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THOUGHT FOR THE DAY

7 Common Mistakes Owners Make When Selling Their Business

Dec 13 2016
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7 Common Mistakes Owners Make When Selling Their Business

1) Poor Preparation   Prepare your business for sale to prevent unpleasant surprises. Business brokers recommend owners spend at least two years getting their finances and overall business practices in order. Improve your company’s accounting procedures, staffing issues and the physical state of your office or facilities. This will impact your business valuation, the type of buyers you attract, and what they are willing to pay.   2) Trying to Go It Alone   Selling your business without help from a broker may result in a poor sale price, delayed sale or no sale. Scattering your energy by handling the sale alone and trying to run your business at the same time can burn you out and result in poor decisions.A business broker’s fee may eat into the amount you receive after closing, but it’s a small price to pay for ensuring a fast and lucrative sale.   3) Not Pre-qualifying Buyers   Pre-qualifying prospects prevents sensitive financial i ...

4 Ways to Improve Your Accounting Methods before Selling Your Business

Nov 08 2016
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4 Ways to Improve Your Accounting Methods before Selling Your Business

Business owners who want to sell their companies for a hefty profit need to review their accounting methods. Fine-tuning both daily bookkeeping and monthly financial reports contribute to an increased valuation for your business and an easier sale. Good accounting methods prevent the errors and omissions that may drive buyers away (and invite scrutiny from the IRS). Improved accounting shows you where you can reduce expenses and where you need to enhance sales. After you’ve assessed your accounting system, you’ll get a clear picture of your current business worth and how you can increase profits.   

Sell Faster by Minimizing Buyer's Risk

Oct 17 2016
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Sell Faster by Minimizing Buyer's Risk

Put yourself in a prospective buyer’s shoes. What would they find desirable in a business? A steady revenue stream,  a stellar reputation, a loyal customer base? Before finalizing your sales plan, consider what your ideal buyer wants from a business and make sure you deliver it to close the sale faster.   

The 5 Types of Business Buyers

Oct 03 2016
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The 5 Types of Business Buyers

Employees One or more trusted employees can buy the business from you and continue to run the company. This saves you time because you won’t need to break in a new owner completely unfamiliar with your service or product. The continuity of your business process and reputation is protected, and you won’t spend time sifting through iffy prospects. Finding a good employee with enough cash to buy you out may be a challenge. You might need to finance a portion of the sale and risk not being paid back if the business does poorly. If you do have an employee who can put down 25% of the total price, he could be eligible for a Small Business Administration (SBA) loan, and let you leave the business without any financial worries. Instead of selling to one employee ...

Develop Your Exit Plan

Sep 07 2016
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Develop Your Exit Plan

First, you must understand why you are selling your business. In order to create a sound infrastructure for a fruitful exit, you will have to identify the elements that have led you to contemplate selling. Be honest and forthright about what's motivating you to sell. If you have an immediate need for an exit, this can equate to a lower sale price. In addition, by moving too quickly you eliminate the opportunity to strengthen the attractiveness of your offering prior to sale. In contrast, if you are more strategic and plan your exit at a slower pace, take the necessary time to properly prepare your business for sale, maintain flexibility with a willingness to finance a portion of the sale, the outcome is more likely to yield a qualified buyer who is willing to pay a higher price. Sellers' motivations have a direct impact on their desired terms for the deal and their expectations for the sale. Prospective bu ...

How Long will it take to Sell Your Business?

Aug 01 2016
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How Long will it take to Sell Your Business?

Though the correct answer is that no one can know for sure.  Most often it is price, terms, and conditions that sell a business.  The lower the price, the more affordable.  In addition, the lower the down payment and a greater amount of seller financing, the greater the chances of selling the business.  The average time is 7 months from listing to close, however, on larger companies, it can take 12 months or longer.  With this time frame in mind, it's important to be proactive when considering your exit strategy and get your "confidential" business evaluation sooner rather than later.

Buyers Return to the Marketplace

Jul 11 2016
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Buyers Return to the Marketplace

Most business owners plan to sell within the next few years.  A seller's market along with an aging baby-boomer population is causing many entrepreneurs to consider exiting. Recent reports from The International Business Brokers Association (IBBA) indicate that retirement remains the leading reason that business owners went to market.  In addition, buyers are returning to the marketplace in larger numbers due to the economic rebound. Buyers today are market educated and increasingly aware of the opportunities coming to market and are therefore ready to make a move when a strong company becomes available.  With the number of transactions increasing, seller confidence has also risen and the findings indicate that it is currently a seller's market.  Business owners selling now don't have to resign themselves to a buyer's market conditions.  As more and more baby boomers seek to retire and put their business on the market, the oversupply of business ...

"How much is my business worth", you ask?

Jun 28 2016
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My first response is to explain that the current market is typically what will dictate the value.  A business valuation can help determine an approximate value, however, it is really a matter of what a buyer is willing to pay and what you are willing to accept.  It's understandable that you would value how much blood, sweat, and tears you have invested in your business or how much money you have invested, the customer base you have built, whether you have a niche product.  These things may matter to you but not have an effect on the actual value.  The truth of the matter is that what you finally accept from a buyer is what your business is actually worth.

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