According to the experts, a business owner should lay the groundwork for selling at about the same time as he or she first opens the door for business.  Great advice, but it rarely happens.  Most sales of businesses are event-driven; i.e., an event or circumstance such as partnership problems, divorce, health, or just plain burn-out pushes the business owner into selling.  The business owner now becomes a seller without considering the unexpected issues that almost always occur.  Here are some questions that need answering before selling: How much is your time worth? Business owners have a business to run, and they are generally the mainstay of the operation.  If they are too busy trying to meet with prospective buyers, answering their questions and getting necessary data to them, the business may play second fiddle.  Buyers can be very demanding and ignoring them may not only kill a possible sale, but will also reduce the purchase price.  Using the services of a business broker is a … [Read more...]

It’s always nice, when eating at a nice restaurant, for the owner to come up and ask how everything was.  That personal contact goes a long way in keeping customers happy – and returning.  It seems that customer service is now handled by making a potential customer or client wait on a telephone for what seems forever, listening to a recording saying that the call will be handled in 10 minutes.  Small businesses are usually built around personal customer service.  When is the last time you “worked the floor” or handled the phone, or had lunch with a good customer?  Customers and clients like to do business with the owner.  Even a friendly “hello” or “nice to see you again” goes a long way in customer relations and service. The importance of knowing your customers and/or clients could actually be extended to suppliers, vendors, and others connected with your business.  When is the last time you visited with your banker, accountant, or legal advisor?  A friendly call to your biggest … [Read more...]

What is the required capital investment? What is the annual net increase in sales? What is in inventory? What is the debt? What is the prospect of the owner staying on? What makes this company different/special/unique? What further defines the product or service? Bid work? Repeat business? What can be done to grow the business? What can the buyer do to add value? What is the profit picture in bad times as well as good? … [Read more...]

Once the decision to sell has been made, the business owner should be aware of the variety of possible business buyers. Just as small business itself has become more sophisticated, the people interested in buying them have also become more divergent and complex. The following are some of today's most active categories of business buyers: Family Members Members of the seller's own family form a traditional category of business buyer: tried but not always "true." The notion of a family member taking over is amenable to many of the parties involved because they envision continuity, seeing that as a prime advantage. And it can be, given that the family member treats the role as something akin to a hierarchical responsibility. This can mean years of planning and diligent preparation, involving all or many members of the family in deciding who will be the "heir to the throne." If this has been done, the family member may be the best type of buyer. Too often, however, the difficulty with … [Read more...]

41% joined the family business 36% wanted more control over their future 27% tired of working for someone else 5% were downsized or laid off *Source: Dun & Bradstreet 19th Annual Small Business Survey May 2000. Totals add up to more than 100% because respondents could choose more than one reason for going into business for themselves. This was published in the May 2001 issue of INC magazine. … [Read more...]

A recent survey revealed the following about the length of time that selling a business requires: Average time from putting the business on the market to time of sale: Time Period % of Businesses Sold in This Time Period  1 to 3 Months 9.7 %  4 to 6 Months 28.3%  7 to 9 Months 38.0% 10 to 12 Months 15.9%  13 to 18 Months 7.6% 19 + Months 0.7% It took from four to 12 months to sell approximately 82 percent of businesses, with 38 percent falling into the seven- to nine-month range. Certainly some businesses sell more quickly, but at the other end of the spectrum, over eight percent are on the market for over 12 months. Why does it take so long to sell a business?  Price and terms are the biggest reasons.  Not over-pricing the business at the beginning of the sales process is a big plus, as well as a transaction structured to include a reasonable down payment with the seller carrying the balance.  Having all of the necessary information right from the beginning can … [Read more...]

Selling one's business can be a traumatic and emotional event. In fact, "seller's remorse" is one of the major reasons that deals don't close. The business may have been in the family for generations. The owner may have built it from scratch or bought it and made it very successful. However, there are times when selling is the best course to take. Here are a few of them. Burnout - This is a major reason, according to industry experts, why owners consider selling their business. The long hours and 7-day workweeks can take their toll. In other cases, the business may just become boring - the challenge gone. Losing interest in one's business usually indicates that it is time to sell. No one to take over - Sons and daughters can be disenchanted with the family business by the time it's their turn to take over. Family members often wish to move on to their own lives and careers. Personal problems - Events such as illness, divorce, and partnership issues do occur and many times force the … [Read more...]

Buyers buy a business for many of the same reasons that sellers sell businesses. It is important that the buyer is as serious as the seller when it comes time to purchase a business. If the buyer is not serious, the sale will never close. Here are just a few of the reasons that buyers buy businesses: Laid-off, fired, being transferred (or about to be any of them) Early retirement (forced or not) Job dissatisfaction Desire for more control over their lives Desire to do their own thing A Buyer Profile Here is a look at the make-up of the average individual buyer looking to replace a lost job or wanting to get out of an uncomfortable job situation. The chances are he is a male (however, more and more women are going into business for themselves, so this is rapidly changing). Almost 50 percent will have less than $100,000 in which to invest in the purchase of a business. In many cases the funds, or part of them, will come from personal savings followed by financial assistance from … [Read more...]

The following is some basic information for anyone considering purchasing a business. Is may also be of interest to anyone thinking of selling their business. The more information and knowledge both sides have about buying and selling a business, the easier the process will become. A Buyer Profile Here is a look at the make-up of the average individual buyer looking to replace a lost job or wanting to get out of an uncomfortable job situation. The chances are he is a male (however, more women are going into business for themselves, so this is rapidly changing). Almost 50 percent will have less than $100,000 in which to invest in the purchase of a business. More than 70 percent will have less than $250,000 to invest. In many cases the funds, or part of them, will come from personal savings followed by financial assistance from family members. He, or she, will never have owned a business before. Despite what he thinks he wants in the way of a business, he will most likely buy a … [Read more...]