they will likely tell you that they have an exit strategy for their eventual departure as leader of their business. For many, this exit strategy may involve passing the family business down to the next generation, or perhaps they intend to sell their business when the time comes. What many small business owners don’t do is keep their business ready to sell.

Why would any business owner concern themselves with an eventuality that seems so far away?

The reason is life can be very unpredictable, and the time to sell might be far sooner than you think it will be. Having your business in ready-to-sell shape will avoid the panic we often see when an owner is suddenly forced to sell.

What are the reasons that an owner would be forced to sell?

The most common we see are family and personal issues. Divorce, a sudden illness for the owner or for a close member of the family, and a need to relocate for another member of the family are reasons that typically occur suddenly and can’t be pushed to the backburner in order to keep the business running. If you are a seller trying to contend with such personal upheaval, it will be difficult to focus on the pre-sale issues that you would have to contend with if your business is no where near ready for the market.

How can I get my business in ready-to-sell shape?

First and foremost, get your financial records in order. If you are like many small business owners, you may have a filing and record keeping system that makes sense to you, but that no other person could possibly decipher. You would need to have at least the past three years of tax returns and current P&L statements put together, but in reality all of your records need to be kept as orderly as you can so that a business broker and buyers can make heads or tails of your business when it hits the market.

Secondly, don’t let the aesthetic appearance of your business go, or let your business fall into a state of disrepair. Any buyer that comes in the door will be greatly affected by a first impression, so keep your business clean and in good shape.

While no one hopes that they will suddenly need to sell their business, it is a circumstance that happens all the time. By keeping your business in a ready-to-go state, you will be better prepared should the unexpected happen.

Are you a business owner who has questions about how to keep your business in ready-to-sell shape? Do you want to know what buyers look for in your industry? Please feel free to leave us a comment or question here and we will be happy to help you get your questions answered.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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One of the greatest aspects of being a small business owner is your business is your own. You’ve made it into what it is today, and for the most part small business owners love what they do. Difficulties can arise, however, when you’ve made the decision to sell your business.

For many it can feel like your business is your whole life, and as such it can be difficult to sever that tie at a closing table. From time to time deals fall apart because a business seller looks at what comes after the closing table and begins to get panic-driven cold feet. The sense of loss of control, coupled with the fact that a seller basically becomes unemployed the day they sell their business, can absolutely get in the way of reaching the closing table.

What can you as a seller do to keep from derailing your own sale?

Take some time to prepare yourself for post-sale life.

The first thing to do is think about the way you describe your business. We sometimes feel like a business is so much a part of our lives that we use the same terminology we would for the people in our lives.

Do you love your business? You may think that you do, but what you actually love is what your business does for your life. If you break it down for yourself you probably love the fact that you are your own boss and the freedom that brings. Think about the time after the sale in the same way. You will still be in control of your day to day life and you will have much more freedom than you do today.

Another common feeling may be the satisfaction you get every day from getting to wake up and do what you love. If the sense of purpose you get from your business is what you will miss the most, find something else to do post-sale that will give you the same level of satisfaction. If you had your own construction business, you could volunteer your time to build homes for veterans, for example.

The key here is to not let your emotional connection to your business keep you from selling. Think about how you can keep the parts of your business life that you love after the sale and you will be better prepared to let go.

Are you a seller who is nervous about selling? Do you have questions about how to better prepare yourself for life post-sale? Ask us! Please feel free to leave us a comment or question here and we will be happy to help.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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