4-year-old running and fitness retail shop servicing Orlando’s runners, cyclists and triathletes. Interested in selling your business in Central or West Coast Florida? Contact us today to learn more about our free valuation services. Know where your business stands before going to market to command a higher sales price. Ring us at 407-367-0100.
How much is your business worth? Bizbuysell.com, the world’s largest business-for-sale website brings the stats to show what is really happening in the marketplace:
http://www.bizbuysell.com/news/media_insight.html
Whether your business is currently on the market or you are evaluating your exit strategy for five or ten years down the line, being educated about the steps needed to enhance your company’s overall value is key to maximizing your proceeds at the closing table.
Though these facts may seem obvious to many, the truth is that most business owners lose perspective when looking at their own company. Time to take stock and discover additional ways to enchance value.
The truth is that most business owners lose perspective when looking at their own company.
Are your profit margins over-inflated because you work too much?
Some owners think value is solely down to profit margins, but we have to analyze the hours an owner works to reach those figures.
Buyers do not like to spend their life savings on a business that requires them to reduce their quality of life (working ridiculous hours).
Example: An owner may have a hard time selling if the company’s success is dependant on him or her working 80+ hours a week. He or she may make $180K net a year, but they have absolutely no life outside of the business.
A key to preparing for sale may be bringing on new assistant management or part-time personnel to reduce the owner’s workload. The owner will be reducing his current annual net, but this move could equal tens of thousands of Dollars, if not more at the closing table.
Summary: A buyer will be much happier working 40 hours a week and netting only $100K annually.
Adding Value by Strengthening Your Transition Plan
Buyers want to know what will happen after close. Are your employees going to leave, what about customer lists and contracts? What do you have to offer a buyer that competing businesses for sale don’t?
Examples to consider: Key members of staff. A key employee can agree to stay on for at least the first year of new management.
Flexibility. A buyer will be more encouraged to purchase a business if the owner offers some flexibility after the initial training period – agreeing to stay longer or act as a consultant at little or no cost for a predetermined amount of time may show an investor that the seller is confident in the business’s long-term success.
Operations Revisited
Before considering going to market, it’s time for a seller to have a good look at his business plan. Don’t have one, or haven’t looked back since drafting it 20 years ago? Time to dig in and have a look at your business. The plan helps bring to light strengths and weaknesses that need to be addressed prior to going to market.
“I think it´s a shame that people associate business plans with starting a business, more than with running a business. Every business needs planning, ongoing and existing businesses as much as start-up businesses” – Tim Berry for Dun & Bradstreet
A seller may also create added value by spending some time and money creating a complete operations manual (or revamping the one from 15 years ago). This can be of great importance for a buyer with executive experience who may be transitioning from a different industry.
Occupancy Costs – An obvious point in this market that has surprisingly been ignored by many
Customarily, most owners do not inform their landlords about their intent to sell until a buyer’s in place.
However, considering the current economy, business owners should be reviewing their current lease to see what new terms they can possibly negotiate with their landlord to reduce occupancy costs – prior to going to market.
An owner who has not tried to reduce this expense in this market can unknowingly kill a potential deal if a competing business for sale has better terms already in place. Buyers know this is a tenant’s market and often will completely pass up a good business opportunity if they feel that there will be drama with a landlord after due diligence and prior to close.
Spring Cleaning – From Retail to Office to Home-based Businesses
Sometimes it doesn’t matter if business has strong repeat clientele and cashflow is high – buyers will pass up a dump and WILL find a cleaner facility in this market that has comparable income to owner. Same goes for how owners organize and file their financials. Do you know how to use Quickbooks? Is it time for a bookkeeper? And is your accountant accurately itemizing your expenses? If you have to scramble to get information, it’s time for help.
American Business Group, LLC is proud to announce its new membership with the Florida Business Brokers Association (fbba.org). Founded in 1985, the FBBA is a non-profit association that strives to improve and upgrade the business brokerage profession throughout the state. All members must adhere to the FBBA Code of Ethics for Business Brokers, and are encouraged to seek out education and gain additional credentials, such as the Certified Business Intermediary (CBI) designation.
By promoting our services and business listings on a number of professional and business brokerage associations, ABG continues to increase its market share and reach a broader client base. We are members of several associations, many which are listed below:
International Business Brokers Association
Business Brokers of Florida
Florida Business Brokers Association
Orlando Economic Development Commission
British-American Chamber of Commerce Orlando
Business Executive Network
Any business owner who has sold a business on his of her own will tell you it’s a long, tedious and stressful process. It consumes time and distracts you from the day to day operation of the business. When your focus should be on maintaining or increasing the value of your business, all of your time and energy is directed to the sale process.
That’s where an experienced business broker can pay huge dividends. There are many areas where the business broker expertise pays off:
Utilizing the services of an experienced, professional business broker allows the owner to focus on running the business reducing the risk of business erosion during the sale process. A sale facilitated by a business broker helps maximize sales proceeds by involving a large universe of buyers in a confidential, competitive bidding process.
As you prepare to put your house on the market, you get the word out to as many people as possible. The “For Sale” sign is placed in the front yard, you invite people into your home during an open house and you put ads in the newspaper and online. You want everyone to know your house is for sale.
However, that’s not the case when selling a business. Place an ad that your business is on the market and people start to wonder. It creates an air of uncertainty that can be detrimental to your bottom line and put the company in jeopardy.
To increase the likelihood of a successful sale of a business at an optimum price, keep it confidential!
What’s likely to happen if people find out the business is up for sale?
Employees get nervous. They begin to worry if their jobs will disappear or if they’ll get along with a new owner. Some may even quit before you have a chance to reassure them and it will probably be the good employees that leave. They’ll start looking for jobs that make them feel more secure.
Losing key people is serious, particularly during the sale process. Key staff members provide valuable continuity and business knowledge that buyers are looking for. Lose them and potential buyers may be lost too.
Customers begin to wonder. They may become concerned whether the business has problems that could threaten their supply chain. They may start questioning if they’ll get the same quality from the new owner.
Competitors will spread the word. Once the competition finds out, rest assured they’ll let your customers know and use it as ammunition to bring that business to their company. It opens the door for them to steal business from you.
Vendors and creditors may tighten terms. You may be working with terms of net 45 or more to benefit your own cash flow. But once creditors learn that the business is for sale, you may find those terms tightening or notes unexpectedly called due.
On average, a business sale takes nine months to one year. If even some of these changes occur early on, the impact can be dramatic. You’ll find that you’re not only running a business, but you’re busy putting out fires.
A buyer wants a successful operation with few changes until he or she can make those changes. Too many question marks translates to greater risk and lower purchase offers.
Confidentiality is crucial no matter the size of the company or the type of business. To maintain confidentiality, use a professional who understands the process – use an intermediary. An intermediary will market the business in a confidential manner, while providing just enough information to attract the buyers you are looking for.
The intermediary should be diligent in screening inquiries to be sure competitors aren’t out there fishing for details. The intermediary should only be sharing your identity after determining that a potential buyer is seriously interested and is qualified. Those serious and qualified buyers should also be required to sign a binding confidentiality agreement that holds them accountable for leaking information.
You want to maintain your business as usual for as long as possible. Keeping the sale confidential until the time is right will help you to minimize uncertainty and maximize the sale.
The International Business Brokers Association® is the largest international, non-profit association operating exclusively for the benefit of people and firms engaged in the various aspects of a business brokerage and mergers and acquisitions. IBBA® has 1,950 members worldwide, with corporate headquarters in Chicago, Illinois.
©2007 International Business Brokers Association® (IBBA®) all rights reserved
Permission to reuse any or all of this material should be directed to the IBBA at 888-686-4442 and is restricted to IBBA members.
There are a variety of factors about your business that will help determine its fair market value. But the most important element that many business owners neglect is their organization.
Your financial and asset records are the lifeline of your business. If you do not have the following documents easily accessible, it could cost you.
Your business broker or business appraiser collects data about your business to establish an opinion of value. Forgotten loan agreements, overlooked expenses, or an inaccurate inventory of your equipment can be a blow to determining value.
If the job has yet to be done, and the task at hand seems too daunting, then ask for help! Many owners forget that they are only human and cannot do it all. Ask for referrals for professionals who can help you get back on track. It’s worth the investment.
Indoor Children’s Recreation Center in upscale community in Osceola County. Business opened its doors earlier this year and parties are completely booked through the fall and into the holidays. Parents enjoy WIFI and cafe perks while kids play. New state-of-the-art jungle gym/”play frame” included.
The business’s breakeven point is only $11,500/month, and is already producing strong positive cash flow. Monthly sales growth shows that the business will exceed its monthly sales target of $17K. Business is taking off — ideal for an owner operator.
$314,000
If you enjoy working with kids call Jessica Hadler at 407-770-8373 to learn more about this money maker.
www.americanbusinessgroup.com
