Selling your business? You’re not alone. Over 10,000 businesses are sold every year, and that number is only rising! Selling your business can be stressful, and finding the right price to sell it for is even worse.
Luckily, with the right tools, you can sell your business quickly and for the right price. Let’s talk about that.
How To Sell Your Business For The Best Price: Create A Checklist
Having a “sell your business checklist” should be your first priority. You basically want to crunch the numbers, look for hidden factors that can increase your sale, and determine how you’re going to sell it.
Consider All Factors
There are so many moving parts in a business, and there’s no one-size-fits-all way to determine what makes a company valuable. Brand loyalty, ad success, business location, scale, employee satisfaction, employee efficiency, the company’s assets, and its liabilities. Those are a small few.
Do the math and trying to value a business is tricky but it’s important to determine your selling price. Try to consider any unique factors to your business as well.
Determine Your Minimum And Ideal Price
Once you have a checklist and you’ve considered all the factors that should go into your price, you should have an ideal price tag as well as a minimum that you’ll accept. To create an example, we’ll say that after you’ve determined your business’ assets, liabilities, and prospects, you think that the ideal selling price would be close to $300,000.
If that’s the case, maybe you’re getting close to retirement, you have your social security coming to you along with your retirement account, and you’re looking to get the business off your hands so you can get to what you want to do. You don’t want to involve yourself for 2 or 3 more years just to get that extra bit out for your ideal price.
In that case, your absolute, bare minimum with no wiggle room at all could be something like $200,000. This makes sure that you walk away with enough to keep yourself going, maybe invest it into something else like a rental property, clear all your debts, and you’re good to go!
Now, you want to avoid that bare minimum as much as possible, there’s no doubt about it. $100,000 is a big difference, and you earned that money by running a successful business all this time. So, in the event someone offers you close to that low range, you let them know your bare minimum is something like $275,000! Keep your low figure in your head.
Figure Out Your Options For Buyers
You can take out ads in the newspaper or post “for sale” signs at your location. You can also sell your business online by posting them to business sale websites. There’s a lot more you can do, but the most important thing is to maximize the number of potential buyers you can find, as this will ultimately get you the best price.
Once You Have A Buyer, Make An Offer!
They may make the first offer. It’s your job to counter it if you have your prices in mind. Sticking with the $200,000 to $300,000 example, let’s say they offer you $225,000 for your business in cash. You might be happy with that but now you’re guaranteed a minimum payout of that. Keep the offer on the table at all costs.
If this event pops up, do everything you can to avoid burning that bridge. However, you can still negotiate. You can say: “You know, I ran through the numbers, this business has all of these great amenities to offer, we already have great employees and management, and our customers are very loyal. I definitely think this business is worth $320,000.”
You’re going high, sure. That leaves the space in the middle wide open to meet. While that’s a good opener for a negotiation to begin, it doesn’t mean it even has a shot at working. As we said, don’t burn the bridge. You want anything that’s above your minimum to stay on the table.
If they aren’t budging on a dime, say to them that you’re going to keep their information and that you’ll update them as soon as possible. If you get a better offer, great. If you don’t, you’re still ahead of your minimum.
What If I Can’t Sell Above My Minimum?
If you find yourself in a situation where you think you aren’t going to get a fair deal, have your business evaluated and let any potential buyers know exactly what your company is worth.
From there, you have a firm figure that you can use to your advantage along with any other selling points you have in your business. Think of it as if you’re selling your home. “The house was valued at $300,000 on Zillow, but it comes with a pool, central air, and all of these amenities not taken into account.”
What If I Can’t Find A Buyer?
If you’re expecting to put your business on sale on Craigslist and get a bite the next day, you’re in for a surprise. If you’ve exhausted everything you can think of and aren’t having any luck, it’s time to call in the professionals. Hiring a business broker to sell your business is like hiring a realtor to sell your house. It may cost a fee in the end but it’ll likely make you more money and do it in half the time!
Get The Best Bang For Your Buck!
If you’re looking to sell your business, you don’t have to do it alone. Hiring a broker will create more interest among potential buyers, sell the business quicker, and ultimately put more money in your pocket. If you’re interested, be sure to check out our seller’s tutorial to learn more!Read More
According to experts, up to 90% of people fail to sell their businesses. Many business owners often ask themselves, “How to sell my business?” They end up debating whether to do this endeavor on their own or to use a broker.
People sell their businesses for multiple reasons, such as losing profit, wanting to do something else, wanting more time to themselves, or other reasons that aren’t listed. If you fail to sell your business, you may be stuck with debt or something you don’t want. It’s a challenging process, which is why using a broker plays a crucial role; continue reading to learn why you should get one.
A knowledgeable business broker can assist you in obtaining the highest possible price. They know the market price structure and can provide important insight into how to price a small business.
If you overprice your business, the majority of prospective buyers will never ask about it. If you undervalue your business, you will not get what it is worth.
A competent broker will free up time for you to operate your business and enjoy your personal life. It’s advantageous to have an expert on your side.
Apart from operating your small business, you have a lot of other responsibilities. Why not delegate the hard work to a business broker while you enjoy your time away from your company?
A reputable business broker would ensure that a non-disclosure agreement or NDA is completed before disclosing anything about your company or even knowing its name. They may assist in explaining why a potential buyer will only get a limited amount of information before making an offer.
A seasoned business broker will weed out bidders who are just seeking information. They will spend time educating genuine buyers about the value of the business.
Professional business brokers have access to resources and industry experts. They would know which SBA banks are lending due to their expertise.
They are acquainted with knowledgeable lawyers that can assist in crafting contracts or ending the sale of a business. They also offer a list of excellent accountants that are familiar with business finances.
Why waste time arguing back and forth when an expert can represent you to get your desired price. By using a business broker, you can remove the worry and personal aspects of the situation.
A competent business broker will spend time developing a concise and effective business review (CBR or CIM) that summarizes all of your company’s critical information. A well-crafted presentation will assist the buyer in understanding the advantages of acquisition.
They’ll be able to provide an excellent overview with their acquisition advisers. A strong CBR is an effective instrument for assisting in the sale of your business.
Supportive Financial Representatives
A business broker can collaborate with you or your accountant to explain and clarify your company’s financial situation. This is often referred to as normalizing financial statements, and when presented properly, can help potential buyers understanding your business’s actual financial performance.
An expert broker will invest in and have access to various tools to help sell your business. They will have access to forms, databases of potential buyers, excellent websites, and much more. Before choosing a broker for the job, it’s advisable to ask them about the tools and techniques they will use to sell your business.
Brokers may use their years of expertise to look around corners and predict possible transaction difficulties in advance. They are intimately acquainted with each stage of the company’s selling process and will offer valuable guidance.
Sell Your Business Checklist: What to Prepare With Your Broker?
Approximately 20%-30% of small businesses listed for sale are successfully sold. In order to be better prepared, here are some items that are required to sell your business:
Required Records & Important Information Before Going To Market!
Prepare the following things before placing the company on the market:
- Three years worth of federal tax returns
- Three years worth of profit and loss statement and a balance sheet
- Three years worth of monthly bank statements
Ensure that you are aware of the proper yearly adjusted net income (cash flow, SDC) for the past three years. Serious buyers will want to know this information early on in the purchasing process, as well as how you obtained it from your tax returns and financial statements.
Obtains a Third-Party Business Valuation
Obtaining a competent company appraisal/valuation from a third party is essential for the selling process. 70% of all small businesses never sell because of the excessive asking price or poor deal structure.
The third-party valuation will be used by a variety of people throughout the selling process:
- Potential business buyers
- Lenders/financing companies for the buyer
- Other advisors/parties to the transaction
Prepare Your Team of Advisors, Attorney, and Accountants
A critical component of being prepared to sell a small business is having a reliable team of experts. This is not the time for your advisers to be on vacation. Make sure you have lined up expert advisers for the length of your transaction.
Database of All Potential Buyers
Maintain a folder or online database of all contacts, notes, and documentation. You want to ensure that you have backup purchasers if your initial one pulls out during the selling process. Maintain all escrow information, purchase agreements, signed non-disclosure papers, contact information for CPAs, attorneys, and other relevant information in this folder throughout the selling process.
Create a Business Profile
Buyers will need a great deal of information about the company being sold. Rather than having to describe the company to many buyers, create a one-page description of the business.
Here is the following information that should be in your one-page description:
- Business’s history
- The date it was founded
- Number of employees
- Significant characteristics
- Recommendation and strategies to run the business
- Geographic location
- The reason for selling
- Amount of training provided following the sale
Before disclosing any information, have all prospective buyers sign and date a Non-Disclosure/Confidentiality Agreement. Let them know the critical nature of maintaining the confidentiality of the company’s transaction and the legal consequences of failing to do so.
Gain Maximum Exposure
The most critical factor in this process is to ensure that large numbers of qualified buyers are aware that the business is for sale. You should expect to invest between $400 and $1,000 in advertising and marketing to reach an adequate amount of buyers.
Sell Your Business Tips: Finding a Reliable Broker
Many states require a broker to be a licensed real estate agent to sell their business. You can verify if an agent is properly licensed by doing a check on your state’s database. You should also make sure that the expert you choose has the experience and is sensitive to your requirements.
Finding a reliable broker can be challenging, but we are here to help. Contact Fusion Business Services to help sell your business today.Read More
You shouldn’t expect to sell your company overnight. For every company that sells quickly, there are a hundred that take many months or even years to sell. Having the correct mindset and understanding of what you must do ahead of time to prepare for the sale of your company will help you avoid a range of headaches and dramatically increase your overall chances of success.
First, and arguably most importantly, you must have the right frame of mind. Flexibility is a key attribute for any business owner looking to sell his or her business. There are many variables involved in selling a business, and that means much can go wrong. An inflexible owner can even irritate prospective buyers and inadvertently sabotage what could have otherwise been a workable deal.
Be Flexible on Price
A key part of being flexible is to be ready and willing to accept a lower price. There are many reasons why business owners may fail to achieve the price they want for their business. These factors range from lack of management depth and lack of geographical distribution to an overreliance on a handful of customers or key clients. Of course, one way to address this problem is to work with a business broker or M&A advisor in advance, so that such price issues are minimized or eliminated altogether.
Be Prepared to Compromise
In the process of selling your business, you may want to achieve confidentiality and sell your business quickly and for the price you want. However, the fact is that most sellers find that it is possible to have confidentiality, speed, and the price you want, but not all three. Ultimately, you’ll have to pick two of the three variables that are most important to you.
A third way in which business owner flexibility can boost the chances of success is to embrace the virtue of patience. By accepting the fact that businesses can “sit on the shelf” for a considerable period of time, you are shifting your expectations. This realization can help reduce your stress level. The fact is that stressed out owners are far more likely to make mistakes.
Sometimes Losing is Really Winning
A fourth way in which business owners should be flexible is realizing that you and your lawyer will not win every single fight. There will be many points of contention, and a smart dealmaker realizes that it is often better to have a good deal than a perfect deal. You may have to make sacrifices in order to sell your company. Simply stated, you shouldn’t expect the other side to lose every point.
At the end of the day, a savvy business owner is one that never loses sight of the final goal. Your goal is to sell your business. Seeing the situation from the buyer’s perspective will help you make better decisions on how you present your business and interact with prospective buyers. Maintaining a flexible attitude with prospective buyers helps to position you as a reasonable person who wants to make a deal. Goodwill can go a long way when obstacles do arise.
The post The Importance of Owner Flexibility appeared first on Deal Studio – Automate, accelerate and elevate your deal making.
There is no doubt that the COVID-19 situation seems to change with each and every day. The disruption and chaos that the pandemic has injected into both daily life and business is obvious. Just as it is often difficult to keep track of the ebbs and flows of the pandemic, the same can be stated for keeping up to speed on the government’s response and what options exist to assist companies of all sizes.
In this article, we’ll turn our attention to an overlooked area of the government’s pandemic response and how businesses can use a whole new lending platform to navigate the choppy waters.
As the pandemic continues, you will want to be aware of the main street lending program, which is a whole new lending platform. It was designed for businesses that were financially sound prior to the pandemic. Authorized under the CARE Act, the main street lending program is quite attractive for an array of reasons. Let’s take a closer look at what makes this program almost too good to be true.
This lender delivered program is a commercial loan. Unlike the PPP, there is no forgivable component. However, the main street lending program does have one remarkable feature that will certainly grab the attention of all kinds of businesses. It can be used to refinance existing debt at a rate of around 3%. With that stated, it is also important to note that businesses cannot refinance existing debt with the current lender. Instead, a new lender must be found. Generally, loans are a minimum of a quarter million dollars and have a five-year term. In another piece of good news, there is a two-year payment deferment period.
The main street lending program can be used in a variety of ways. In short, the program is not simply for refinancing existing debt. Additionally, there is no penalty for prepayment. The way the program works is that lenders make the loans and then sell 95% of the loan value to the Fed. This of course means that the lender is only required to retain 5% of the loan on their balance sheet. The end result is that lenders can dramatically expand the amount of loans they can make.
Whether it is the PPP or a program like the main street lending program, there are solid options available to help you. Businesses looking to restructure debt or put an infusion of cash to good use may find that the main street lending program offers a very flexible loan with great interest rates.
The post The Main Street Lending Program appeared first on Deal Studio – Automate, accelerate and elevate your deal making.
In today’s business climate, reviews are the differentiator. Years ago, people commonly asked for references when they were vetting a product or service. But these days when people are searching for a local business to work with, they are likely to conduct research on their own and read online reviews.
Google reviews can give businesses a big credibility boost without having to spend a dime. Let’s take a look at some of the key benefits.
Increased Credibility & Trust
According to statistics, approximately 91% of consumers read reviews to determine credibility of a local business. In fact, 84% of consumers say the positive reviews have helped them gain trust. Without the reviews, that level of trust would not have been established.
Needless to say, people trust Google. The fact that these reviews are on a 3rd party website increases transparency. These reviews have much higher value than testimonials posted on the actual business website.
Improved Business Conversions
Once a potential customer gains trust in your company through reading Google reviews, it is more likely the conversation will get converted to an actual business transaction.
Customer Feedback Loop
When your customers write reviews about your business and post them on Google, these reviews often clearly mention details about your product or service. Through this means, future customers become educated. These reviews can also serve as a feedback loop for you if things need improvement.
Increases Online Reputation & Visibility
The power of online marketing methods you might be using to promote your business will be amplified, as users will become more attracted to your business due to 5-star reviews. This factor increases online traffic to your website and an increase in leads and business.
Another fact to be conscious of is that your clients will review your products or services whether you want them to or not. If you fail to set up Google reviews, you’re missing out on the opportunity to gain a level of control and visibility.
How to Set Up Google Reviews
- Create a Google My Business account. – Visit https://business.google.com/ to sign in or create a Google account for a business. Complete the step by step process by filing required information like email, phone number, business details, etc.
- Ask clients to review your services. – Start sharing your Google My Business URL with clients and ask them to post a review about your services. When asking for reviews, you can mention to clients that their review will help everybody else make an informed decision when they are looking for help. It is important to ask about the review within a few days of closing your transaction. If more time goes by, the client may be less motivated to post a review for you.
- Remind clients. – Everybody is busy. Therefore, there is a chance that your client might forget to write a review. In this case, we recommend reminding them to do so. You can also politely inquire if they need any help posting the review that you discussed.
Through the above-mentioned process, you can begin generating reviews for your business. Of course, it goes without saying that you can only guarantee good reviews when you are providing excellent customer service along with a top-notch product or service.
The post Why Does Your Business Need Google Reviews? appeared first on Deal Studio – Automate, accelerate and elevate your deal making.