ENTREPRENEURSHIP THROUGH ACQUISITION
A Reliable Alternative To Chasing Unicorns
From the Trenches - Interview With California Business Broker Randy Hendershot
Q&A with business broker Randy Hendershot on the current state of the business acquisition & sale industry, and where things are headed.
Randy Hendershot
Current market perspective from the trenches of the business acquisition & sale industry
Sit-Down Interview With Business Broker Randy Hendershot
What are your thoughts on where business acquisition & sale market activity is heading over the next 3-6 months?
If the last quarter of 2020 is any indication of business for sale activity in 2021 the marketplace will be very active. Both individual and strategic buyers are looking for strong businesses to acquire.
Due to the Pandemic, we are seeing quite a few buyers looking to exit the corporate world and become their own boss.
What do you see as the most significant SELF-IMPOSED threats out there that could hurt the market for business acquisition & sale and small business activity in general?
Business owners need to continually update their monthly financial records keeping them current and in order for buyers to have a complete understanding of the business.
We also continue to see examples of high customer concentration issues creating challenges for buyers to move forward with a purchase.
What Makes Evolution’s Approach so Special?
What do you see as the top three things the government needs to do to support the main street business acquisition and sale opportunities for small business owners through the remainder of this year?
Allow small businesses to make their own decisions in creating an environment in their business that makes customers feel safe. If they do this customers will return. I have the utmost faith in entrepreneurs in that they will figure out how to be successful during the Pandemic.
Provide financial assistance options if need be for qualified businesses.
Stop changing the rules weekly and monthly on how businesses need to act during the Pandemic.
What do you see as the top three reasons to BUY a business in 2020?
Take control of your future by being your own boss and not relying on someone else.
Banks are eager and willing to lend in this environment with reasonable rates.
Automotive Service shops continue to perform well during these hard times here in Northern California.
What are some of the questions a business owner should ask when choosing an advisor to help buy a business or work on exit planning to help navigate through this challenging stretch?
Sacramento and Bay Area business owners should dig into the details on how a business broker will market their business to find buyers.
Other than the numbers, which are very important, how will a business broker "package a business" to help buyers understand the true story of the business?
3 Value-Wasting Mistakes to Avoid When Hiring a Professional Business Broker
How would you rate the current political environment related to small business growth, business acquisition & sale?
2/5
What are your thoughts on transaction terms for buyers & sellers in the current market?
We are seeing buyers seeking to have more of a percentage of seller carry in business for sale deals in the Northern California market place.
The main reason is the "unknown" as we navigate forward in the Pandemic. The challenge is showing buyers how the business is performing during these times compared to pre-Covid-19 times.
A month by month comparison for 2020 compared to 2019 is a must to help tell the story.
Why Should I Hire a Broker?
Thoughts on business valuations in today's market?
The key to valuations in the current Sacramento and Bay Area market place is how fast a business comes back to pre-Covid-19 times.
If a business is getting back to normal, valuations will most likely remain close to the pre-Pandemic times, yet the terms will most likely be more risk-averse for buyers.
Businesses still affected by the Pandemic may be hard to sell and if so will most likely see a drop in the sales price. If your business is performing better during the pandemic you may see some increase, but more likely have much more buyer interest which can help with both price and terms.
Marketing The Deal - Interview With Cleveland Business Broker Brad Ruth
Q&A with business broker Brad Ruth on marketing businesses for sale.
Brad Ruth
Current marketing the deal state of the business acquisition & sale industry
Sit-Down Interview With Business Broker Brad Ruth
Talk to me about the marketing process for marketing a business for sale… What are the top considerations a business broker needs to manage well?
I market my businesses on my company and personal LinkedIn profile, business Facebook page, company website, BizNexus, and BizBuySell. I have an email list of about 650 active buyers that have expressed interest in businesses I have sold in the past. As a broker, it is important that I respond quickly to interested buyers with a link to NDA and a phone call.
Where do you see sellers typically fail when marketing their own business for sale?
Sellers typically do not have a strong network and they should be concerned about keeping the sale confidential.
What are your favorite tools & platforms for marketing a business for sale?
How many buyers do you typically want to have bid on a deal you represent?
It just depends on the business, but usually 2 or 3.
Anything else? What’s special about your particular marketing strategy for sellers in this market?
I believe I am more active on social media and I have an extensive list of active buyers that I stay in touch with. This is definitely an area I can always improve.
From the Trenches - Interview With Florida Business Broker Charlie Meeks
Q&A with business broker Charlie Meeks on the current state of the business acquisition & sale industry, and where things are headed.
Charlie Meeks
Current market perspective from the trenches of the business acquisition & sale industry
Sit-Down Interview With Business Broker Charlie Meeks
What are your thoughts on where business acquisition & sale market activity is heading over the next 3-6 months?
I believe that there will be significant opportunities to assist our clients through the sale of their business and with the influx of new Florida residents there will be great opportunities to assist buyers as well.
What do you see as the most significant SELF-IMPOSED threats out there that could hurt the market for business acquisition & sale and small business activity in general?
If the trend continues whereby everyone continues to hunker down under the threat of COVID-19 we are in for a very long recovery.
That recovery may not even be realized is our political client doesn't correct itself as well. Business owners will not contemplate a structured exit for their business, but rather sell out of fear that they could lose everything.
So there are two issues to consider as we move forward that could threaten the survival of our total social system.
What do you see as the top three things the government needs to do to support the main street business acquisition and sale opportunities for small business owners through the remainder of this year?
Lift the restrictions on how businesses operate.
Allow businesses to function as they have in the past.
Keep our tax structure in place as it is.
Eliminate ObamaCare
Let businesses run themselves instead of allowing government to override what has worked for many years.
What do you see as the top three reasons to BUY a business in 2020?
The inventory is available and unfortunately, the prices are lower than they have been for many years. This is difficult as there are so many uncertainties at this time in our economic environment.
7 critical points every business owner must know berfore selling their business
What are some of the questions a business owner should ask when choosing an advisor to help buy a business or work on exit planning to help navigate through this challenging stretch?
When choosing a business broker to help you sell your business, be sure to ask the following questions:
What is your experience in selling a business like mine?
How will your market my business for sale?
How will you price my business so that it will sell quickly?
What do you know about my industry and where to find the likely buyers?
buying a business - where do you start
How would you rate the current political environment related to small business growth, business acquisition & sale?
2/5
What are your thoughts on transaction terms for buyers & sellers in the current market?
There needs to be flexibility on the parts of both buyers and sellers to get the deals done. There needs to be some seller financing.
Sellers need to provide a comfort level to the buyer regarding retention of the customer/client base.
Thoughts on business valuations in today's market?
Business valuations are very important in the determination of what a business may sell for.
Watch the whole interview with Florida Business Broker
Charlie Meeks.
From the Trenches - Interview With Alberta Business Broker Steve Fylypchuk
Q&A with business broker Steve Fylypchuk on the current state of the business acquisition & sale industry, and where things are headed.
Steve Fylypchuk
Current market perspective from the trenches of the business acquisition & sale industry
Sit-Down Interview With Business Broker Steve Fylypchuk
What are your thoughts on where business acquisition & sale market activity is heading over the next 3-6 months?
My brokerage is focused on the Main Street market. For a few months in early 2020, we saw a slow down of new businesses coming on the market in Calgary and Alberta. That period has past and activity has picked up. That pause in new businesses will cause a drop in closed deals over the next 3 - 12 months but it will be spread out.
What do you see as the most significant SELF-IMPOSED threats out there that could hurt the market for business acquisition & sale and small business activity in general?
The most significant self-imposed threat to our industry in the near future may be business owners that think a sale is impossible due to a dearth of buyers. There is no shortage of buyers for good businesses. Business owners should always talk to a professional and get an unbiased opinion on the saleability of their business.
What do you see as the top three things the government needs to do to support the main street business acquisition and sale opportunities for small business owners through the remainder of this year?
Governments need to make it easier to borrow money for the acquisition of a business and lower the tax burden on sellers. The more a business owner can keep after a sale, the more likely he/she will want to sell and for a reasonable price that makes sense for a buyer and a lender.
What are some of the questions a business owner should ask when choosing an advisor to help buy a business or work on exit planning to help navigate through this challenging stretch?
When choosing a business broker to help you sell your business Calgary, be sure to ask the following questions:
What kind of qualifications do you have?
Are you a member of the IBBA?
How many businesses did you sell last year?
Do you know what the market will pay for my business?
How will you keep the sale confidential while attracting buyers?
How would you rate the current political environment related to small business growth, business acquisitions & sales?
3/5
From the Trenches - Interview With Virginia Business Broker Hal Feder
Q&A with business broker Hal Feder on the current state of the business acquisition & sale industry, and where things are headed.
Hal Feder
Current market perspective from the trenches of the business acquisition & sale industry
Sit-Down Interview With Business Broker Hal Feder
What are your thoughts on where business acquisition & sale market activity is heading over the next 3-6 months?
I am seeing brisk activity and engagement from both buyers and sellers but the interest levels are very business category-dependent. By this I mean there seem to be 4 main groups of businesses:
Thrivers: businesses that are essential and doing better than ever within the COVID landscape.
Survivors: businesses that are experiencing an adverse short-term impact, but will come back to pre-COVID performance over time.
What I Worry: businesses that have not been very impacted by COVID either up or down.
Demise: these are businesses that will not be able to survive the impact of COVID and the related economic disruption surrounding the virus.
I expect the next six months into 2021 to continue along with the "cautiously optimistic" mindset. The buy-sell market seems to have digested the news and adverse impact of the virus, and despite, the rise of infections and deaths in certain geographies, I think business owners and prospects believe in the strength and resiliency of the underlying favorable economic fundamentals of the marketplace.
The promise of an effective vaccine and improving therapy outlook is also a positive which provides an air of hope that come 2021 we can return to a pre-COVID pace.
What do you see as the most significant SELF-IMPOSED threats out there that could hurt the market for business acquisition & sale and small business activity in general?
Attitude determines altitude ... business owners need to adapt, be flexible, and learn important lessons from the current market challenges.
Why waste a good crisis? Seriously, 2020 is shaping up to be a great litmus test of adaptability and survivability for all of us. What can we learn from these challenges now that will better position us in the future? I will give you an example .... after spending 35 years in the global auto business, I specialize in valuing, marketing, and selling franchise automotive dealerships.
Before COVID, many auto dealers were reluctant to get into digital selling in a meaningful way. The virus came and changed all that.
Auto dealers were "forced" to find new ways to sell products in a touch-less manner. The virus challenge enabled a sea-change of new methods, processes, and initiatives that will improve the way customers choose to buy vehicles. Event + Reaction = Outcome. The reaction to a difficult event has now led to a positive outcome for both dealers and their customers.
The greatest self-imposed threat is everything that lies between our two ears!
POSITIONING FOR A SUCCESSFUL EXIT
What do you see as the top three things the government needs to do to support the main street business acquisition and sale opportunities for small business owners through the remainder of this year?
Develop a fast and simple way for business owners to get their PPP loans forgiven. It worries us when I see a one-page form to obtain the loan and a ten-page form to get forgiveness for the loan.
Provide banks with guidelines to facilitate the sale/transfer of business when a PPP loan is still active and not yet forgiven. Businesses are bought and sold every day including during a global pandemic ... help us help the business owners!
Continue to monitor the market impacts of COVID and act swiftly with new programs if and when they are required. Small business is the lifeblood of the USA economy and can lead us back to full recovery if we continue to support them.
What do you see as the top three reasons to BUY a business in 2020?
There are vast numbers of great businesses for sale right now. The boomers are retiring in big numbers and demographics are driving excellent business inventories and opportunities.
Interest rates are near historical lows which greatly improves business affordability. This fact coupled with banks having available capital and an aggressive leading posture set up nicely for buyers.
In the auto sector, the shift to electrification, autonomous vehicles, and ride-sharing platforms is driving a lot of industry disruption. Where there is disruption, there is an opportunity. Right now it seems as if half the dealers are looking for the exit door, and the other half wants to consolidate operations and get bigger. Depending upon your goals, this is a great time to be a buyer and a seller if you are working in the franchise automotive industry!
What are some of the questions a business owner should ask when choosing an advisor to help buy a business or work on exit planning to help navigate through this challenging stretch?
The effective business broker has to wear a lot of hats ... they have to be a trusted advocate and place the client's interests upon all else, they have to be a financial wizard and understand the financials to develop a market-based pricing offer.
They have to be marketing experts and develop a campaign that gets the business in front of the right prospects. They need to be an effective merchandiser and develop a package of materials that conveys value in a compelling, relevant, and differentiated manner. They have to be the "deal quarterback" and call the plays they move the deal towards closing, including bringing in functional experts when needed. Above everything, they have to protect the confidentiality of the client, safeguard their interests, and help them derive the most return from their hard-earned investment in a swift, stress-free, and high integrity manner.
The question to the broker should be: How many hats can you wear?
How would you rate the current political environment related to small business growth, business acquisition & sale?
4/5
What are your thoughts on transaction terms for buyers & sellers in the current market?
Every deal, every buyer, and every seller is different. There is no such thing as an average deal. What I try to do is to pre-qualify all my listings such that there is a term sheet included in the prospectus package which spells out for the buyer an attractive, viable way to purchase the business via a bank loan.
I have found this practice makes a good listing, a great listing, and makes a great listing, a terrific listing!
Learn More On Deriving The Highest Return From The Sale of Your Dealership
Thoughts on business valuations in today's market?
Business valuations are a fundamental process step in the pricing of the business. Depending on the business category, the COVID situation can impact the valuation -- both positively or negatively.
I am finding that solid, established, and profitable businesses that possess strong brand equity, and motivated, talented teams are holding their multiples and business values in this environment.
Buying a Business: How to Value a Small Business That's for Sale
Buying an existing business can yield big rewards. The more market value a business has the better. Read on to learn how to value a small business that's for sale.
Buying a business
How to value a small business for sale?
Buying an existing business can yield big rewards. The more market value a business has the better.
Discover how to value a small business that's for sale.
Starting a business from the ground up is a major undertaking without any guaranteed success after all that hard work. In fact, once opened, only about 20% of businesses survive their first year. This statistic is both staggering and disheartening.
Instead of swinging for the fences and shedding blood, sweat, and tears in the hopes of getting a business to profitability, you can ensure success and profitability by purchasing a business instead of starting one.
You might be wondering how to go about putting a dollar value on an active, profitable business.... There are certain ways you can go about that and make sure that you're investing your money in the right places.
Keep reading to learn how to value a small business that's for sale.
1. Assess the Business Market Value
If you want to know how to evaluate a business, one reliable method is to assess the business market value.
Business value is determined by the market itself. With this in mind, you can compare the type of business you want to buy with the same types of businesses that have already sold.
If a business you want to buy is way above the determined market value, then you might be getting ripped off. However, the market value isn't the only factor to consider.
2. Calculate Assets and Liabilities
Another way to get an accurate idea of how much a business is worth is by determining the difference between assets and liabilities. That number will be a reliable indicator of whether or not you should invest.
Remember that assets are a bunch of smaller chunks of a business that can add up to much more value than what might first meet the eye.
Liabilities, on the other hand, are debts that the small businesses still need to pay off, which takes away from value, of course. With that in mind, too many liabilities can be a red flag when thinking about buying a business.
Check out this video if you are looking to buy a website, eCommerce, an app or SaaS Company
3. Check the Income History
Yet another way to assess the value of a small business is by looking at its income history.
This is a great way to figure out whether your investment will be profitable at the get-go. You can also figure out if you're looking at a low-maintenance business or one that will need more work put into it.
By adding up the net profits of the business from the past and getting the average, you can have an idea of what to expect after you buy the business.
From there, you can use a purpose-driven model to grow that business even further if you're up to the task.
You Know How to Value a Small Business
Now that you know how to value a small business that's for sale, you can start thinking about taking your first steps towards finding an actual business to approach.
Whether you want to buy a business that's for sale or put your business on the market through a business broker, BizNexus can help you get matched.
To get started, sign up and set your acquisition preferences, and start getting matched with businesses for sale and business brokers who can help you. Try it at www.biznexus.com
BizNexus -Learn More From Our YouTube Playlist:
BUSINESS ACQUISITION
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THE BIZNEXUS ROUNDUP
Quick & dirty interviews, war stories & tips from the trenches of business acquisition, growth & sale. We aim for value, efficiency & fun, so you'll walk away with something useful to take with you along the journey of buying, growing & selling a business.
What You Need to Know About Selling a Small Business
Start with this entrepreneur's guide to selling a small business as quickly and efficiently as possible.
Read to exit your business?
Here are great tips you need to know
You're ready to move on to the next venture. Start with this entrepreneur's guide to selling a small business as quickly and efficiently as possible.
Selling a small business
In 2018, there was a 4% increase in businesses sold from the previous year. The 2019 numbers are just coming in and it's clear this has been a banner year for business exits/sales.
The economy has been on a tear and business owners are cashing in on a market with active buyers and high price multiples. But don't believe that just because you have a business, and because you work really hard in that business, that you'll be able to sell your business quickly.
There are steps you need to take when selling a small business, and we want to share with you what they are. Keep reading our guide to learn how to sell your own business.
Figure Out Why You're Selling a Small Business
The first step to selling a small business is being able to clearly articulate why you want to sell. Most potential buyers will ask this question right off the bat.
Most business owners decide to sell for the following reasons:
Bored
Overworked
Retiring
Illness or death
Partner problems
Others decide to sell because their business isn't profitable and their soul has been accordingly crushed after years of slugging it out with nothing to show for it. Selling a struggling business is like trying to sell a rundown house with a crappy foundation and a frat house next door. It's harder to get a favorable transaction done and there are fewer buyers out there interested in dealing with the problems they'd be inheriting in a market with so many attractive deals for sale.
You're better off trying to fix any addressable problems before putting your business on the market if you can take the time to do it.
You Must Know The Real Value When Selling a Company
It's vital you know how much your company is actually worth in the eyes of a potential buyer. This will ensure you don't price it too low or too high.
Find a business broker to get a valuation. The broker will provide you with a detailed explanation of your business's worth based on real market comparable and professional experience.
A formal valuation can also help you back up your asking price. Most buyers will ask for the business to have a valuation done at some point in the process, so better to arm yourself with one before you start engaging prospects.
Prepare Documents
There are certain documents buyer's will need to take a look at regarding your business such as:
Financial statements
Tax returns (dating back three to four years)
List of equipment being sold with the business
A list of contacts of salespeople and suppliers
You should also include any relevant paperwork like your current lease. A buyer must understand exactly what he or she is getting if they choose to buy your business.
Find a Broker
Yes, you can sell a business without a broker but it's like selling a home without a broker. It's often more difficult, riskier, and leaves you vulnerable to making costly mistakes.
Selling your business tends to be a lengthy process. Being patient, taking your time, and being thorough will help you make smarter decisions.
Before choosing a broker, interview several before you choose which one to work with. A good broker will have a realistic approach. A bad broker will try to sell you a fantasy of what you can expect and it'll take longer for your business to sell it at all.
Put Your Business on the Market
Selling a small business doesn't have to be hard. You just need to surround yourself with the right team to help you find the right buyer. Use websites like BizNexus to match you with the right business intermediaries to help you sell your business on optimal terms at the right price.
Best of all, it's a free service. Click here to try it now.
BizNexus -Learn More From Our YouTube Playlist:
BUSINESS ACQUISITION
Have you checked out our podcast?
THE BIZNEXUS ROUNDUP
Quick & dirty interviews, war stories & tips from the trenches of business acquisition, growth & sale. We aim for value, efficiency & fun, so you'll walk away with something useful to take with you along the journey of buying, growing & selling a business.
What's Your Business's Market Value? How to Value a Company
Are you wondering what your business's market value is? Read this article to learn how to value a company fairly so you can sell fast and make a profit.
How to Value a Company
What’s Your Business’s Market Value?
Are you wondering what your business's market value is? Read this article to learn how to value a company fairly so you can sell fast and make a profit.
How to value a company
You’re finally ready to sell the business you’ve worked so hard on. The first step of the process is valuing how much your company is worth.
But if you’re new to selling a business, likely you won’t have a clue where to start. Thankfully, there are several ways to work out the market value of your company.
Ultimately, your business is worth whatever you decide it’s worth. But you can make your estimation using various ways to value the company and can choose a mix that reflects your final thoughts.
Keep reading to learn how to value a company.
Work out the Value of the Assets
If you’re wondering how to value a business, the first thing you should do is add up the value of everything the company owns. This includes all the equipment and inventory. Then, you’ll need to remove any debts or liabilities.
After all, a buyer would need to purchase all the same stuff if they were starting the business from scratch, so the company at the very least is worth the replacement cost.
While this doesn’t provide an efficient whole evaluation of a business, it’s a great starting point for understanding a business’s worth. Your final balance sheet will offer a good indication of the value of your business’s assets.
Remember that the company is probably worth a lot more than its assets though. Consider how much revenue and earnings the company pulls in.
Base It on Revenue
This leads us to another method on how to value a company. You can base the value of a company on its revenue.
How much does the company make in annual sales? Work that out and determine, using a stockbroker or a business broker, how much a company within your niche may be worth for a level of sales. For example, it may typically be worth about three times sales.
Explore Beyond Financial Formulas
It’s important not to just base your assessment of your company’s value on figures. For example, maybe the location of your business is extremely sought-after?
Always consider the value of your business based on other factors too, such as geographical location.
How to Value a Company for New Sellers
When considering how to value a company, these are some of the best methods to start with. However, one of the best ways to assist with the process is to consider professional help.
Here at Biznexus, we can help. We help match business owners with the best business intermediaries to help you sell your company for great value, on optimal terms.
The service is free for business owners, and we aim to help improve entrepreneurs’ chances of having a positive experience of selling their business. To learn more about how we can help, check out our website.
BizNexus -Learn More From Our YouTube Playlist:
PREPARING TO EXIT YOUR COMPANY
Have you checked out our podcast?
THE BIZNEXUS ROUNDUP
Quick & dirty interviews, war stories & tips from the trenches of business acquisition, growth & sale. We aim for value, efficiency & fun, so you'll walk away with something useful to take with you along the journey of buying, growing & selling a business.
Top Considerations When Buying a Business in Boston
Many people like the idea of owning their own business, but not everyone is cut out for starting one from the ground up. If this sounds like you, you may want to consider buying an existing business in the Boston area.
Buying a Business in Boston?
Here are top considerations you don’t want to miss
Many people like the idea of owning their own business, but not everyone is cut out for starting one from the ground up. If this sounds like you, you may want to consider buying an existing business in the Boston area.
There are several perks to this particular option. The business will already have a customer base, you will have actual numbers to work with rather than estimates, and you may be able to obtain certain patents related to the business. Get started by considering the following issues.
Location
Think about whether you want a business that is in your community or if you are willing to move. You could also look into a business that isn't tied down to one specific location. The location where you choose to conduct your business will impact many variables, such as taxes, labor costs, and other financial points that could affect your bottom line.
Size
Would you like to own a large enterprise or would a small family business be more your style? When looking for local businesses for sale in Boston, be realistic. Large companies make more profits, but they also come at a higher cost and involve more stress.
Industry
Don’t choose an industry simply because you like the sound of it. Choose a business that deals with an industry you already have experience with. The industry you choose will determine factors such as how many hours you will work.
Once you know what size business you want, what type of industry you are looking for, and where you want it to be located, it is time to start shopping. A business broker can prescreen possible business options and help you find in Boston that are within your area of interest. Login to BizNexus by visiting its website at https://biznexus.com/ for help finding these local businesses for sale that are just right for you.
BizNexus -Learn More From Our YouTube Playlist:
BUSINESS ACQUISITION
Have you checked out our podcast?
THE BIZNEXUS ROUNDUP
Quick & dirty interviews, war stories & tips from the trenches of business acquisition, growth & sale. We aim for value, efficiency & fun, so you'll walk away with something useful to take with you along the journey of buying, growing & selling a business.
5 Best Practices For Preparing Your Business For Sale
Are you ready to put your business up for sale? Here are some best practices we recommend you use to properly prepare your business for the sale.
Preparing Your Business For Sale?
Here are five best practices you don’t want to miss out.
Are you ready to put your business up for sale? Here are some best practices we recommend you use to properly prepare your business for the sale.
Business for sale
When you have a business for sale, you need to be certain that you are leaving no stone unturned when it comes to the details.
In addition to figuring out exactly why you want to sell, you'll need to cover your legal bases and come up with a strategy that works. This will help you fetch the biggest price, while also getting help with negotiating the deal.
Follow these tips so you can prepare your business for sale.
1. Get a Thorough and Up to Date Valuation
For starters, you'll need to get a proper business valuation. During a valuation, professionals that understand the market will take an objective look at your company to see how much it is worth.
They will look into all matters of the business, including your cash flow, debt, future growth potential, and other variables.
When your business has been valued, you will know what kind of sell price the market dictates and how much you can stand to earn. Having this report will also give you leverage and clarity when you're speaking to buyers.
Start to put together documentation for your business well in advance so that you can show clean, accurate records of your revenue, budgets, and other important matters.
2. Understand Completely Why You Want to Sell
Aside from financial implications, you need to know exactly why you intend to sell the business.
For some, it may simply be time for retirement, and selling the company can give you plenty of liquidity. You may also be at a point where cutting your losses and selling a majority of your company in an acquisition might make good sense.
Your reason for selling will help you choose which strategy can work best for you.
3. Carefully Vet Your Prospective Buyers
In addition to the sales price, you need to know who you're selling the company to.
Work with a business broker so that you can research every buyer's background. Finding a broker is crucial because studies show that only 20 to 30 percent of companies ever even find a buyer.
When you are seeking a buyer, move as carefully as possible so that your company lands in good hands, and at a good price.
4. Have a Plan in Place For the Transition
You need to have a solid exit strategy in place so that you can comfortably transition ownership and management.
When you have a plan, you're better able to choose a successor and make sure the company is in good hands once the sale goes through. It will protect the brand moving forward, and any future equity you might retain in the company.
5. Get Some Marketing Help
Your first two priorities should be to get legal help to know exactly where you stand and making a point to stay silent on it until the time is right for you to share terms with the public.
Once you are ready to announce to the public, make sure that you have a marketing team in place to help you communicate your message.
Follow the Right Tips When You Have a Business For Sale
When you have a business for sale, these are the tips that you need to keep in mind. It will help you get the best deal while protecting your interests.
Get in touch to set up a free consultation for our business sale and acquisition advice.
BizNexus -Learn More From Our YouTube Playlist:
PREPARING TO EXIT YOUR COMPANY
Have you checked out our podcast?
THE BIZNEXUS ROUNDUP
Quick & dirty interviews, war stories & tips from the trenches of business acquisition, growth & sale. We aim for value, efficiency & fun, so you'll walk away with something useful to take with you along the journey of buying, growing & selling a business.
Mistakes to Avoid When Selling Your Business
Are you selling your business? If so, make sure you avoid the mistakes listed here to ensure a successful and profitable transaction.
Mistakes to Avoid When Selling Your Business
To ensure a successful transaction
Are you selling your business? If so, make sure you avoid the mistakes listed here to ensure a successful and profitable transaction.
Selling your business?
In 2018 there were 30.2 million small businesses in America. In 2015 small businesses employed 47.5% of the private workforce in the U.S.
But there comes a time in every entrepreneur's life when they are ready to move on and sell their business. While the reasons for selling your business may vary, the goal is to walk away with a tidy profit.
You have to know what you're doing to ensure you sell your business for the most money. And there are tons of mistakes you can make.
If you're looking to sell your business, keep reading. We're sharing with you the biggest mistakes entrepreneurs make when selling a company.
Always Be Prepared Before Selling Your Business
Just like a well-thought-out business plan can help you grow your business, you need to do the same with your exit strategy. It's hard to get exactly what you want when you don't know what that is.
Collect Your Documentation
You'll need to gather a few key pieces of information in order to sell your business successfully such as:
Sustainable profitability projections
Identify and address lease issues
Identify and address staffing problems
No one wants to buy a business that isn't well run and well organized. This information will also help you set the price for your business that's on par with the current marketplace.
Plan Ahead and Start the Process Early
If you really want to be prepared to sell your business, begin the preparation process at least two years before you list it for sale.
Qualify Your Buyers
Another common mistake is not properly pre-qualifying prospective buyers. While you may think that qualifying a buyer too soon will scare them off, usually the opposite is true.
Instead, the pre-qualification process helps draw those buyers deeper into the sale. If you're worried about giving buyers access to sensitive information, have them sign documents such as a confidentiality agreement and financial background information.
This process will help you attract only serious buyers which means you won't waste your time wooing the wrong buyers.
Hire the Right Team
While it may seem like a good idea to try to save some money when selling your business by not hiring professional help, it's usually not. There's just too much at stake.
An investment broker and/or business broker can help you present your company in the best light.
How a Broker Can Help
They know exactly which databases to advertise your business on. They also know how to do the following tasks:
Preparing documents
Identifying buyers
Generating interest
Soliciting offers
They'll also help close the deal as quickly as possible.
How Other Professionals Can Help
But you may also want a transactional attorney to help with the following tasks:
Preparing an asset purchase agreement
Negotiating an asset purchase agreement
Handling documentation such as bills of sale and officer certificates
An accountant can help you structure your deal and help you plan ahead of potential taxes you'll have to pay. And a business appraiser can help you evaluate your business so you know what it's really worth.
Work With Us
Selling a company is a difficult process. It's important to surround yourself with the right team to help you save time, money, and prevent potential problems from arising.
We can help. Our team of knowledgeable experts can help make selling your business easy. Click here to learn how.
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Quick & dirty interviews, war stories & tips from the trenches of business acquisition, growth & sale. We aim for value, efficiency & fun, so you'll walk away with something useful to take with you along the journey of buying, growing & selling a business.
Top 10 Entrepreneurs Tips & Ideas for Buying an Existing Business
One thing that differentiates entrepreneurs from other people is the ability to see opportunities and take them. Opportunities exist in different forms and buying a business is one of the uncommon ones. There are people that erroneously assume that for a business owner to desire to sell, something must be wrong with a particular business.
How to Take a ‘Sprouting Seed’ and Make It Grow
Ideas for buying an existing business for sale
One thing that differentiates entrepreneurs from other people is the ability to see opportunities and take them. Opportunities exist in different forms and buying a business is one of the uncommon ones. There are people that erroneously assume that for a business owner to desire to sell, something must be wrong with a particular business. However, real entrepreneurs do not reason that way.
There are myriad reasons founders may like to sell their businesses. Some may just be bored of the business and are looking for new challenges. Others are particular about getting ideas off the ground and moving into the next idea in their heads. There are businesses that are in the form of ‘sprouting seeds’ with real potentials to grow into great companies. An entrepreneur may decide to buy such an existing business instead of starting a new one from scratch.
Actually, there are several advantages of buying an existing business. The chances of failing with an existing business are slimmer than the chances of failing with a new startup business. This means it is less risky and can be extremely rewarding when handled the right way. Before buying an existing business; however, it is important that a true entrepreneur performs his/her homework. There are so many things to know about an existing business before buying it.
From the time you decide to buy a particular business till the first few months of running it, you have to get so many things right in order to succeed. It may be a little less risky than starting a business from ground zero, but a single wrong move can lead to failures too. Here, we will discuss some tips that can be helpful in setting you and your ‘sprouting seed’ up for success:
Understand Why the Business Owner Really Wants To Sell
This may sound a little disconnected from the picture we painted above about why some founders may want to sell their businesses. We will be living in denial if we don’t point out that there are businesses for sale that are actually not in great shape. There are instances where business owners want to sell because their businesses are going down or are facing some legal or licensing issues. Take your time to understand exactly why the business you want to buy has been listed for sale. This will save you from buying a business that is bound to fail.
Be Sure the Business Is What You Really Want
Before setting out to buy an existing business, it is important that you define what you want in a business. You also need to make sure that a particular business you are interested in meets your requirements before considering it. The most important factors to consider include the location of the business, the size, the industry, and its suitability to your lifestyle and aspirations. It is important that the business you are considering buying meets the majority of these important factors. This will help you to buy a business that you will enjoy running. You should also consider your short-term and long-term goals.
Consider Working With a Business Broker
No matter how experienced you are in business, it is not advisable to go on the road alone when it comes to buying an existing business. In fact, it is impossible to do that. There are a number of people you will need to complete the transaction. It is not compulsory to have a business broker as part of your team but it is very important. There are so many things a business broker can do for you: a reputable one will help you avoid pitfalls while buying an existing business. A business broker can even help you find a business for sale that meets your requirements. He/she will also stand by you to ensure that the process is completed smoothly.
Ensure You Have a Strong Acquisition Team
Asides from your business broker, there are several other professionals that you need to complete your due diligence and buy the right business that you can grow to an organization you will be proud of. You need to assemble a strong acquisition team with members you trust. You will need an acquisitions attorney, a professional accountant, as well as an independent business valuation team. You don’t need to leave anything to chance, have the right professionals by your side to make the entire process smooth.
Take Business Valuation Seriously
There is a mention of an independent business valuation team in the tip above. The point is only stressed here to give you an idea of how important it is. Even if you are very conversant with financials, there are things that can confuse you when you are looking at the records of an entirely strange business. When you have an independent team that is focused on business valuation looking at a business you intend to buy, you will have a better understanding of the business standings and make a better decision. Hiring an independent valuation team will give everyone the impression that you are serious. Take a step further by stressing to the team you’ve hired what you really need.
Consider the Reputation of the Business Seriously
Asides from the financials of the business and its true value, you also need to consider the reputation of the business you are buying. How is the image of the business in the eyes of customers and suppliers? Do not assume that once you take ownership, people’s opinions about the business will change. There is no need to gamble with a business that has a shattered image. To know more about the reputation of the business you are trying to buy contact such important stakeholders as customers, suppliers, and banks. Steer clear if the image is severely damaged.
Consider Current Employees and Organizational Chart
While knowing everything about the financials of a company is very important, the human factors behind the figures are also important. The current employees of a business can be its biggest asset in some instances. There is also the possibility that the employees of a business and the organizational structure is the reason behind its poor performance. Look at the organizational chart, consider the current management practices and the management-employee contracts besides union agreements. Make sure you understand all legal contracts with the employees in time.
Have a Clear Vision of What You Want For the Business
Identifying a good business with potentials is never enough. If you are truly taking ownership of any particular business organization, you must have a clear vision of how to take it forward. There are instances where entrepreneurs that have prepared their businesses for sale will offer a growth plan in their marketing package; you can consider this a bonus. It is important, however, that you have your own vision of how to transform what you have at hand into what you are hoping to achieve in the future.
Sort Out Your Funding Options from the Beginning
Unless you are independently wealthy or have a very wealthy financial backer, there will be a need to sort out your funding options when trying to buy an existing business. You won’t get any good business that is in great shape cheap. Any business, irrespective of size, that has real potentials for growth will be considerably expensive and you must figure out how you will meet the price. It will be necessary to do your math and sort out your funding options before agreeing on a fair price for any existing business you truly want to buy.
Pay Attention to the Sales Agreement
Drafting the sales agreement may be the most emotionally charged aspect of buying an existing business, but you need to set your emotions aside and approach it as an entrepreneur. If you have considered all the factors that matter to you most and have decided to buy a particular business for a certain price, you need to make sure that the agreement is well drafted to avoid any surprises. This is one of the reasons you need an acquisitions attorney as part of your team. If there is any aspect of the agreement you don’t understand fully, speak up until you are sure of what you are signing. Do not leave even a single ambiguity as it could lead to issues at closing or even after the acquisition has been concluded.
As an entrepreneur, you must realize that buying an existing business can offer several benefits. You also need to understand that there are several things involved in it and you need to take all of them seriously. The tips discussed here can be very helpful in taking that ‘sprouting seed’ and making it grow.
Are you finding it hard to decide if buying an existing business is actually worth it? Log in today at BizNexus. Our trusted experts are always available to speak with you and provide suitable answers to your questions and concerns. A fantastic experience awaits you.
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THE BIZNEXUS ROUNDUP
Quick & dirty interviews, war stories & tips from the trenches of business acquisition, growth & sale. We aim for value, efficiency & fun, so you'll walk away with something useful to take with you along the journey of buying, growing & selling a business.
6 Critical Questions to Ask Sellers before Buying a Business
Buying a business or an established business operation that is already generating cash flow is a great way to fast-track your way into business ownership and CEO creds. Here are six critical questions to ask sellers
6 vital questions to ask sellers when buying a business
Are you buying a business?
Buying a Business? Here are six critical questions to ask sellers
Buying a business or an established business operation that is already generating cash flow is a great way to fast-track your way into business ownership and CEO creds. If you do it right, you’ll also be buying into contracts or relationships with productive, loyal customers and veteran employees who already know the ins and outs of the business.
If you have found a business that you think you might want to buy, the next step is to ask the seller some important vetting questions before you make any final decision. This helps ensure you’re making the right move to acquire the business or run for the hills, -fast.
Here is a list of six questions that you should consider when talking to a potential seller:
Ask for three years covering the business financial records
Get a feel for profitability, for margins… Ask the seller to provide you with the financial statements going back to three or five years . A reputable firm should audit the financial records for larger deals. If a seller doesn’t have organized financials, that’s probably a red flag for other mismanaged Easter Eggs bound to pop up down the road.
What are the high-potential prospects?
No entrepreneur wants to invest in a business with a stagnating or declining top-line. Ask the seller to provide you with a realistic, explainable projected sales analysis, and a list of their potential clients or customers that they intend to sell. This will give you an idea if there are workable client accounts or whether you have a real shot at accelerating growth.
Why are they selling their business?
Selling a business due to retirement or because an owner is investing her time and money into another venture, are common reasons a business owner might want to sell or exit their current business. Careful, -a business owner could be selling their business because it’s not turning a profit or they don’t like wants coming down the road with the macro economy. Make sure that you understand well why the business has been put up for sale. Accessing the financial statements and the sales records will ensure you a better understanding of the business and its potential.
What happens to outstanding contracts?
After exchange of business ownership, contracts that have been in place may cease to exist or transferred to the new owner. There are no guarantees that the current clients will want to continue working with the new owner. It is important to make sure that the current contracts or projects of these long-term clients won't become void after you acquire the business.
What are the challenges?
Every business comes with challenges and most of them are hard to deal with at best. Some business owners will absolutely try to hide any negative information that could depress a selling price, complicate terms or flat-out 86 the deal. It is your responsibility to conduct proper due diligence, so be forewarned.
Buying a business that is profitable and fits your potential can be life changing.
Follow these tips and you’ll be on your way (a first step anyway). You can also seek assistance from a business broker or accountant to ensure your getting a profitable business.
Tips on How to Buy a Business and Entrepreneurship Through Acquisition
Generally speaking, buying an established business is considered less risky than setting up your own business from scratch. As an entrepreneur, you won’t necessarily need to come up with a unique business idea, sell investors on an unproven concept or incur the costs & risks of building a business up from the ground level. This practice of acquiring an already established business is known as entrepreneurship through acquisition.
Generally speaking, buying an established business is considered less risky than setting up your own business from scratch. As an entrepreneur, you won’t necessarily need to come up with a unique business idea, sell investors on an unproven concept, or incur the costs & risks of building a business up from the ground level. This practice of acquiring an already established business is known as entrepreneurship through acquisition.
It’s Still Risky To Buy a Business
buying something that is already stable, and profitable doesn’t mean risk won’t still be a huge issue as with any form of business ownership and entrepreneurship. The large majority of businesses out there publicly listed for sale are riddled with issues you’ll have to find, fix and tweak to grow the business and determine the right price to buy a business. In 2019, we’ve seen a huge surplus of small business owners out there hoping to sell under-performing or unprofitable businesses, or businesses that have not yet been optimized for sale and to encourage new ownership. This can be a great opportunity to acquire and grow an existing business, but as an investment, the operational risk is absolutely still there.
So how do you buy a business? To avoid getting married to a bad deal, you need to investigate thoroughly the business opportunities you’re thinking of pursuing. And a well-thought-out approach is necessary for you to find and secure a good business. To help you buy a profitable, well-managed business at the right price, think through the following steps.
Identify What Interests You
Entrepreneurs hoping to buy a business typically focus on existing financials and current cash flow, but it’s equally important to align yourself with a target company’s culture & lifestyle goals. You’ll be considerably happier if you purchase a business that’s already aligned with your ideal work culture, and in an industry with which you care about and already have experience. The more informed and fluent you are with the model of a particular business, industry trends, products, or services, the more inventive and successful your expansion plans will be. Ultimately, it boils down to embracing your passions, skills, experience, and interests, and throwing yourself in head-first the moment transfer of ownership occurs.
Determine Whether It Will Succeed or Not
Other than money, you’ll be spending time, energy, and hair follicles. Take into account the time and energy requirements you intend to take on for the day-to-day management of your new business. Some managers would rather be “grinding” all time, with their employees, but most investment-focused buyers will favor delegation and putting a capable management team in place, while they can focus on oversight and growth through acquisition. The number of resources you’ll need to invest will be influenced by the people and procedures already in place on the ground, and your prior understanding of the industry & relevant players.
Think of Why the Owner Is Selling the Business
If you’re about to purchase an enterprise, you’ll need to know precisely why the business is no longer working for its recent owner. There are many reasons why a company owner might want to sell a business. And you must get an honest outlook of how the operation is doing—without the seller’s influence.
Keep an eye on the existing business debts, condition of the equipment, competition, location problems, inventory problems, and any brand problems. Also, ensure you are updated on the current business’s achievements, failures, future opportunities, and possible challenges. Apart from speaking to the current owner about these issues, also engage employees, existing customers, neighboring companies, residents, and any relevant person you can think of.
Find a Business That Meets Your Budget and Personal Needs
Strategies to find the right business on the market that fits your needs include classified newspaper ads, online business-for-sale websites, and working with a business broker. Bear in mind that business brokers representing existing businesses for sale lawfully represent the seller. For this reason, be careful about passing on sensitive, potentially compromising information to them. Nevertheless, a business broker can help you decide on the kind of business you need, screen companies to eliminate businesses that are unlikely to sell, and assist you with the paperwork and help with negotiations to get a deal done.
Take into account that, if you involve a broker, a commission of 8%-15% will typically be required (paid by the seller), which can be well worth it for a business broker who works hard to facilitate an optimal, pain-free transaction… As a buyer, you’ll want to hire a good accountant to appraise business financials and make sure the cash flow number you are negotiating is accurate. It’s also critical to have a competent business transaction, M&A-focused lawyer to represent you in negotiations and keep you informed about how the transaction will be executed, and how the delivery of the purchase price will be paid out over time.
Do Your Due Diligence
Assemble as much data as you can before buying an enterprise. This is one of the most critical steps on your way to becoming a business owner. In this period, work with your lawyer and accountant to guarantee you get all the facts and figures you need before proceeding. This will help you ascertain that the business owner isn’t out to sell a startup for the price of a well-established business with a track record of reliable profits, revenues, and paying customers. Be aware; the seller will most likely require you to sign a non-disclosure agreement. This safeguards the seller should you decide not to buy the business after reviewing the documents. Below is a buy a business checklist of the materials that the seller should have prepared for you:
Contracts and leases
Business permits and licenses
Business Financials
Environmental regulations
Zoning laws
Certificate of good standing
Condition of the inventories
Organizational chart
Letter of intent
Code
Signing the Sales Agreement
After due diligence, comes the final verdict; whether to buy the business or not. In case you decide to go ahead with the purchase, the sales agreement is the “strap” that binds it all together. The agreement will spell out the final buying price, and every item you are buying, including intellectual property, tangible assets, intangible assets, and customer lists. Make sure you have a good legal representative to help you piece this list together.
Value the Business
Whether you do it yourself or hire a professional accountant or certified valuation analyst (CVA), being aware of how businesses are valued is important for any buyer. Note that, before a business is transferred to the buyer, both the seller and the buyer have to settle on an agreed-upon price based on revenues & cash flows of the business. Often, buyers and sellers have their own unique processes for zeroing in an agreed-upon financial value, and this forms the basis of their negotiations. Some of the most common models of valuation for an existing business include the market approach, asset approach, and earnings approach.
Raise Funding Needed to Buy the Company
As soon as you’ve settled on a price, the next phase is to get the money. There are numerous distinct channels through which you can access the cash you need to buy the business. Are you aware of the different means of financing a new business acquisition? Some common financing options to business buyers include:
· Personal financing
· Debt financing
· Search fund
· Seller financing
Closing the Deal
It doesn’t matter you’ve reached an agreement on the terms of sale and price; the transaction could still be torpedoed based on terms, and how compensation will be distributed over time. A buyer can walk away from a negotiation at any time if a deal isn’t working for all parties, or if a seller decides to get greedy or back-track on previously agreed upon negotiation items.
Transitioning the Acquired Business
Typically, the seller will help you for a period of time as a consultant while you get up to speed with the day-to-day requirements of running the business. Make sure you clearly outline the responsibilities of each party in a written contract, and how the training will be conducted. Transitioning to new ownership can be a rough time for existing employees, and you want that to go as smoothly as possible. As a new owner, put mechanisms in place to make sure the business transition goes smoothly for all parties involved. Create time and speak to key personnel, suppliers, and customers before assuming day-to-day leadership. Let them know your plans for the company’s future, and pay close attention to existing stakeholders’ feedback and opinions as you move forward with the business and make incremental changes to the model, processes, and team.
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BUSINESS ACQUISITION
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THE BIZNEXUS ROUNDUP
Quick & dirty interviews, war stories & tips from the trenches of business acquisition, growth & sale. We aim for value, efficiency & fun, so you'll walk away with something useful to take with you along the journey of buying, growing & selling a business.
Why 2019 might be the best time in history to buy a new business
So if you’re considering a jump into entrepreneurship, -buying an existing small business is absolutely an option you should consider. In his article for business.com, Looking Ahead: Buying a Business in 2017, Bruce Hakutizwi states:
Buy A new business
Here is Why 2019 Might Be The Best Time
As we mentioned elsewhere, 2019 looks like it might shake out to be the best year in a decade to buy a business in the United States. There are a few big reasons for this:
Loans are accessible and still historically dirt-cheap.
First-time entrepreneurs have access to up to $5 million in SBA loans from the government to help finance a new business acquisition.
With small business owners set to skyrocket over the next 10 years, there’s rapidly increasing interest out there for buying and established, viable business.
New technology solutions continue to offer increasingly efficient ways to connect buyers and sellers of businesses and to identify the right professional for you to do so.
So if you’re considering a jump into entrepreneurship, -buying an existing small business is absolutely an option you should consider. In his article for business.com, Looking Ahead: Buying a Business in 2017, Bruce Hakutizwi states:
Depending on your business strategy, industry, location, and other factors, there are more reliable and willing funding opportunities available to entrepreneurs right now than ever before. Between low-interest traditional business loans, government grants and loans, and a striking volume of venture capital available from individual angel investors, large corporations, and established VC funds, it’s easier and faster than ever before to fund a promising new startup or the expansion of an existing business.
As opposed to the relative risk of a brand new startup, obtaining funds to purchase an already established and successful business is even easier. This is doubly true if you’re purchasing another business that naturally extends or expands your own existing company or expertise since you can likely prove to the lender you’re up to the task of making the acquisition profitable. -Bruce Hakutizwi.
Buying a new business can be an exciting, rewarding, and potentially life-changing experience for you and your family. Do your research before you choose any professional to help you with the process, and make sure you’re clear on expectations and compensation from the outset. And as always, we recommend you check the BizNexus Marketplace to help vet financial services professionals, and for any helpful reviews, ratings, or relevant content to help guide your way.
A few useful links if you’d like to dig deeper on the topic:
How to Buy an Existing Website: A Step-by-Step Guide. -Will Lipovsky
How to Find a Business Broker. -Entrepreneur
BizNexus -Learn More From Our YouTube Playlist:
Business Acquisition
Have you checked out our podcast?
The BizNexus Roundup
Quick & dirty interviews, war stories & tips from the trenches of business acquisition, growth & sale. We aim for value, efficiency & fun, so you'll walk away with something useful to take with you along the journey of buying, growing & selling a business.