How to Sell Your Small Business in St. Louis
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.
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7 Reasons You May Need to Sell Your Business
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.
3. Retirement
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.
4. Relocation
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.
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The True Meaning of a Fairness Opinion
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.
Copyright: Business Brokerage Press, Inc.
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6 Things to Consider When Selling Your Restaurant Business in St. Louis
The restaurant business is a lucrative one with annual sales comprising more than 4 percent of America’s gross domestic product. That’s a whopping $863 billion in sales. So, there’s no doubt about it, the hospitality industry is cut-throat.
With so much competition around you, owning a restaurant is not for the faint of heart. This is probably one of the most common reasons most restaurant owners choose to sell when the time is right.
If you’re one such business owner, check out these selling tips before you put your restaurant on the market.
1. Know What Your Business Is Worth
As a business owner, there’s nothing worse than undervaluing or underpricing what you’ve spent many years building. Before you list your restaurant for sale, ensure you have a clear idea of what it’s really worth.
To add to this, potential buyers or investors will want a detailed breakdown of your financials because they need to know what they’re buying into, too.
Set aside enough time to gather all the necessary financial data you need so that your sales pitch is attractive to potential buyers/investors. They’ll want to see a steady influx of cash flow as well as high-quality sales. During this time you can also augment and streamline your sales and expenses to improve your cash flow.
It’s also a good idea to scope out what other restaurants are selling for in your area. Hire the expertise of an appraiser if you want to make extra sure that you sell your business for the right price.
2. Understand the Terms of Your Lease
Selling a business is not always as easy as finding the right buyer. You often have other responsibilities that need consideration, such as the terms of the space you are leasing.
If you do not own the restaurant building/space, you’re most likely leasing it from someone. Before you sell your business, you must ensure you aren’t breaching any lease terms.
Remember that your landlord could jeopardize the terms of a good sale if you are in breach of a lease agreement. If you’re unsure of all the legal particulars when it comes time to sell your company, it’s best to hire a lawyer who can explain your legal rights to you.
It’s in your best interest to speak to your landlord about your plans to sell the restaurant. They might be willing to let you out of your lease early, so it’s worth being open and honest.
3. Enlist the Expertise of a Business Broker
While you think you might have a good handle on the restaurant industry, no one understands trends like a restaurant business broker. These professionals specialize in selling and buying restaurants of all types and sizes, in different markets too.
A business broker can help you create the perfect marketing scheme in order to find the perfect buyer. They are specialists in their field and have a full grasp of the restaurant business, current trends, what buyers look for, and how to settle on the best deal.
If you have no idea where to start when trying to sell your restaurant, a business broker has you covered.
4. Sell Your Restaurant as a Commodity
How well is your restaurant doing? If it’s a thriving business with great staff, good customer turnover, intact furniture and fixtures, and up-to-date equipment, it’s a real commodity. And you should consider selling it as such.
In short, this means selling your business as a whole, an entire asset, rather than in parts. In general, most buyers find a thriving business that’s well established far more enticing than buying it in parts.
5. Consider Selling Off Your Liquor License
As a restaurant owner, you’re probably fully aware of just how valuable a liquor license is. In fact, it’s one of your most lucrative assets, depending on the location of your restaurant.
If you don’t plan on selling your business as a whole, you can begin by selling your liquor license to a willing buyer. Most of the time, you could receive a decent profit as liquor licenses are difficult to acquire so a potential buyer might be willing to pay.
Again, you can opt for the help of a broker to find you the right buyer.
6. Improve Your Restaurant’s Physical Condition
Selling a restaurant is much like selling a home — its ”sellability” hinges on what it looks like and its physical condition, especially from the outside. Curb appeal is not only important for homes, but for all street-side restaurants and businesses.
Before you list your business for sale, put some effort into upping your curb appeal, first. This might include a fresh coat of paint for the exterior, new paving, awning covers, light fixtures, tables, and chairs.
Always keep rubbish and other forms of refuse out of sight from your customers. The staging of the interior of your restaurant is also important. This is probably one of your key selling points.
You might need to consider replacing outdated furniture, the interior might need a repaint or updated tablecloths. Going that extra mile to improve the physical space of your restaurant can do wonders for how quickly it sells, and the profit you pocket.
Looking To Sell Your Restaurant Business?
The decision to sell your restaurant business is huge — that’s why you need the right guidance. With Fusion Business Services you have the expertise, support, and industry connections of one of the best business brokers in the St. Louis region.
We can put you in touch with legitimate business buyers willing to offer you the price and profit that you deserve after many years of hard work. Learn more about how we can help!
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How to Work With a Small Business Broker in St. Louis
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.
Come Prepared
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.
Be Prompt
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.
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