Business owners are often asked, “Do you think you will ever sell your business?” The answers vary from: “Only when I can get my price” to “Never” to a realistic “I don’t really know” with everything else in between. “When will you sell your business?” is often asked, but very seldom answered. Certainly, misfortune can force the decision, but no one can predict this event. Most don’t believe or accept the old expression that advises, “It is always a good idea to sell your horse before it dies.” There is an also an old adage that says: “You should start planning on exiting your business the day you buy or start one.” You can’t predict misfortune, but you can plan on it. Unfortunately, most sellers wait until they wake up one morning, and just drive around the block several times working up the courage to begin the day working in their business. This is a common sign of “burn-out” and is an-going problem with small business owners. Or, they face family pressure to start “taking it … [Read more...]

Here are some tasks business owners should consider completing before going to market to help their businesses sell. Remove any items not included in the sale. That family heirloom portrait behind the counter of Grandfather William, founder of the business, should be removed. Remove or repair any non-functioning equipment. Prepare an operations manual to show a new owner all the functions of the business, how things are done, the major customers and suppliers, samples of advertising, and any other information that would help a new owner manage and operate the business. Take care of any outstanding bills and resolve any legal, tax, or governmental issues. Bring your financial statements up to date, and have your accounting professional prepare them for a buyer’s inspection. Clean up the business inside and out. Fill the shelves, clean up the inventory, and paint the interior if necessary. … [Read more...]

Many experts say that the best time to sell is when the business is better than it’s ever been. This may be good advice, but few follow it. Why sell when business is good? You just suffered through a few not-so-great years and now the experts are telling you to sell? Right or wrong – good or bad – the decision to sell is generally event-driven. For example: declining health, a partnership break-up, personal issues, too much competition, family member elects not to purchase the business, etc. Retirement sounds like a good reason, but it has no time pressure, unless a seller has made the decision to retire at a certain age.  Even then, when the seller realizes that he or she will have nothing to do after a sale...the idea loses its appeal. However, one thing that a seller can do, without creating any pressure about selling or not selling, is to take a bit of time every year and prepare – just in case. This means tying up loose ends. Make sure financial records are current and complete, … [Read more...]

Confidentiality Agreement - A pact that forbids buyers, sellers, and their agents in a given business deal from disclosing information about the transaction to others. It is common practice for the seller, or his or her intermediary, to require a prospective buyer to sign a confidentiality agreement, sometimes referred to as a non-disclosure agreement. This is almost always done prior to the seller providing any important or proprietary information to a prospective buyer. The purpose is to protect the seller and his or her business from the buyer disclosing or using any of the information provided by the seller and restricted by the confidentiality agreement. These agreements, most likely, were originally used so that a prospective buyer wouldn't tell the world that the business was for sale. Their purpose now covers a multitude of items to protect the seller. A seller's primary concerns are to insure that a potential buyer doesn't capitalize on trade secrets, proprietary data or any … [Read more...]

…….What a "loaded" question you may think, but the reality is that almost no business owner and their business reach the qualifications of "Ready to Sell" without professional assistance from a qualified individual. Getting your business and yourself,  as the business owner "ready to sell", takes quite a bit of work and preparation. You need to know and work with someone whose sole profession is selling businesses. You know your business better than anyone, but do you know how to get it ready and in its best shape to sell?  Most probably not and the worst mistake a business owner can make is try to get both themselves and their business ready to sell and then try to sell it themselves.         Experience has shown us that more often than not, the Seller will spend more time and money trying to sell and take less than the business is actually worth because they skipped the professional assistance they needed to insure the best price. In short, leaving money on … [Read more...]

Are you a Certified and Registered Broker/Intermediary? Are you affiliated with any business brokerage associations or trade groups? Will you provide any references? (Sellers, Attorneys, etc.) How will you determine how much I should ask for my business? Will you display my business on any Internet sites? If so, how many? How, other than the Internet, will you market my business? How can you help me to qualify a potential Buyer while protecting my Confidentiality? Under what circumstances will you show my business? How often will you contact me about what is going on? Can you please tell me about you and your firm? … [Read more...]

BUYERS WANT CASH FLOW Recasting financial statements will help you provide a potential buyer with a better view of cash flow.  Cash flow is not the same as profit.  All potential buyers will want to see the income tax returns, profit and loss statement, owner compensations, etc. LOOKS CAN MAKE A DIFFERENCE Just as you will need to do all that you can do to show a well organized, profitable business, you also will need to make sure that your facility is as aesthetically attractive as possible.  Anything that you do to increase sales, increases profits and adds to that important cash flow that buyers seek. ADD VALUE TO YOUR BUSINESS Don't overlook the impact of a loyal customer lists, proprietary products, well-maintained equipment, special computer software programs, unique services or products and good employees will make when considering the value of your business. ELIMINATE SURPRISE If your business has any flaws, be open about them.  Do not allow legal, environmental or any … [Read more...]

Your reason(s) for selling your business and your future goals need to be clear and well thought out before you try to market your business.  A prospective buyer will want to know why you are selling and may be curious about what you intend to do after the sale. A poor economic climate and/or a peronal emotional dilemma can cause you to accept a deal that is not in best interest for you or for a buyer.  It is important to market your business for sale at a time when you are not under pressure to sell. As soon as you have a firm objective to sell, gather key information to facilitate the marketing and divestiture process: Three years of profit and loss statements. Three years of Federal income tax returns for the business. A complete list of business assets (fixtures and equipment). All lease agreements and related documentation (property and equipment). List of loan amounts and payment schedules. Copy of franchise agreement (if applicable). Total worth of the assets. Names … [Read more...]

Increasing the price of your products or services is, in most cases, the most difficult decision a business owner has to make. Looking at the negatives is easy. •    Our business is too competitive to increase prices. •    Our customers/clients are used to our pricing. •    Customers are too price-conscious. •    We won’t be able to get new customers/clients. •    We are known for low prices. •    We have a lot of repeat customers, they won’t pay more. The list of reasons why prices shouldn’t increase could go on and on. The fear is always that people won’t pay the increase and profits will suffer. Before considering a price increase, one must look at their current pricing method. Do you work on a cost plus a certain mark-up? If you use a mark-up percentage, are all items marked up by the same percentage? Do you try to maintain a price comparable to the competition? If you work on an hourly rate, for example consulting, when was your last increase? Have costs increased and have you … [Read more...]

When is the last time you reviewed the lease on your business premises? When you signed it years ago?  There are some important reasons that should prompt a business owner to revisit the terms of his lease. If you can’t assign your lease to a new owner, you may not be able to sell your business. A similar concern is that if you can’t assign the lease, it may cost you a lot of money. This means that the landlord may want what could be termed as a “transfer” fee; or the seller may have to reduce the price accordingly. Whether you are thinking of selling or not, it is a good idea to review your lease and the transfer of lease provisions. It’s also a good idea to check what happens at the end of the lease. Is there an option to renew and if so, how soon before the termination of the lease do you have to notify the landlord? And, just as important, do you want to stay, or is it time to move on? A recent article in the New York Times titled “Thinking Past Location in Finding Space” said: … [Read more...]