Quality employees are essential for the long-term success and growth of any business. Many entrepreneurs learn this simple fact far too late. Regardless of what kind of business you own, a handful of key employees can either make or break you. Sadly, businesses have been destroyed by employees that don’t care, or even worse, are actually working to undermine the business that employs them. In short, the more you evaluate your employees, the better off you and your business will be.
Forbes’ article “Identifying Key Employees When Buying a Business,” from Richard Parker does a fine job in encouraging entrepreneurs to think more about how their employees impact their businesses and the importance of factoring in employees when considering the purchase of a business.
As Parker states, “One of the most important components when evaluating a business for sale is investigating its employees.” This statement does not only apply to buyers. Of course, with this fact in mind, sellers should take every step possible to build a great team long before a business is placed on the market.
There are many variables to consider when evaluating employees. It is critical, as Parker points out, to determine exactly how much of the work burden the owner of the business is shouldering. If an owner is trying to “do it all, all the time” then buyers must determine who can help shoulder some of the responsibility, as this is key for growth.
In Parker’s view, one of the first steps in the buyer’s due diligence process is to identify key employees. Parker strongly encourages buyers to determine how the business will fare if these employees were to leave or cross over to a competitor. Assessing if an employee is valuable involves more than simply evaluating an employee’s current benefit. Their future value and potential damage they could cause upon leaving are all factors that must be weighed. Wisely, Parker recommends having a test period where you can evaluate employees and the business before entering into a formal agreement.
It is key to never forget that your employees help you build your business. The importance of specific employees to any given business varies widely. But sellers should understand what employees are key and why. Additionally, sellers should be able to articulate how key employees can be replaced and even have a plan for doing so. Since, savvy buyers will understand the importance of key employees and evaluate them, it is essential that sellers are prepared to have their employees placed under the microscope along with the rest of their business.
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1. They want you to hold money in your escrow account (usually a large dollar amount so the deal is attractive). The risk is that the deal or client requires you to transfer some or all of the money out of your account before you bank has time to verify the funds are legit and can cover the transfer. This actually happened to a Georgia attorney awhile back and it was in the AJC. Talk about bad publicity for the attorney who got suckered; he was very embarrassed.
2. The transaction involves an overseas or out-of-state company wanting to do a deal with either an individual or a business in located Georgia, and they need a Georgia attorney or other professional to represent them.
- Private chat area for member brokers to ask questions and confidentially share information.
- A new and improved broker search tool that will enable visitors to search for member brokers by radius, specialty, and other filters.
- GABB members will be posting our listings to our own webpage, this will give us the ability to post more photos and info about our listings, it will also help with our longer-term goal of improving the SEO of our website among other benefits. We are working on methods to share those listings to BizBuySell and other websites.
- Visitors to our site will be able to find what they are looking for faster.
- The new design will be less labor intensive for GABB’s administrator and for each member to manage profiles and listings.
- Sponsors and affiliates will have better visibility in the new design.
Members will be able to view the proposed new website and ask questions of the website developer, Ron West, of Business Brokerage Press, who also hosts the GABB website. Ron will join us remotely.
Business Brokerage Press is the publisher of the text for Business Broker University Training, The Complete Guide To Business Brokerage and the industry standard guidebook for valuing businesses, the annual Business Reference Guide. BBP, through Ron’s knowledge and leadership in technology, also hosts and consults with many business broker Websites and IBBA Affiliate Websites through the DealStudio brand.
The GABB will meet at the Georgia Association of Realtors at 6065 Barfield Road, Sandy Springs, GA, 30328. The meeting will start at 10:30 a.m. preceded at 9:45 a.m. by a networking breakfast. The GAR headquarters building is a two-story building located in Sandy Springs near the intersection of Hammond Drive and Barfield Road.
The GABB is the state’s largest and oldest association of professionals who specialize in brokering the purchase and sale of businesses and franchises. Broker members help owners determine the asking price of their business, create marketing plans and strategies for selling their business, identify and qualify buyers, and have the knowledge, experience and skills needed to help maintain the confidential nature of the process. Affiliate members include bankers, lawyers, appraisers, insurers and other professionals who work closely with brokers to help owners and buyers get to the closing table.
For more information about GABB, please contact GABB President Dean Burnette at 912-247-3209 or firstname.lastname@example.org, or GABB Executive Director Diane Loupe at email@example.com or 404-374-3990.
The first step towards successfully selling a business is finding a qualified business broker to work with. Sellers should also ask themselves important questions about their motivations for selling. Freelance writer Troy Lambert outlines some crucial questions in an article published recently by Unbound Northwest and the Good Men Project.
1. Are you ready?
Such a simple and powerful question: “Are you ready?” For example, are your financial reports ready to show? If you’re like most businesses, your accounts are set up to provide the best tax advantage, but that usually doesn’t show all the money you make or have the potential to make. To get top dollar for your business, you’re going to have to “recast” your books, usually with the help of your accountant.
2. What’s the business worth?
3. How healthy is my industry?
Prospective sellers should be brutally honest when they answer this question: “How’s the health of my industry?” You’d better believe that your broker, bankers and prospective buyers will be asking this question as part of their due diligence. If your industry is in a transition period, for example, then it might be better to wait until a better time to sell.
4. How long will it take?
Selling a business can take a long time. If you need to sell quickly, you are likely to get less money and less favorable terms. Successfully selling your business may even mean that you have to stay on and work with the new owner during a transition period. The process can take a year or more, so plan for that.
5. Who is my buyer?
You don’t want to waste a lot of time with potential buyers who are simply not a good fit. Professional business brokers understand this and will prequalify buyers, ensuring they have the finances to buy your business and the right skills or certifications to run the business. Finding the right buyer for your business helps to ensure that a deal will be finalized. Brokers also understand the necessity of confidentiality in marketing your business.
6. How will I get paid?
Even if you get your asking price, you may not walk away with a wad of cash. Before you put your business on the market, decide how you want to be paid and how flexible you can be in terms of payment. Are you willing to finance part of the deal? Will you accept sales-based payouts? Balloon payments over time? Payment in the form of stocks or a stake in the business?”
For most sellers, selling a business will stand as the largest financial decision of their lives. With this realization comes more than a little pressure.
Having good advice is critical to a successful sale. A seasoned and experienced business broker understands what it takes to buy and sell a business. Working with a business broker is an easy and efficient way to begin the process of selling your business. Brokers know what it takes to successfully sell a business and can help you answer these questions and many more.
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The number of small business transitions continues to be strong for the first quarter of 2019, according to a leading market analysis. In fact, despite a small decline, small business transitions remain at historically high levels.
Looking at the Statistics
According to a recent BizBuySell article entitled, “Number of Small Businesses Changing Hands Dips Slightly, But Market Remains Ripe for Buyers and Sellers,” now is still very much the time for both buying and selling a business. It is true that the number of businesses sold in the first three months of 2019 dropped by 6.5% when compared to 2018. Yet, it is important to keep in mind that the number of completed transactions remains very strong. Likewise, inventory is increasing, with a 6.1% increase in listings in Q1 of 2019 when compared to the same period in 2018.
While the market is indeed strong, the BizBuySell article did note that some experts feel that there are signs that the market could become more challenging moving forward. In part, this is due to the prospect that interest rates and financing could become increasingly challenging and more expensive. These factors indicate that now is a smart time to both buy and sell a business.
Likewise, the financials of sold businesses in Q1 remains strong. In fact, the median revenue of sold businesses jumped 6.5% when compared to Q1 2018. Now, the median revenue stands at $540,000. However, cash flow continues to hover around the $100,000 for five years in a row.
What are the Top Regions?
Atlanta-Sandy Springs-Marietta ranked among the top ten markets in the top markets by closed small business transition, according sales reported on BizBuySell.com. The top markets were Miami-Fort Lauderdale-Miami Beach, Los Angeles-Long Beach-Santa Ana, New York-Northern New Jersey-Long Island, Tampa-St. Petersburg-Clearwater and Dallas-Fort Worth-Arlington. The Atlanta area ranked seventh, tied with the Washington, D.C. area, The top markets by median sale price are Charlotte-Gastonia-Concord, San Francisco-Oakland-Fremont, Denver-Aurora and Dallas-Fort Worth-Arlington.
A Consistently Strong Market
Overall, the experts at BizBuySell believe that the market remains very strong and active. They believe that the wave of retiring baby boomers looking to exit their businesses, historically low interest rates and the rise of the next generation of entrepreneurs are helping to fuel a great deal of activity.
According to Matt Coletta, Co-Founder and Managing Partner, M&A Business Advisors, “We are seeing more quality businesses coming on the market with good, clean books than I have seen in my 25+ years in the business.”
If you are considering buying or selling a business, then now is an excellent time to jump in. Working with a business broker is a great way to ensure that you find the right business for you at the right price.
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