How Can You Tell If a Potential Buyer is Really Serious?
When you’re trying to sell your business, the last thing you want is to waste time dealing with buyers who aren’t qualified and are unlikely to actually make a purchase. After all, you will not want to reveal details about your business to someone who may be looking to take advantage of the situation. Let’s take a closer look at how you can weed out legitimate buyers from those who are just kicking the can down the road.
Legitimate buyers will ask the right questions. They will have a keen interest in your industry and are seeking to gain more information. They will also be likely to ask intelligent probing questions about your customer base and the strengths and weaknesses of your business.
The best buyers will also ask logistical questions about your inventory and cash flow. It goes without saying they will want to know details about profits that are generated. Real buyers will also be concerned about wages and salaries. Their goal will be to ensure that your employees are taken care of and will be unlikely to quit.
Another area that you can expect serious buyers to ask about is capital expenditures. They will evaluate any equipment and machines involved in the business. They will also likely inquire about inventory that is unusable due to the fact that it is outdated or problematic. After all, if they are truly planning to buy the business, they would inherit any headaches.
A good rule of thumb is to imagine yourself in the shoes of the prospective buyer. What kinds of questions would you ask? If you find that a buyer is only asking the bare minimum of questions that only scratch the surface, odds are that they are not really interested. You can expect the legitimate buyer to ask about everything from environmental concerns to details about your competitors.
The best way to evaluate buyers is to turn to the experts. Your Business Broker or M&A Advisor will have years of experience in talking to buyers and will have a leg up on evaluating who is worth your time and energy.
Further, you would likely be overwhelmed with the process of handling buyer inquiries while you are still trying to effectively run and manage your business. A good brokerage professional will handle your incoming inquiries and only notify you of buyers who are suitable, qualified candidates. They will ensure that the highest standards of confidentiality are held along the way.
Copyright: Business Brokerage Press, Inc.
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8 Signs It’s Time to Sell Your St. Louis Business
About 50% of business owners try to sell their businesses themselves, and most of them fail.
Deciding to sell your St. Louis business can be heartbreaking because you’ve spent years building it – it practically becomes your baby. However, you also need to ensure that you sell it at the right time to ensure maximum investment return.
With that in mind, here is a look at top indicators that it’s time to sell your business and how Fusion can help you.
1. New Opportunities
Most entrepreneurs land new opportunities, even when their ventures are doing well. The opportunities come in different forms, including a new business, a role in a larger organization, or something that offers more.
And while you might always say “no,” there may come a time when you are conflicted between moving on and staying in your business. This is particularly true if you are ready for a new challenge and feel that the opportunity could be your chance. When that time comes, it might be time to sell your business.
Otherwise, you will regret not taking the chance to try something new.
2. You Lack Motivation and Ideas
Despite your best efforts, there comes a time when we hit a creative dead end. Business owners in this situation find themselves without ideas on keeping their venture afloat.
As a result, the workflow and business sales suffer. Running a business is hard enough without worrying about how your burnout will affect your venture.
So what can you do?
Rather than force unlikely business results, it may be best to accept failure to grow. There is no harm in moving on, especially if running a business is no longer a motivating and fulfilling experience. Consider selling your St. Louis business if you start experiencing entrepreneur burnout.
3. The Business Can Run Without You
When investors shop for a business for sale, they buy companies in different states. However, the companies that attract the best prices are the ones that can continue running profitably.
A business that can run independently is more viable because buyers only need to invest financially. They don’t need to be active participants.
Does that describe your business? Can your business run itself? If so, you’re likely to get a bigger payout. This doesn’t mean you can’t sell if your business doesn’t run independently yet. It just means you should take time to develop it so it doesn’t rely on your day-to-day presence.
Once you have done all you can for the company, you can sell it to someone who can appreciate your hard work and earn a bigger payout at the same time.
4. You Have Fallen Behind on Industry Trends
The emergence of the digital era has transformed the world of business. Traditional ways of doing business are no longer reliable, especially if you hope to dominate the market and become an authority in your niche.
Entrepreneurs have to adapt and meet market demands. Unfortunately, not all business owners get in line with moving industry trends.
All too soon, they find themselves outmatched by competitors because their services:
- Can no longer compete with larger and more aggressive companies
- Have become obsolete
- The business model is not viable enough to stay afloat
If you have fallen behind industry trends and fear you have nothing more to offer, it might be best to sell the company. It can be a difficult pill to swallow, primarily if you have invested years into building the business.
However, the market will quickly swallow you up if you wait too long to sell and reduce the value of what you could get for the company.
5. The Business Has Outgrown Your Skills
As your company grows, there may come a time when you realize you are no longer an asset to the business. And while it’s hard to accept, honest entrepreneurs can often come to that realization by themselves.
For instance, business owners often make good salespeople. But when the company generates $5+ million in annual revenues, it demands more leadership than your skills can deliver.
Having the courage to admit that and take the appropriate steps to ensure the business’s success is crucial. And while you can learn and grow with the company, it’s also okay to sell it to someone who can take it further.
6. Your Professional Aspirations Have Changed
There is no shame in admitting that the venture you spent your life building doesn’t do it anymore. People develop new dreams or realize that they aren’t cut out for a particular type of business. When that happens, it’s best to sell your company and find a new passion.
But all isn’t lost. You can use the money from the sale of your St. Louis business to fund a new venture. Whether it is a new job, returning to school, or a new startup, fresh starts can be pretty exhilarating.
7. You Can No Longer Tolerate the Risk
Entrepreneurs often have to carry the risk of their company’s profits and losses. Sometimes, this can mean celebrating big wins while barely earning a salary at other times. During the early stage of the business, existing on a tight budget and not worrying too much about losses is normal and exciting.
But as you get closer to retirement, your financial needs change, and it becomes more critical to minimize risk. Whatever the case, selling your business might be the best to reduce the risk to your financial profile.
8. You are Ready for Retirement
Beyond financial reasons for selling a business, life events like the death of a partner, health deterioration, or divorce can force your hand. Other compelling reasons for retirement include stress and not wanting to manage the company daily.
Whatever the reasons for retirement, the sale of your St. Louis business might be the best cause of action. The income generated from the sale can help fund your future. Just be sure to make the company as attractive to buyers as possible to maximize the sale value.
Sell Your Business with Fusion
Do you think it’s time to sell your St. Louis business? At Fusion, we are dedicated to providing valuable selling tips and guidance on selling businesses. From pricing and valuation issues to exit strategies, we strive to ensure the sale of your business goes smoothly.
Register here if you want to sell your business with no stress.
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A Step by Step Guide to Selling a Bar in St. Louis
Perhaps the most famous bar in America is Cheers in Boston. The Cheers sitcom made the establishment more legendary than ever, portraying the ideal bar of people’s imaginations.
You understand how incredible that environment can be if you’ve ever owned a bar. But, just like Sam Malone, you may decide it’s time to sell your bar.
However, selling a bar is not as easy as it may sound. It requires a lot of work on your end, as you have to make sure the bar is a worthwhile purchase for a seller.
If you’d like to sell your bar business but don’t know where to start, don’t worry! In this guide, we’ll give you the essential information you need about how to sell a bar.
Preparation For Selling a Bar: Collecting Financial Records
When selling a bar, the first step is to get your affairs in order. First, collect your financial reports. The first thing any prospective buyer wants to know is that your bar business generates a profit.
Your financial reports alone won’t be enough to impress a buyer. You may not mind keeping all of your receipts in a small locker, but most buyers will be unimpressed with such a system.
These days, most businesses store their information in computer-based accounting systems. Start transitioning your books to electronic recordkeeping systems; this way, a buyer can trust that you store your records efficiently. In the mind of your prospective buyer, this means they won’t have to install an entirely new system right away.
Make Sure Equipment Runs Well
Another thing to do before you sell the bar is to ensure your equipment runs as it should. Even if you don’t use the equipment, it’s best to fix it or remove it. Having defunct items in a bar is a significant turn-off to prospective buyers.
As you examine your equipment, it’s also wise to remove any item that’s not a part of your sale. Over the years, you’ve likely accumulated personal items and memorabilia that make the place feel like home.
However, buyers assume that anything they see in the bar is a part of the sale. If you don’t want to part with these items, it’s best to move them out before buyers see the premises.
Iron Out Leasing Issues
When buyers see your bar, they expect to run it in its current location for the foreseeable future. However, for that to happen, your bar needs to have a viable lease.
If your lease runs out in a few months, or even in a year or two, it can halt the buying process. The buyer may not want to invest in a bar that they can’t guarantee will remain in place.
In many cases, this results in buyers turning their attention to more secure locations. So, before you talk with any buyers, make sure the lease still has plenty of time left on it.
Make Any Necessary Staffing Adjustments
This step may be the most important step in your preparation. Often, bar owners have strong relationships with their staff — you’ve come to see yourselves as a team.
However, a buyer doesn’t care much about your bar relationships. They want to know that your staff can run the bar smoothly and efficiently. If the answer is no, they may not buy the bar.
Alternatively, they may fire your staff without much mercy. So, if you have staff that underperforms, it’s in your best interest to let them go. If it comes from you, they may have an easier time recovering.
Interview Brokers and Choose Your Representative
The next step is to find a representative for your bar. This firm serves as the middle man between you and the buyer, relating information to both parties.
Perhaps the most critical service that brokers offer is valuing a business. When you interview brokers, it’s essential that you ask each candidate how much they believe your business is worth.
Generally, most candidates will give similar appraisals for your business. It’s often in your best interests to avoid outliers in these appraisals.
How do you know you can trust a representative in valuing a bar? It helps to check their credentials, such as the following:
- How many years have they spent in this business?
- What was the representative’s business background before selling restaurants?
- Are they licensed?
- How many restaurant listings do they currently have?
- How many restaurants have they sold?
- Do they have prepared contracts for buying a business?
- Do they have any references you can contact?
If they can answer all of these questions favorably, you can likely trust their judgment in valuing your business. From there, you’ll move to the next step.
Signing the Listing Agreement
Once you sign the listing agreement, follow these tips to help the process go more smoothly. First, run the bar as though you weren’t selling it. Don’t begin reducing hours or making other significant changes.
Likewise, keep the establishment clean and open for showings before and after hours. Return any phone calls or emails from your broker as soon as you can and check in with them for buyer feedback.
Review and Accept Offers
When it’s time to accept an offer you like, remember to work with the buyer. Give them a few wins in negotiations if you can handle them. Likewise, grant them the freedom to inspect the bar for health purposes.
Make sure your CPA is on board to offer any due diligence information as well. Lastly, we cannot stress enough that you shouldn’t make significant bar changes while under contract with a buyer.
If everything comes back favorably, all that’s left is to attend the closing and collect your check. At this time, you’ll turn over any keys, codes, and passwords to the new owner.
Start the Process of Selling a Bar
Selling a bar can take time. If you’ve determined to sell your establishment, start preparing today! Begin by collecting your financial records and making any necessary adjustments with the equipment.
Once you’re ready to find a representative, consider our services! We offer top-notch representation to bars and restaurants across St. Louis. We’ll be happy to add your establishment to our listings.
If that sounds like what you need, don’t hesitate! Contact us today to learn more about selling your bar business.
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How to Sell and Successfully Launch Your Retirement
Many business owners are emotionally attached to their businesses, and it is easy to understand why. Typically, business owners invest not only a considerable amount of time and money into their business, but a good bit of themselves as well. Owning and operating a business often becomes part of one’s identity. However, the fact is that no one will work forever, as retirement eventually comes for almost every business owner. With this in mind, it is important to prepare for selling your business well in advance.
Brokerage professionals can take your knowledge regarding your business, and use it to help you frame your business in the best possible light. Your expertise in your business can also help a broker find ways to improve your business so that it is more attractive to potential buyers. With all of this in mind, let’s turn our attention to the key steps you should take when preparing to sell your business and transition into retirement.
Select Your Second-in-Command
Any savvy buyer will want to know that the business is well supported by a capable team. Buyers rightfully worry about having a smooth transition period, and nothing helps dispel those fears like having a proven and capable second-in-command standing by. When selecting this important individual, it is important that you pick someone that understands how your business works and is a proven asset to its operation.
Automate, Automate and Automate
Buyers can be intimidated by taking control of a business. Having a proven second-in-command ready to assist is one smart step. Automating as much as possible is yet another prudent move. In short, you want your prospective new buyer to feel more confident about buying and operating your business.
Make a “Smooth Transition” List
As the seller, you have the critically important job of removing buyers’ fears. When you boost their confidence that they can successfully run your business, you increase the odds that your sale will go smoothly. Making a smooth transition list, which includes all the steps that you can take to improve the odds of a buyer being successful, is a smart investment of your time and effort.
A good transition list will include information about how to work with key customers, employees and vendors. You want to ensure that your customers, employees, and vendors understand that a sale will take place, but also understand that the process will be smooth and trouble-free. Whether large or small, take any steps that you can to show buyers that the transition will be well-received.
The average business owner has, in fact, never sold a business before, and is unprepared for this very complex process. Since the process of buying or selling a business is a very complicated one, they should strongly consider working with an experienced Business Broker or M&A Advisor who can help guide them through the process. Brokerage professionals are experts at buying and selling businesses. They understand what both buyers and sellers want and need. As a result, they can help you take the necessary steps to get your business ready to be sold.
Copyright: Business Brokerage Press, Inc.
The post How to Sell and Successfully Launch Your Retirement appeared first on Deal Studio – Automate, accelerate and elevate your deal making.
A Guide for Determining a Reasonable Price for Your Small Business
There is a considerable difference between determining the value of a privately-held company and a publicly-held company. Topping the list of considerable differences is the fact that privately-held companies do not have audited financial statements. Let’s look at how the owners of privately held companies should proceed in establishing a reasonable price for their company.
An audited financial statement is a costly endeavor. In order to avoid the cost, many companies simply don’t go public. Of course, it should be noted that publicly held companies, as the name indicates, reveal much more about their finances than their privately held counterparts do. Privately held companies are often seen as being more mysterious whereas publicly held companies are considered more “open.”
Business owners looking to sell their business will, of course, want to address the fact that their company lacks the public information associated with publicly held companies. Providing prospective buyers with as much verified information about your business as possible is one of the fastest and easiest ways to overcome buyers’ concerns. A smart move for any business owner is to work closely with their accountant to go over the numbers and create an easy-to-understand presentation for prospective buyers. This should serve to allay many of their concerns.
Working with your accountant is only the first step in providing prospective buyers with the information they need to feel comfortable. The second step is to work with an outside appraiser or other expert who can determine the value of your business. After that, you’ll want to decide on what your market price will be, as well as your “wish price,” or the price that you would ideally want. Third, you must know your “rock bottom” lowest price. You, as the owner, need to have this information as it will greatly facilitate and streamline all negotiations.
When buyers are reviewing materials and working to determine what price they are willing to pay, they will look at a wide range of factors including:
- Product diversity
- The size of your customer base
- Potential competitors in the area
- Competitors on the horizon
- Potential disruptions to your business, such as supplier problems
- The stability of your earnings
- The stability of the market
- Need for capital
Different buyers may place differing levels of emphasis on certain areas, but you can be certain that the aforementioned areas will be examined with care. The process is undoubtedly rather complex. This complexity underscores the need for professional assistance.
Ultimately, the market will determine the sale price of your business. For business owners, the first and most important step is to work closely with professionals such as accountants, appraisers, Business Brokers and M&A Advisors to establish the price of your privately held business. You can count on brokerage professionals to properly organize the facts and numbers that support that price.
Copyright: Business Brokerage Press, Inc.
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