Category Archives: how to sell a business

Are Todays Job Seekers Tomorrows Business Buyers

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In Business Acquisition and Sales  the “pool” of  most future business buyers are currently employed by someone else right now.  The same applies for future Entrepreneurs.   But what about those currently unemployed?

The job market seems to have an abundance of very qualified people chasing a very limited number of jobs.  The number of those unemployed in the US seems like a fairly difficult number to track, but with unemployment in the 9-10% range-depending how you measure or guesstimate  it seems that you have well  over 10,000,000 (ten million) people unemployed here in the United States. Is owning your own business by either starting a business or buying a business a viable option for those unemployed.

Is Buying A Business The Future For You?

Is buying a business or starting a new business the right career path to all of those seeking to “re-find” a career or just get off the ranks of the unemployed.  Buying a business or starting a business is not for everyone, but it can be a very viable option for many.  There are the both mindset obstacles to overcome,  and finacial battles to be won before one can make the transition  from employee or currently unemployed to one that owns and operates their own business.

I personally think overcoming the mindset of  “can I do this?” may be the bigger of the 2 obstacles. To over use a saying- “Thinking outside the box”. Personally I feel there seems to be so many that are “trapped” inside the box, that  thinking outside the box in this situation can be a life changing situation.  I believe that many of those so many qualified individuals that are currently unemployed will consider “going out on their own” and enter the world of entrepreneur by either starting or buying a business.

For example- I am working with a business owner of a small computer service store, assisting him in selling his business.  He is very anxious to sell his store as he has plans to move out of state to be near a friend and join him in a business venture there.  He recently reduced his price to $65k due to his increased interest in moving on.

Buying A Business

Photo (c) lusens.com

He runs a viable one man business, works about 40 hour  weeks, and his business is up over 2009 numbers.  His “Owner benefit” is approximately $70,000.  So are you buying a job that pays you $70,000 a year?  Are you buying a career?  Are you buying the ability to control your career? It can be a nice situation for the right person.

Sending off resumes, searching the job board, going on job interviews can almost turn into a routine that may seem to have no end.- Is it a comfort zone, is it doing everything you can do to find your next career.  I suggest spending a few minutes  looking on a website such as mine Florida Businesses For Sale , or maybe some other larger business for sale websites like www.bizbuysell.com or globalbx.com, or possibly look on Flippa.com to see what sort of businesses for sale are out there, or possibly a website, or e commerce site may be available, what are the cost,  and is it even a possibility based on ones current situation.  I think one should at least allow the concept of buying a business or starting a business to come into the equation.  Certainly owning or running a business is not for everyone, but is it for you?

5   Reasons not to consider starting your own business or buying a business.  – Or maybe you should…

  1. Money is needed to buy a business or start a business–    but do you have any realistic feel of how much it would take.
  2. Ive never bought a business before or started a business before – talk to most all businesses owners that have owned their business for 10+ years and they will also say the same thing.
  3. The economy is doing so bad now, its just the wrong time to try a new venture.- There are many business owners that have and are delaying the sale of their business.  A “pent up” demand is being create.  The workings of supply and demand show that as supply increase prices reduce.And of course also  the choices are more abundant.
  4. Some people are just more prepared to buy a business or start a business.  This is true, but are you one of those “some people”.  When you talk to long time business owners you learn that all the uncertainty that you may have while making this major decision is completely normal.
  5. My Job Searching is  really going well- I think that is great, my decision to “be my own boss” 20 years ago was about controlling my own destiny,  perhaps there are different ways to do that.

My profession involves a lot of time talking with business owner regarding their short and long term business plans.  Many current business owners feel they need to get their financials/ and Sales  back up to a level commensurate to the value they seek from the sale of their business. This is creating somewhat of a pent up supply   I also speak to many potential business buyers and understand that everyone’s situation is so different. Available money, family, location, other personal matters all go into the evaluation.  Part of my long term planning of my business broker activities does assume that many of todays unemployed will be tomorrows business buyers.

What Does it Really Feel Like to Sell Your Business

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You are thinking about selling your business. You may have uncertainty, angst, worries, trepidation, fear, unknowns, and sleeplessness nights.  I believe you are not alone. My approach as a business broker in Florida is from a perspective of a former long term business owner.   I truly feel some of the feelings I experienced as  a business owner are very similar or the same of the business owners I work with as a business broker.

While at this stage of my professional life I am “sitting on the other side of the desk” I feel I do understand the concerns, fears, thoughts of the person on the other side of the desk.  There are many qualified experienced business brokers that are not former business owners and these quality brokers bring various valuable perspectives and experiences that benefit their clients.   My choice to pursue my “2nd career” as a business broker comes from my recognition as a business owner of the value a business broker can bring.

Should You Sell Your Business?

  1. If I sell my business Do I have enough to retire?
  2. What will I do after I sell my business.?
  3. What will happen to my employees?
  4. What will I sell my business for?  Is it enough?
  5. How do I handle all the “little situations” that are part of most any business prior to selling my business?

Does the business owner considering the sale of their business that they were involved from the beginning/day one of the business differ from business owners that had bought an existing business?- Of this I am not sure but  somewhat curious if there is a difference.

While it is awkward for me to share personal thoughts in such a public forum, possibly some of my experiences may help others in this very important decision. Some of my thoughts and experiences:

  • I had felt that the decision to sell my business was equally as difficult as the
    Sell Your Business

    Photo (c) mabusinessbrokers.com

    process of trying to sell the business.  But selling a business is a difficult process.

  • I had made the decision that if I wanted to sell the business that I would do it under my timeframe, (and when I was mentally ready to sell my business)  and not wait until a situation or market or business conditions forced me to sell the business.   This decision may have had me miss an opportunity to sell at a higher multiple in the late 1990’s when acquisition values where higher inside my industry, but mentally I was not ready to sell at that point.
  • My CPA (accountant) that was a very close advisor to me would always say regarding the sale of the business- “You will know when you are ready”. I believe in this statement and it did apply to me.
  • While going thru the process of selling the business, I always ran the business as if the deal would not consummate.  I dont believe you ever really know a sale will occur until signatures are had at the closing table.  Even at the closing table on late Friday afternoon, I was still thinking of things I would need to be doing Monday as if I were to remain the business owner. Habits are hard to break and it seemed prudent.
  • Maybe the proceeds from the sale of your business will allow you to comfortably retire and do nothing.  Maybe the sale of your business will give you a little extra cash to save or spend on something you want.  Maybe you dont know if the proceeds from the sale of your business is enough “to retire on”, but possibly its enough to allow you to choose an activity, 2nd career, or even work for someone else without the need to solely rely on this decision as your sole source of income.  This can be a very comfortable position.

Take My Advice If You Decide To Sell Your Business

I have shared with a few others that after the sale of my business of 20 years I experienced a feeling that was very foreign to me that caught me by surprise, and is kind of difficult to describe.   When my business was sold what I was really selling was my responsibility.  As all business owners know- you are responsible for everything.  If  an employee makes a mistake at work, it is your responsibility.  If sales goes down, it is your responsibility.  If expenses, taxes, fees, regulations increase it is your responsibility.  After the sale of the business while on the airplane flying home I experienced  a difference that almost seemed inside me at a “cellular level”.

The concerns I had for my 20 plus employees and 5000+ customers that I carried with me for 20 years were gone.  I felt I had done my due diligence, worked closely with my CPA , attorney and advisors, found the right buyer to address my goals as a seller and I was leaving my former employees, customers, and responsibilities in good hands.  I certainly did not absolve myself of all my responsibilities, and recognized problems could still surface, but I did experience a feeling I hadn’t had in 20 years.

Business for Sale-Who, How Many, How Much?

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I am a business broker based in Florida, and  also a member of an Association called  the Business Brokers of Florida.  The Business Broker of Florida  Association (BBF) is the largest state business broker association in the country and the second largest association of business brokers in the world.   The activity within this association does provide the business owner and or entrepreneur some insight into actual activities related to businesses buying and selling.

Most all business transactions involving the sale of private companies and information regarding this activity remains very private.  And accurate pertinent information can be difficult to attain.  What does a business similar to yours sell for?,  How long does it take to sell a business like yours, and how many businesses like yours are being sold.  One can search and view a lot of information regarding Florida business being bought and sold at Free Search on Businesses For Sale 

Businesses For Sale In Florida

Florida is experiencing the current economic downturn and is somewhat representative of the US economy.  Actually Florida may be feeling the effects of the downturn more than most of the US  as its economy seems very tied to the real estate industry.  I have always found value in trying to understand some of the numbers behind the numbers to help me to perform my role as a business broker. The following are some items of note  as it relates  to business buying and selling activity in Florida.

Certainly not all business sold do  involve a business broker, nor are all businesses sold in Florida handled thru this association, but as a rather large association it is fairly  representative of the buying and selling activities in Florida.    Web based businesses and or websites may be sold at an online auction, larger  “brick and mortar” companies may seek larger M&A firm for representation, but the activity within this association does provide some insight for the  business owner outside of Florida that may buy or sell a business.

Per the currently active listed data available thru the BBF Association-   As of today almost 4000 business are for sale of those:

1) Businesses For Sale in Florida over $10M –      5

2) Businesses for Sale in Florida Priced over $5M-   30

3) Florida Businesses for Sale Priced over $1M – 330

4) Businesses in Florida For Sale with Net Income over $100K – 1227   

Other observations:

a) Largest type of business Listed For Sale in Florida– Restaurants – 773 (this represents almost 20% of all businesses listed)  of those 223 have Net Income >$100k.

b) Home Based Business For Sale – 402 (represents about 10% of all businesses listed for sale)

c) Florida Internet related businesses for sale 43, of those: Asking Sale Price $1M+  is 8, those with net income over $100k – 20

Businesses Sold in Florida thru the Business brokers of FloridaFlorida Business For Sale

of all the business sold in the last year (6/2009-6/2010) Here are the following Averages on Florida Business Sold.

  • Average Sales/Revenues- $636k
  • Average Selling Price- $252k.
  • Average Adjusted Net Cash Flow – $114k.
  • Average number of Days to sell the business- 226 days or approx. 7 1/2.   Please note this figure does not include business that got listed for sale and did not sell. Estimating those in  the average time to sell a business may exceed a year(my guesstimate ).

If you own a business and do not plan on exiting from that business for several years, it still makes sense to understand the value of your business.  What is the asset that you have worth?  What sort of multiple of cash flow should your business sell for?

Understanding what other similar businesses are selling for does provide some basis.  but the devil can be in the detail…  Also growing your company thru acquisition can be both a viable and profitable business decision.  What may it cost to acquire a synergistic company?  A review of some reliable numbers may be a good first step in the needed due diligence.

(some info shared above compiled from Business Broker of Florida Assn website as of 7.30.2010)

We Suck Less

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Currently I am a Business Broker in Florida working with business owners in the process of buying and selling businesses.  Back in 1985 I was working for (a Texas based Technology company ). We were bidding on a very large multi-million dollar computer based project for the Los Angeles Unified School District (LAUSD). Part of the bidding process involved all us potential vendors travelling via buses throughout the Los Angeles area viewing a dozen of the 700+ schools that would potentially buy and use our systems.

The Importance Of Smart Marketing

While driving thru the various areas of LA I had seen white billboards with 3 words on them WE SUCK LESS. I saw this billboard in several different parts of the city. After repeatedly seeing that same sign in the various communities, I asked a local contact regarding the purpose of that billboard, or rather what it meant. I was told that it was a marketing campaign of a local radio station. The premise was – We’re not the best, We’re not number one, We’re not perfect, But We Suck Less than our competitors, and therefore customers/listeners should tend our way. “Were not perfect, we may not be very good, but we suck less than your other options”…

We Suck Less

As we continued the 2 day journey throughout the city, that concept really struck a nerve. It really wasn’t a premise or concept that was even remotely familiar to me. This approach, while just in jest… I think, just hit me as so unusual, that I found myself sharing this story many times over the last 25+ years. Ironically I have also crossed paths with various businesses and business situations over the years that prompted me to recall this ” business concept”.

Is this concept completely hypothetical, or does it truly exist? Has anyone else seen this in action in certain business environments? As a business broker I get to see the inner workings of many companies and mostly I witness hard working well meaning business owners.  But, is it possible that this could be an approach of a business, or just the result of many years of apathy, poor management, or some other larger problem?

Set The Bar High

I really really think we all our wired to “set the bar very high”, we strive to be very good, we want to be the best, some seek perfection even knowing its not possible but keeping it as a goal nonetheless. But to non- chalantly say, “I just have to suck less than the next guy” and as a result of that approach my business will advance to me is somewhat mind numbing.

I recognize faults and imperfections occur in my own business practices. I’ve always felt that it is important that I remain my own toughest critic. As a business broker that helps business owners sell businesses and individuals buy businesses communication is very important. Promptly returning emails and phone calls to me is an essential, and is just mandated.

Treating business relationships with respect, honesty and effort is important to me. Is it easy for someone to fall into the trap that since my colleagues/competitors don’t return emails/phones calls for 4-5 days or never then, if I wait 2-3 days to return a call or email, that makes me better than my competitors. Is this possibly the mindset of some in business? Can one be satisfied with the approach of just not being as bad as the others?- I don’t know. As a business broker and professional, I do know I may see this play out in other businesses, but certainly not mine.

But I do know Striving to “Suck Less”, to me just sucks. I really don’t know if it is a conscious business concept by some, but I do believe I have seen some resemblance of this approach. I also know that I find myself 25 years later sharing this story again.

Selling My Business – How Much is my Business Worth

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Selling My Business How Much is my Business Worth.  Almost all businesses are for sale to some degree. Lets say your business is not For Sale. Assume  Your business is worth $100,000.  You love what you are doing, someone contacts you with an offer to buy your business for $500,000.  Is your business now For Sale? The preceding is not a likely scenario for most business owners.  To successfully sell your business planning and preparation is needed.  But if you are now or at some point considering the sale of your business you may want to consider the following 3 points:

1.     Identify your honest interest level  when selling your business. Early in the decision process of selling your business consider what approach you may take towards selling your business.  As a Business Broker in Florida I interact with the various interest levels by small business owners.

  • My business is not for sale but if someone walks in and offers me way more than what I think it is worth- I would sell my business
  • My business is not for sale but if you run across someone that would want to buy it please let me know.
  • I want to pursue selling my business but I won’t sell it for less than…( A somewhat inflated price) .  I am willing to accept that it may take 1-2 years to sell my business, and if priced too high I can accept the fact that my  business may not even be sold.
  • I want to pursue selling my business and after significant due diligence I feel the price I am seeking is consistent to what other like businesses have recently sold for.
  • I want to sell my business and I want out now.  I will set my price aggressively and set a lower price than price currently sought for businesses similar to mine.  I will expect this aggressive pricing to both help me sell my  business and decrease the amount of time it will take to sell my business.

If you do have a true interest in selling your business as suggested in above  last 2 points you do need to  exercise due diligence to gain understanding of what the value of your business may be.

Business Value

Photo (c) nett.com.au

2.    You can expect that the  perceived value of your business to you and the value of the business to a potential buyer will probably be 2 different values.

  • Ultimately the price of your business is what a willing and able buyer is prepared to pay to buy your business.
  • Seek “reasonableness” to your price that you will seek to sell your business for. If similar businesses to yours are sold at 1 1/2 times adjusted cash flow, why is yours worth 3 times adjusted cash flow?
  • Ask yourself what you honestly would pay to buy your business.
  • Do a free Search on my website https://www.sellabusinessflorida.com  0r similar sites to research what similar businesses to yours is asking to sell their business for.  Remember – all businesses are different, but use such a search as part of your due diligence.  A business for sale asking price and the price a business sold for can be greatly different, but asking prices can provide some basis-while current  Businesses Sold information is more pertinent
  • Speak to your trusted advisers.  A business broker may be able to help with non-public info on sold businesses in your area.  Your accountant or attorney also  may or may not be aware of such sales as well.  A Professional Business Valuation specialist may benefit you.

3.    Whether it  is part of your exit strategy to sell your business or not, you should have an exit strategy.

  • Most small business owners do not have an exit strategy.
  • If you own a business you should have an exit strategy.  Do some planning, perform some due diligence. Know what you have or may have.
  • Even if you are not planning to sell your business there is value in knowing  approximate value of this potentially large asset.  You know what your house is worth, you car, your other assets. Understanding the value of your business can be a significant piece of information when planning ahead.

Selling ones business can be a rewarding experience when done properly.  Understanding  a proper value for your business can set the stage to a successful sale of your business or a business that is unable to find a willing and able buyer.