There are plenty of reasons a small business owner in St. Louis would choose to sell their business.
The market may be in your favor, and you’re ready to make a profit by selling. It could be time to move on to the next thing or just time for you to end this professional chapter. Finding the right buyer can be difficult regardless of why you’re selling.
When you’re ready to sell, working with a small business broker is always a good idea. Having extra help from an expert who knows the ins and outs of the local market can be a huge help.
If you’re considering hiring a business broker, you’ll want to ensure you get the most out of your arrangement. Here’s what you need to know to have the best experience possible with your broker.
Understand How Payment Works
Every business broker handles payment in their own way.
Some require money to be paid upfront, others collect money once the sale has gone through, and some do a combination of the two or something new entirely. Regardless of how the broker handles getting their payment, ensure you understand payment terms before agreeing to work with them.
Most business owners expect brokers to take a small commission from the sale. The issues start to arise when they’re unclear about how much the broker plans on taking or when it’ll happen.
It isn’t unusual to see some brokers request anywhere from 8% to 15% in commission. In addition, some brokers charge monthly or progress fees on top of that commission.
Make sure that payment is discussed and understood early in the process. This way, everyone involved can avoid unpleasant surprises.
When working with a business broker, there’s no such thing as giving them too much information. The more information you can provide the broker about your business, the easier job they’ll have finding the right buyer.
Take the time to prepare for your first few meetings by gathering all the documents and files they’ll need to sort through. Going as far back as possible can help give them insight into your business, but generally, a good rule of thumb is to have documents going back at least three years.
Bring documents around money like profit/loss statements, balance sheets, and information about cash flow. They’ll play a significant role in your business valuation. However, they’re far from the only helpful documents your broker will need.
Any paperwork you can bring that explains your business plan or executive summary can benefit your broker. It’ll teach them essential details about your business and could help them form their marketing plans and sales pitches.
Agreements with vendors, suppliers, and employees can also be beneficial. This can educate your broker on any legal obligations with employees and entities.
Things move fast in the business world. The last thing you or your broker would want is to miss out on something because you didn’t notice a missed call or sent email.
Remember, you’re far from the only small business owner that wants to sell their company. You can have a lot of competition in your local market or industry, and they could snatch up your buyer if you aren’t careful.
Make it a point to check your phone and email throughout the day. Answer questions your broker may have as quickly as possible, and don’t be afraid to let them weigh in on some of your decisions.
Develop a Communication Cadence
Some business owners want weekly updates from their brokers to see how things are progressing. Others only want to hear from their broker when they think they’ve found the right buyer. Regardless of your choice, talk to your broker about how often you wish to communicate.
Both you and your broker are busy professionals. Coming up with a communication schedule is an easy way to ensure you get the information you need at the right time.
When thinking about how often you want to be in contact, also think about how you want to be contacted. For example, some people prefer to talk on the phone. Others only want things in writing and prefer texting or emails.
Have the Right Expectations
Brokers may be a great asset, but there are some things even the best brokers can’t do.
It can take time to sell a business, and as recession fears loom, it may take even longer. Your broker may be able to find a buyer, but they won’t be able to help you make thousands in profit if your business is underwater.
A lot of the tension that happens between brokers and business owners comes from having misaligned expectations. This is why both parties must be as open and honest as possible.
Be as upfront as possible with your broker. Talk to them about your expectations around how long it’ll take to find a buyer, the broker’s involvement, and how much you think you’ll get for the business.
This allows you to be transparent about what you want. The broker may change some expectations, but that can be good. You’ll want to work with someone realistic who also understands what you want.
Find the Right Small Business Broker for You
A broker is a must when you’re trying to sell your business. If you follow the tips in this post, you’ll be setting yourself up for success with your small business broker.
Are you ready to work with brokers that understand the right way to sell in St. Louis? We’re dedicated to helping you find the right buyer. Contact us today to discuss the best way to market and sell your business.Read More
Often selling a business comes down to storytelling. The buyer and seller are the main characters of the story that is being told. The seller is the one relaying the story, and the ideal buyer is the one who truly sees the future opportunity.
A Brokerage Professional Can Help Tell Your Story
The simple fact of the matter is that often even sellers don’t know what the true story of their business actually is. They tend to lack the proper perspective as they are too deeply involved. Sellers may be burnt out or have never really thought through the story of their business in the first place.
Business brokers and M&A advisors serve a great function as a third party who can look at the story from a different perspective. These professionals are numbers people, but it goes beyond that, as they can clearly see your business as a story to be told. And they can help you control that storyline for optimal results.
Embracing the Human Element
In order to tell the story of the business and why a buyer should want to buy it, it is necessary for your business broker or M&A advisor to truly understand your business. This is why good communication is so important. After the interview process, these professionals must precisely arrange all the relevant information in such a way that the buyer can digest it and see the potential within the business. Through that means, a prospective buyer can understand that value and envision him or herself as the hero.
It Goes Beyond the Financials
Business brokers and M&A advisors also help sellers determine the price and work as advisors on pricing. The story of the business does start with the financials and the facts. But this is only the beginning of the process. Brokerage professionals will want to interview you to learn how to weave together your story.
In the end, every story has a moral. It is important to pull all of these elements together to make an engaging story that will ultimately inspire and motivate a buyer to buy the business.
Storytelling Leads to Successful Deals
When buyers open their minds to the story being told, they are able to envision the future potential of the business and why it is going to be a valuable opportunity. At the end of the day, selling a business isn’t strictly about numbers, figures, facts, profit and loss margins, and other financial variables. Instead, it is also about the people.
The post Telling the Story of Your Business appeared first on Deal Studio – Automate, accelerate and elevate your deal making.
When it comes to getting a loan, you can be certain that a bank will want collateral. This is true for both personal and business loans. Simply stated, if you have collateral, your bank won’t be concerned about being left empty handed if you can’t repay the loan. Many budding business owners are, in fact, held back by the fact that they lack the collateral needed to buy a business. However, the good news is that there are ways that one can buy a business with no collateral or very little collateral.
The Small Business Administration (SBA) is the first stop for those wanting to start a business with a low level of collateral. The SBA’s 7 (a) program provides banks with incentives to make loans to buyers. It is through this program that the SBA will provide guarantees for a whopping 75% of the loan amount. The borrower still has to have the remaining 25% of the loan amount. This means that on a $1 million dollar business, the borrower just has to come up with $250,000 and not the full $1 million dollars.
Through the SBA’s 7 (a) program it is possible for prospective business owners to consider businesses that would otherwise be completely out of their reach. Yet, there is a second excellent aspect to the program, namely that the cash that buyers use to meet the 25% requirement can come from an investor or a gift. Anyone looking to become a first time business owner will want to fully explore all that the SBA’s 7 (a) program has to offer.
A second route for those looking to buy their first business is seller financing. Seller financing is not rare, as many may suspect. This method of financing is actually quite common. If sellers are motivated, they are much more willing to consider seller financing. Keep in mind that there are many reasons why a seller may be motivated, such as retirement, unexpected personal problems, or just burnout. Seller financing and the SBA’s 7 (a) program could, in some situations, be used together. This combination could serve to greatly increase your chances of buying a business.
This is not to state that there are zero obstacles or limitations with the SBA’s 7 (a) program. For example, the program requires that sellers cannot receive any form of payment for a full two-year time period. There are ways to address this problem, but it is something that buyers and sellers alike should be ready to address.
A lack of collateral doesn’t have to mean the end of the dream of owning a business. If you are interested in owning your own business and lack collateral, meet with a consultant at S.C.O.R.E. and other experienced professionals, such as a business broker or M&A advisor. An experienced brokerage professional will have a wide-array of ideas for how to buy a business with little or limited collateral.
The post Is it Possible to Buy a Business Without Collateral? appeared first on Deal Studio – Automate, accelerate and elevate your deal making.
Each year, thousands of entrepreneurs across the United States opt to sell their businesses. In 2021, an impressive 8,647 businesses were sold. That means if you’re thinking of selling your small business, you’re in good company.
But finding a buyer for an existing small business is no small feat. In fact, most businesses that are put up for sale actually end up not selling.
If you’re thinking of selling your small business in Jefferson County, you’ll want to make sure you do it right. But where do you start?
This guide on how to sell your small business will help set you up for the most favorable outcome of the sale. Read on!
Know the Value of Your Business
Having a clear understanding of your business’ value will help you to set a realistic asking price and increase the chances of successful negotiations.
There are a number of different factors that can contribute to the value of a business, such as its assets, earnings, reputation, and market share.
A professional business appraiser can help you to assess the value of your company and give you an indication of what you should expect to receive. With an accurate business valuation in hand, you will be in a much better position to sell your small business successfully.
Many sellers make the mistake of waiting until the last minute to sell their small businesses, but that’s hardly the best time to sell.
Start early in the process to increase your chances of a successful sale. By giving yourself enough time, you can ensure that all the necessary paperwork is in order and that you have a good understanding of the current market value of your business.
This will help you to set a realistic asking price and avoid any last-minute haggling.
In addition, starting early gives you time to spruce up your business operations so that potential buyers can see it at its best.
With a little planning and preparation, you can maximize your chances of getting top dollar for your small business.
Hire a Business Broker
Hiring a business broker is one of the best things you can do when selling your small business. A good business broker will have a wide network of potential buyers and will be able to get you the best price for your business.
They will also be able to handle all the paperwork and negotiation involved in selling a business, which can be a daunting task for someone who is not familiar with the process.
Brokers can also help identify any warning signs likely to derail the sale and help you take the right action.
Review Your Contracts
Going through your contracts may not sound like the most exciting way to spend an afternoon, but it’s an important step in the process of selling your small business.
Reviewing your contracts will help you identify any areas that need to be updated or revised before you put your business on the market. This is especially important if you have any long-term contracts in place, as potential buyers will want to know about these before they make an offer.
Prepare Your Employees
Preparing your employees for the transition is critical. After all, they are a crucial part of your company, and you want to make sure that the sale goes smoothly for them as well as for you.
There are a few things you can do to prepare your employees for the sale of the business.
First, it’s important to be transparent with them about the process. Let them know what’s happening and why.
It’s also important to keep them updated as things progress. You also need to reassure them that their jobs are safe. No one wants to work for a company that’s in flux, so it’s important to give your employees some stability during this time.
Finally, you should try to create a smooth transition plan for the new owners. This will help everyone feel more comfortable with the changes and ensure that the business continues to run effectively.
Market Your Business for Sale
No buyer is going to come knocking on your door if they don’t know your business is up for sale. The key is to not only get the word out there but also to market your business in a way that will attract the right buyer.
Take the time to identify your target market. Who are you trying to attract? This will help you determine where to advertise and what type of marketing materials to use.
Next, create a marketing plan. This should include everything from online ads to print ads to PR campaigns. In today’s digital world, business buyers will often do their initial research online, so it’s important to have a strong digital presence.
Negotiate the Sale Price and Terms
Negotiating the sale price and terms will determine how much money you walk away with at the end of the sale. The goal is to get the highest possible price while also minimizing your liability.
To do this, you need to be clear on your bottom line and be prepared to walk away if the terms are not favorable.
It’s also important to have realistic expectations. Remember, the buyer is usually looking to get a good deal, so don’t expect to receive full value for your business.
Sign the Purchase Agreement
The purchase agreement is a document legally transferring ownership of the business from you to the buyer.
It is important to have a lawyer review the agreement before you sign it to make sure that all of the terms are fair and that you understand what you are agreeing to.
Once the agreement is signed, the buyer will typically pay a deposit and then have a certain amount of time to complete the purchase. At that point, ownership of the business will be officially transferred, and you will be paid the remainder of the purchase price.
Now You Know How to Sell Your Small Business
Knowing how to sell your small business can be a complex and daunting task. However, it’s important to take the time to understand the process and do things right. By following these steps, you can ensure that you get the best possible price.
We hope this guide has given you the information you need to get started.
If you need help selling your small business in Jefferson County? Get in touch with our team of expert business brokers today and learn how we can help you.Read More