No one works forever. Regardless of how much you love your business, sooner or later you will have to step away. Owning a business can be very demanding, especially for owner-operators of businesses. And unless you’re a zombie, you won’t live forever. So, you’ll have to embrace retirement at some point, and you may not know how to prepare to sell a business.
Most business owners have never sold a business before and may not know what to expect. The good news is that prospective buyers usually like the idea of buying an established business directly from a business owner. It is key, however, to do everything possible to make selling your business, as well as the transition period, as easy for a buyer as possible.
Prepping your business for sale has many diverse parts that need to be taken into consideration. Prospective buyers want to feel as though they will have a seamless transition, so it’s in your best interest to evaluate what steps you need to take to make the transition smooth.
You are the world’s greatest expert on your business. As a result, you are perfectly positioned to evaluate your business so as to ensure that it is both appealing to a prospective buyer and ready to sell. Let’s take a look at the steps you can take to ensure a smooth transition.
The Top 4 Transition Tips
1. Automate as many processes as possible.
In this way, prospective buyers are less likely to be intimidated by the level of work involved in owning a small business. The odds are good that many of your prospective buyers have never owned a business before. One of the best ways to not scare prospects away is to make owning and operating your business as streamlined as possible.
2. Work with your employees, key customers and vendors to ensure a smooth transition.
Anything that can cause a potential disruption may scare off prospective buyers. Put yourself in the shoes of prospective buyers and think about what may cause you concern if you were evaluating a business. Once you locate those areas of potential concern, do what you can start to remedy them well before placing your business on the market.
3. Pick out your “second-in-command” before you sell your business.
Having a competent and proven “right hand man or woman” that can step in and essentially operate your business is a very attractive asset to have in place when it comes time to sell your business. Often, prospective buyers want to retain key employees, so they will be valuable assets when you prepare to sell a business.
4. Work with a business broker.
Brokers know how to negotiate the complicated maze of buying and selling businesses. They will be able to help you evaluate your business and address areas that need improvement so as to ensure a smooth transition. Working with a broker will also save you hours of time and ensure confidentiality during the process.
Taking these steps will not just make your business easier to sell, but it will also shorten the amount of time it takes to sell and maximize the sale price. The last thing you want when you are prepare to sell a business and retire is for the selling process to drag on forever.Read More
Many people know that owning a business isn’t for them. But for others, the appeal and lure of owning their own business can be powerful indeed. If you are uncertain as to whether or not this path is for you, there are a few simple questions you can ask to gain almost instant clarity. In this article, we will explore those key questions and help you determine if owning a business is in your future.
1. Are You Dedicated to Growing Your Income?
Quite often people like the idea of making more money, at least in the abstract. But when presented with what it takes, many people realize that they don’t want to do what is involved. Owning and operating a business can be a lot of work and it’s not for everyone. Yet, those who embrace it can find it rewarding in a variety of ways.
Being a business owner is radically different than being an employee. As an employee, you simply don’t exercise much control. Summed up another way, your financial fate is clearly in the hands of someone else: your employer.
However, owning a business means that you can take steps to control your own financial destiny. You can make decisions that will, ultimately, boost the success of your business and in turn increase your own income.
As an important note, statistics from 2010 show that the longer you own your business the more money you, as the business owner, will make. It is typical for those who have owned a business for ten years or more to earn upwards of six figures per year. If you have had more than one year of experience in running an organization, the yearly salary will likely range from $34,392 to $75,076. However, if you’ve owned your business for more than a decade, you will likely earn more than $105,757 per year.
While there are no guarantees, owning a business can be a path to growing one’s income and wealth.
2. Would You Like Greater Control Over Your Life?
Many opt to start their own business because they want more control. Business owners realize that unless they own their own business their financial fates rest in the hands of someone else. Some people are comforted with this feeling or don’t see a way around it and others are not so comfortable with the realization. If you want greater control over your life, then owning a business might be for you.
Owning a business increases the amount of control a business owner has over his or her life in many ways, not just financial. For example, business owners have more control over how they spend their time, where they work, when they work and who they work with on a daily basis. Instead of being part of a business, you help create, mold and shape it. Clearly, this is a lot of work and it isn’t for everyone, but again the rewards can be diverse and great.
3. What is Your Personality Like?
Owning a business translates to great control, but that control comes with a degree of risk. In the end, you’ll have to determine how comfortable you are in dealing with risk. As a business owner the “buck” stops with you. You’re risking your time, effort and, of course, money. You also don’t get a paid vacation, sick days or any of the other benefits so often associated with being an employee.
Other traits identified during a study by the Guardian Life Small Business Research Institute showed there are other ideal personality traits for business owners. These traits include collaboration, curiosity, focus on the future, and being self-fulfilled, tech savvy and action oriented.
Thinking about these three key questions is the perfect place to start when contemplating opening a business. Additionally, working with a business broker can help you gain clarity and determine if owning a business is right for you.Read More
Are you looking for a way to perfect your presentation? Understanding what the typical serious buyer wants will help you get your business ready for selling.
Let’s turn our attention to looking at what these types of individuals and entities really want. After all, your time is precious.
1. An Interest in the Industry
First, prospective buyers will want to have a better understanding of your industry. Any serious buyer will want to understand the industry as a whole, as well as your existing customers, prospective customers and the strengths and weaknesses of your business. Key factors, such as threats from competition, will also be a major factor for prospective buyers.
2. Seeking Knowledge about Discretionary Costs
Secondly, expect buyers to take a long look at discretionary costs. Sellers will often look to reduce their expenses in a range of discretionary areas including advertising, research and development and public relations; this is done to help make a business appear more attractive to a buyer. However, it is important to note, that a savvy prospective buyer will notice reduction in discretionary expenses.
3. Inquiries about Wages and Salaries
Wages and salaries is another area that receives attention from buyers. If your business is paying minimum wage or offers a limited retirement program then employee turnover is likely to be high. Buyers may be concerned that employee stability may be low, which, of course, can potentially disrupt business.
4. Questions about Cash Flow and Inventory
No serious buyer will ignore the issue of cash flow. Any prospective buyer will want to know that the business they are considering buying will continue to generate profits both now and in the future.
Inventory is another area that will not be ignored. If your business is carrying a large amount of antiquated, unsalable or simply unusable inventory, then expect that to be factored into a prospective buyer’s decision-making process. It is best to disclose such inventory instead of hiding it, as it will be discovered during due diligence.
5. Seeking Capital Expenditure Details
Finally, capital expenditures will be examined by buyers. You can expect buyers to carefully evaluate machinery and equipment to ensure that there will be no expensive surprises looming on the horizon.
These give areas are definitely not the only areas that buyers will explore and investigate. Everything from financial agreements and environmental concerns to government control will be examined in depth. You should invest some time thinking about the situation from the perspective of a buyer, as this will help you discover many potential problems and try to secure viable workarounds. Working closely with a business broker is another way to ensure that you can successfully anticipate the needs of buyers.Read More
Being our own boss is a dream many of us have had since first entering the workforce. Maybe it’s because we know we could implement processes that would produce better results, or we would like more flexibility in scheduling work time, or we want to leave something of lasting value to our heirs.
Whatever the driver, it is important to carefully consider many aspects of this critical decision. Here are five issues we suggest you carefully explore before taking the steps towards purchasing a business.
1. Taking out the Trash. Too many business owners only want to be CEO of their business. But, especially in the beginning, the demands of the business owner could be many – from stocking shelves to emptying trash to figuring out why the web site crashed. To keep the wheels on the bus you will most likely have to assume some duties that are not very glamorous.
2. “Show me the Money,” as they say in the movies. Before you begin exploring businesses, know your funding options and your qualifications for borrowing additional funds should you need them.
3. Get to know the Owner. As you look at businesses to buy, you will be evaluating someone else’s “baby.” The current owner has built, nurtured, and developed this company so it is important to help him/her feel comfortable with you, your approach, and your intentions.
4. The Art of Price Negotiation. Pricing is often a function of timing. If a business is doing well, the price will seem inflated. When the economy is slow, buyers will want to buy a business for less than its value. Also, timing can be a function of the seller’s circumstances. There is a right time to buy and a right time to sell.
5. Businesses Are Risky. Are you looking for a “sure thing?” If so, buying a business might not be for you. There is no such thing as a sure thing in business. With so many variables affecting business performance, there is no way to always predict results. Buying (and owning!) a business is all about risk…
These are just a few examples of the issues to consider before buying a business. A professional and experienced business broker can help you negotiate these and other issues in the successful purchase of a business.
C. David Chambless, a past president of GABB, is President of Abraxas Business Services and a lifetime member of the GABB’s Multi-Million Dollar Club.Read More
ATLANTA–Mike Chriszt, Vice President of Public Affairs, of the Federal Reserve Bank of Atlanta, spoke about the Federal Reserve and its role in Georgia economy at the June 26 meeting of the Georgia Association of Business Brokers (GABB), the state’s only professional association of professionals who help in the sale and purchase of businesses and franchises.
His powerpoint presentation is here: GABB June 26
The GABB meets at the Atlanta Realtors Center at 5784 Lake Forrest Dr. NW, Atlanta, GA 30328. The monthly meeting begins at 10:30 a.m. and is preceded at 9:45 a.m. by a free light breakfast and networking session sponsored by Bob Smith, Health Insurance Advisor with North American Health Plans.
The GABB is composed of professionals who work with owners of Georgia businesses. Many of today’s business buyers are individuals who have decided not to re-enter corporate America, but are ready to control their own destiny by purchasing and operating a Georgia business.
In his role as a vice president and public affairs officer in the Federal Reserve Bank of Atlanta’s Public Affairs department, he is responsible for the Bank’s communications, which include media relations, publications, websites, conferences, and outreach activities such as speeches, economic education, and corporate citizenship. He also oversees the Bank’s internal communications and the Knowledge and Information Management function.
Prior to assuming his current responsibilities, Chriszt was a vice president in the Research department. There, he was responsible for the Regional Economic Information Network and the Center for Real Estate Analytics. From 2008 to 2010, Chriszt served as assistant vice president in the Research department. He was director of international and regional analysis from 2004 to 2008. In these roles, he oversaw the analysis of economic conditions in the Sixth Federal Reserve District and of international economic developments. Chriszt joined the Bank in 1989 as a public information specialist and moved to the research department in 1990.
While at Miami University in Ohio, Chriszt earned two bachelor’s degrees, one in history and one in diplomacy and foreign affairs. He also earned a master’s degree there in political science with emphases on international economics and comparative politics. Chriszt received a certificate of study of the European Union and is a graduate of executive education programs at Duke University’s Fuqua School of Business and the University of Virginia’s Darden Graduate School of Business Administration.
Chriszt is a member of the National Association of Business Economists and the Atlanta Economics Club, where he served as the group’s president. He also serves on the board of the Georgia Council on Economic Education. A native of Cleveland, Ohio, Mr. Chriszt is married to Maxine and they have five children.
For more information about the GABB, contact GABB President Mike Ramatowski at 770-634-0428 or email@example.com call Diane Loupe at 404-374-3990 or email firstname.lastname@example.org.
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