Have you been thinking that business ownership is for you? Many people are committed to the idea of owning a business and work hard to pursue this goal. Of course, the path towards buying a business is indeed complicated and requires a significant investment of not only money but also time. As a result, you’ll want to ensure that you are fully committed to business ownership before beginning the process. Let’s take a look at some common reasons why individuals choose to buy a business.
Desire to Grow Your Income
Most people will say that they would like to make more money. However, keep in mind that while owning a business will likely mean you grow your income, it also requires a significant amount of work, especially in the early stages.
Research shows that the longer you own your business, the more profits you will generate. Those who have owned their business for more than a decade will typically earn more than 100K a year. Of course, owning a business always comes with a degree of financial risk, but if you do successfully run your company for a series of years, you will likely succeed financially. Just be prepared for the possibility that the first few years may not generate as much income as you had hoped.
On the positive side, owning your own business allows you to have control over your financial destiny. You have the ability to make decisions that will grow your business
Interest in Shaping Your Lifestyle
When you work for someone else’s business, the way your life is organized is dictated by the rules and regulations of the company. For example, you may want to work at home, but your job requires you to spend 40 hours a week in the office.
If you want to make key decisions that impact your day-to-day life, owning a business will be quite attractive to you. You will be able to decide not only where you work, but also how many hours you work and with whom you work. You have the power and ability to shape many aspects of not only your life, but the life of your employees as well.
You are Willing to Take on Some Risk
The personality of a typical business owner is a person who is comfortable with taking on some risks. After all, not all businesses succeed. At some level, you are always risking your time, money, and energy. Of course, this aspect will vary dramatically depending on the kind of business you acquire.
It is also important to consider that many business owners find that they are working around the clock. They simply cannot go home and forget about their job at the end of the day. In sharp contrast, they are always on call and actively thinking about their business and relevant decisions. You also may not get a paid vacation or sick days.
Guardian Life Small Business Research Institute studied the ideal personality traits for a business owner and found that successful owners are action oriented, curious, self-fulfilled, tech-savvy, and future focused. They surveyed over 1,000 small businesses to generate this data. If you resonate with these traits, it is likely you are indeed cut out to own a business.
The post Three Reasons Why You Might Want to Own a Business appeared first on Deal Studio – Automate, accelerate and elevate your deal making.
BizBuySell is an online resource that focuses on offering unique content that specifically addresses the needs of buyers and sellers. To make this happen, BizBuySell has teamed with a range of experienced business brokers who are covering topics relevant to business owners, buyers, and sellers. For example, they feature articles that focus on how to make a business more interesting to a potential buyer. These resources help to position BizBuySell as a go-to place for a range of relevant business information.
Of course, every quarter BizBuySell publishes Insight Reports complete with interactive market data. These reports offer a comprehensive overview of trends that are essential for brokerage professionals to know about. The latest report can be accessed here. It covers important trends noted in the first quarter of the year.
Some of the changes that were noted in this important report include the following:
1. Rebounding Transactions
For Q1 2022, the Quarterly Report indicates that transactions are continuing to rebound from the slump of Q2 2020. Year over year, transactions shot up a whopping 24% and are now beginning to return to 2019 levels.
Overall, the main sector that seems to be holding back an even stronger rebound is the restaurant sector, which is still not where it was in pre-pandemic years. However, with that stated, the restaurant sector has also dramatically improved and has shot up by 42% year over year. Yet, the restaurant sector is still down 22% from Q1 2019.
2. Changing Buyer Preferences
When BizBuySell surveyed buyers as to what kind of business they wanted to buy, the numbers were eye opening. 35% of surveyed buyers responded that they were interested in the service sector, and this was followed by 15% of respondents choosing retail. Director of Sales Doug Whitmire stated, “Buyer demand seems to be leaning toward business services, self-storage, car washes, as well as advanced distribution services for manufacturers. There have been few opportunities, so buyers are flocking to them and inventory is limited.” The result of the limited inventory is record sales prices.
3. Listing Growth
In Q1 2022 listing growth has increased substantially, with service listings up 14%. While the restaurant sector is obviously still lagging, it is important to note that the Quarterly Report indicated that restaurants were experiencing a 10% growth. If the pandemic continues to recede, we could see a robust rebound in the restaurant sector.
4. A Boom in Sellers
The Q1 report also indicates that sellers, who have previously been sitting on the sidelines, are deciding that now is the time to sell. Once again there is talk of a “silver tsunami” approaching as Baby Boomers begin to sell. It is also interesting to note that many of those who are selling are doing so due to burnout. Importantly, burnout is occurring for a variety of diverse reasons, ranging from supply chain and labor issues to pandemic burnout.
Advice for Sellers
The BizBuySell team strongly advises that sellers should fix major supply chain issues before entering the market. Whitmire noted, “We try to get our clients to work with us to fix those issues before we go to market. Many times, you only have one chance with a buyer and then you lose them.” It definitely makes sense for sellers to try their best to remedy any issues that might have resulted from Covid-related circumstances. This will ensure that the sales process goes as smoothly as possible.
What if you could swap worrying about driving your business forward with relaxing in retirement? 45% of entrepreneurs report feeling stressed compared to other workers. It’s become something of a modern pipe dream, but it doesn’t have to be – provided you do the right things.
One of the wisest and most profitable things you can do is sell your small business.
Why not share your legacy with another ambitious entrepreneur and watch them carry on where you left off? If you live in the greater St. Louis region, we’ve got plenty of tips on finding a buyer.
Read on for our in-depth guide on how to sell a small business in St. Louis.
1. Know Your Worth
Before you put a price tag on your business, it is important to have your finances in order. Your books must be immaculate and ready to be looked over by accountants, lawyers, and valuation specialists. The prospective buyer will also look at your financial records to see if your business is worth their investment.
Once your finances are in order, you can calculate your business’s value. The value of your business is less about your assets and more about profitability. If your books are up to date, then it shouldn’t take long to calculate the value of your business.
The best option for calculating the value of your business is to hire a business valuation expert.
2. Find the Right Buyer
Providing intricate details of your business to serious prospective buyers is an important part of the selling process. Unfortunately, this is an opportunity for your competitors to find out information that could undermine your business. Including a non-disclosure agreement (NDA) along with your sensitive documents will prevent other business owners from posing as buyers for nefarious reasons.
Many business owners allow prospective buyers to view sensitive documents on their premises to avoid them falling into the wrong hands. Gather a shortlist of buyers so that you have plenty of options if the deal falls through. Allow some room for negotiation and keep in touch with potential buyers to build a relationship.
3. Have a Solid Plan
Every business owner should have an exit strategy in place for when they want to sell. The details of your plan will depend on your personal and business circumstances.
Are you selling to family or friends? Your employees may also show interest in buying the business. Make sure that you get everything in writing and keep the transaction as professional as possible.
Your plans should also include details of how the new business owner will take over the business to ensure a smooth transition. This may include information about equipment, location, and competition so that your successor can continue to make a profit. A business that is growing will sell quickly to investors who are looking to take advantage of your success.
A business broker could help you formulate a plan for selling your business. You can concentrate on running your business while the broker takes care of the sales process. They can also help to increase your business value before you agree on a sale.
4. Consider Your Options
Depending on your goals for the business, there are lots of options for you to consider. Selling to someone you know can reduce the business transition risk because they have prior knowledge and understanding of your business. Some of the options for selling include:
- Management or employee buy-out
- Sell to a third party (individual or company)
- Partial recapitalization
Be clear about why you are selling and how you will support yourself in the future once your business has sold. Planning your future is an important part of the sales process to avoid any remorse after the transaction is complete.
You can choose to sell your business with or without a business broker. If you have the knowledge and tools to complete the process without professional help, then this is a viable option. You’ll get to keep the money from the sale and will earn more than if you hired experts to help you.
5. Get Professional Help
Enlisting the help of a business broker and pre-qualified valuation expert could make the sale of your business easier and more profitable. Selling a business can be stressful and time-consuming. With the help of a professional business broker, you can get the best deal possible for your business.
A business broker could also help you identify the best time to sell your business. It makes sense to sell your business when profits are high. A business with falling sales is less desirable to a potential buyer.
It is important to note that there are risks to selling your business without a business broker or legal team. You may cheat yourself out of potential profits by skipping a business valuation. A broker could negotiate a better deal for your business that will cover the costs of their fees.
Your team could also include an accountant, financial advisor, and lawyer to help guide you through the process of selling your business.
Learn More About How to Sell a Small Business
Learning how to sell a small business can be overwhelming without the right help on your side. After years of building your business, it can be difficult to let go of what you have built. With these helpful tips, you can start formulating your exit strategy and sell your business with minimal stress.
Are you ready to sell your business? Contact Fusion Business Services for expert advice and support on how to sell your small business.Read More
Did you know that around 20% of new businesses fail during the first two years, and 45% fail during the first five years? Though everyone wants to see their business succeeding, running a business is never easy.
Business owners face different obstacles that can cause them to sell their businesses. Though you may have dedicated your time and finances to starting and growing your business, selling it might be the most brilliant move you can make.
But what makes people decide to sell their business? Here are some common reasons why you may opt to sell your business.
1. You Need Money
One of the common reasons for selling a company is money. Business owners sometimes convert their businesses to liquid cash and use it for different purposes, especially emergencies.
Some people sell their businesses to pay medical bills, travel the world, start another business or chase a new hobby. In such cases, selling your business may be the best way to get the money you want.
Note that, though buyers are interested in investing in a new business, especially if the owner is losing interest in it, buyers shy away from businesses running at a loss.
Therefore, if you are selling a company to fund another lifestyle or need, ensure you still pay attention to the business until you get the right buyer.
2. Unforeseen Business Risks
There are several risks that a business can face. Some common risks include security, financial, legal, compliance and more. The success of any business relies on how much they prepare for business risks.
Some people choose to sell their business because they do not have enough money to operate it while failing to open their doors after a security breach. When starting a business, it is imperative to determine the risks you may face and have a robust risk management strategy.
Suppose you don’t have a good plan to handle risks and can no longer hold the business together. In that case, it may be an excellent time to sell. Though you will still lose your business, selling will allow you to start over again.
You have dedicated several years of your life to growing and building your business. Now it may be time to take a break from it. Several entrepreneurs sell their profitable businesses because they are retiring.
Others choose to pass the business down to their family members. However, the latter is only possible if your family members share your passion and have the right skills to run the business.
If you feel it’s time to take it easy and enjoy your good golden years, consult the best business services providers near you and find the right buyer for your business. They will maximize your sale price, give you different offers or options and ensure you make good money from your business.
Whether you are moving to a retirement home, want to buy a house, or start an easy-to-manage business, you will get enough profit to fund your plans and have some money for retirement.
Several business owners sell their businesses because they have to move to another state or country. Since relocating a business can be challenging, it may make sense to sell the business and start another in your new location.
In some cases, you may need to sell your current business to explore a better business opportunity in another location. Since relocation also involves strict timelines, you may need to find a buyer as soon as possible.
This can also affect your selling price. To ensure you have enough time to transfer your business and that you don’t sell your business at a loss, consider hiring a broker immediately after you decide to sell.
5. Looking For a Change
Changes in dynamics can cause a business owner to sell their company. This can be as simple as losing interest in the business. It is okay to desire to change or take time off and figure out the next step.
Changes in life, such as a divorce, can also cause a business owner to sell the business as they divide their assets or change their spending habits.
Whether you want to pursue another different type of business or not, you can choose to sell the business while it is still profitable.
6. Burn Out
Running a business is very involving. To ensure your business is successful, you may need to stay actively involved, which can be very tiring. If you are no longer interested in the business or feel tired, consult a business broker and know your options.
This way, you will get expert selling advice, including the best time to sell the business at a good profit. Note that when burnt out, it is best to sell the business before losing interest in it.
This way, you will be patient enough and more determined to sell it at a reasonable price.
7. Business Partner Problems
If you disagree with your business partner, you may want to sell the joint company and venture out independently. In some cases, one partner may consider buying the other partner out, or both parties may decide to sell to a neutral party.
Before selling the business, consult an expert business broker and get a possible asking price from an outside buyer. Sometimes, selling to an outside buyer may be more profitable than selling to your partner.
At times, it may be easier to sell the whole business instead of retaining some equity. Get to know what is achievable and the best decision to make for your company.
Sell Your Business with Fusion Business Services
Selling your business is a vital decision. Since you have invested your time and money in your business, it is only fair that you get the best deal when selling it. At Fusion Business Services, we work with businesses and help them get the best from their investments.
We will evaluate your business and ensure you get the right buyer. Consult our experts and learn how you can take advantage of our network to sell your business.Read More
Many people assume they know what “fairness opinion” means because they are familiar with the term “fair market value.” Fair market value refers to a price that is reasonable for both a buyer and seller in an open and competitive market. However, a fairness opinion is quite different. This term refers to a report that evaluates the facts of a merger or acquisition or any other type of business purchase.
A fairness opinion is typically in the form of a letter that contains an actual opinion and justification of why a selling price is fair. Of course, there are limitations, as this report is fully based on information that has been provided by the management of the business.
Who Prepares a Fairness Opinion?
A fairness opinion must be prepared by a professional with expertise in business valuation. It is typically done by a business intermediary or appraiser. An investment banker can also prepare a fairness opinion. Although the professional who prepares the fairness opinion may very well have experience in structuring deals, this letter does not include any information or opinion on the deal itself. It also doesn’t include advice or recommendation. In preparing the report, the advisor seeks to look at the deal from the perspective of the investors.
Basically, it is structured to specifically comment on fairness from a financial perspective, based on the information on hand.
Who Uses Fairness Opinions?
You will most frequently see fairness opinions utilized in the sale of public companies by the board of directors. When this document is received, it shows that the board is working to protect the shareholders. Of course, fairness opinions can also be used for private companies. In this case, it can serve to protect the interest of shareholders or family members who may later look to challenge the sales price. However, in most situations that involve middle market private acquisitions, a fairness opinion is not necessary.
In the end, a fairness opinion assists with communication and decision-making. It serves to lower the risks surrounding a deal. This important document can be used in court if a shareholder later decides to file a lawsuit against the director of a company.
The post The True Meaning of a Fairness Opinion appeared first on Deal Studio – Automate, accelerate and elevate your deal making.