Getting Your Business Ready For Sale

Getting Your Business Ready For Sale

Getting your Business Ready to Sell
I am a business broker. I work with business buyer and business sellers in both South Carolina and Florida. I also owned my own business of 20 years and sold it. A business owner interested in selling a business needs to know how to prepare a business for sale.

FACT- Many businesses that try to sell do not actually sell.

Looking at the reasons that a business does not sell can be guidance towards measures a current business owner can make to prepare a business for sale. Selling a business has a lot of moving parts. How can one increase the likelihood of a successful sale? The answer can be in knowing how to prepare your business for sale.
What are some of the top reasons businesses Don’t Sell?
• Price
• Business Performance
• Business has poor records
• Business completely dependent on Business Owner
• other liabilities encumbrances

The value of a business is ultimately defined by what a willing capable buyer (s) is willing to pay for that business.
What could possibly be the best approach to getting your business ready to sell is to look at your business as a Business Buyer rather than a Business Seller. Would you buy your business? If so how much would you pay for your business?
What steps can a business owner do today to prepare a business for sale?
Getting your business ready to sell –
1. Have realistic expectations. Stories circulate about “Google buying this business for 10-20x cash flow”.
Sales like this are not the norm. Businesses with Sales of $5M + sell for a higher multiple of cash flow than businesses with $800k of Sales- Generally. Try to research what other similar businesses my be selling for or have sold for. A qualified Business Broker may assist with this step.
2. Ensure your financials are concise and clean. Are there any outdated entries on any of your financials. Can you readily reconcile any differences between tax records and Income Statements? Furthermore a business that is doing better is more likely to sell than a business with declining sales or margins.
3. Have documented business operational procedures or business practices and procedures. If you already have them, review and update them. Consider if it is time to archive or throw out records from 5- 10-15 years back.
4. Make big and small steps to have less reliance on you as a business owner. Ask the question- “Does your business rely on you ? Delegate if possible. Sometimes it’s hard to let go of the idea that “only I can do that”. I’ve personally experienced a long stretch of illness while owning a business and quickly learned of the many activities that I was doing that could be done by other members of my staff.
5. Clean up your business. Your office, your trucks, grounds, facilities, equipment, tools and employees appearance can all add value. Equipment involved with the sale that is well maintained and in order provides to the “Peace of Mind” a business buyer is seeking. Again envision yourself as business buyer and looking at your trucks and most of the tires are bald, and smoke is coming out of the exhaust and they look like hell. It may only take a few thousand dollars to improve this conditions, but a prospective buyer may mentally devalue the business value by tens of thousands or more. It may create more doubt and uncertainty about other components of business.

Again- not every business that tries to sell actually find a buyer that is a fit. There are steps you as a business owner can make to increase the likelihood of a successful business sale and transition.
Getting your business ready to sell is a very important step in the process of selling your business. Working with a trusted advisor, finding prospective business buyer candidates is highly important as well. Finding the “right” buyer candidate to transition your business to is the end goal that begins with preparing your business for sale.

For More information on Selling a Business or Buying a Business contact Scott Messinger- Business Acquisition and Sales- Gateway Business Advisors www. SellaBusinessFlorida.com

Selling Your Business How to Find a Buyer

Selling your Business How to Find a  Buyer

Looking For a Business Buyer

You have decided you want to sell your business.  How do you find a buyer for your business?

When a business has been in existence for many years, 10-20-30-40+ years it is not uncommon for the business owner to be approached about selling his/hers business. Or it is not uncommon to “hear about someone interested in buying the business” or have someone express “interest in buying the business”.    I have seen and experienced this as a business owner and as a business broker. So one may think  “if these  people are interested in buying the business and I’m not even trying to sell it, I think it may be very doable to find a buyer when I am ready to sell my business.” But like a lot of other complex processes, “the devil is in the detail.”  Often  , when ready to sell your  business,  it turns out the person  or competitor, or strategic buyer prospect that was interested in the business 1,2, 3 years ago, is no longer interested- their situation has changed.  Or the guy that said he knew someone  that was interested in the business, doesn’t have the resources to consummate a deal. So how does a business owner find a buyer for the business. 1. Try to find a buyer on his/her own. 2. Hire a Business Broker to find a buyer.   Neither options are guaranteed. What is generally not known by one trying to sell a business is that MANY  businesses that actively try to sell their business DO NOT SELL.  Industry statistics show that well over 1/2 of all businesses that actively try to sell actually do NOT  transition the business to a new buyer. But it is with little doubt that hiring a qualified business broker greatly increases ones odds of finding a buyer.  It is my opinion that a significant reason why utilizing a business broker is the simple fact that most business owners already have their hands full running their business.  And then to add  the components of selling a business to their day is barely doable at best. Marketing the business, vetting out buyer prospects, tire kickers, not disclosing the confidential component of the sale are just a few responsibilities that are easy to do  while continuing to run their business.   Often there is not enough hours in the day to get all that done and run the business. A business broker is able to have “generic dialogue” with competitors and strategic buyers without disclosing the name of the business.  If  Mike from Mikes Towing approaches ABC towing about buying their business, then ABC business knows Mikes Towing is for Sale. If Scott from XYZ  Business Brokerage approaches ABC Towing about a Towing business in the Jacksonville Florida area- confidentiality is maintained. But as a Business Broker we market  looking for business buyers across many different platforms, often searching locally, regionally, nationally and internationally.    So often business buyers are from “Somewhere else”.   Also a business buyer is someone that buys a business.  About 9 out of 10 people that approach about an interest in buying a business don’t buy a business.  They may one day, but that may not be this year or next year.  They are prospective business buyers.- As a business Seller you are looking for a Business Buyer. I personally have bought  several business over the last 25 years. I have made the decision to buy a business- found a business that met my goals and then concern myself greatly if I cannot effectively acquire the business   Many “Business Buyers” looking for a business do not ever make an offer on a business , or buy a business.  They may be a perpetual business buyer prospect, or they may truly be ready to take the next step and be a business buyer. Knowing the difference between a prospective business buyer and actual business buyer can be the difference between an effective sale or a frustrating  time demanding process . For More information on Selling a Business or Buying a Business  Scott M Messinger (239) 770-2421

When Business is not Just Business

When Business is not “Just Business”

 I think most that have been operating in the business world have heard the expression  “Its just Business”, like “sorry I have to use another vendor- you know Its just business”.  Or I hate to let you go… “Its just business”.  It falls into a similar category of the discussion small business owners have about their employees and are constantly advised to not worry so much about employees and the difficult policies, pay cuts, benefit cuts are “just business”.  I recognize the truth to that matter, but when you talk to most business owners with long term employees you see that is easier said than done.

Emotions are a part of business.  Sometimes the business relationship can turn into something much stronger , friendships are developed and suddenly it becomes more than “just business”.

I am a Business Broker Based in Jacksonville Florida.  I lost a dear person last week to cancer.  It was more sudden,  unfair, and painful to me than I expected.  This person was a client- which is such an inappropriate word in this case.  This husband and wife had hired me to sell their business.   It took a long time.  We are under contract  (and have had other potential buyers) her, her husband and I  did expect this transaction to happen but the Cancer happened faster.

I’m not a dinosaur but I’ve been in the business world long enough to gain a perspective where I look for more out of my business activities that wins/losses.  We all know there is a lot of “the same old same old” in our business activities and sprinkled among the day to day are special people and special situations that stand out.  I am involved with business brokerage as I recognize Buying or selling a business as a life changing event – it was for me.  Marriage, children, Buying a business, Selling a business are life events that can shape a life- but death trumps them all.  She incentifyed me by being so nice to me throughout this process.  We all have favorite clients or customers- and she fit the bill. They both are wonderful people.   I recognize that it is easy as a business broker to “get in the way” of a small business owner.  They are trying to run their business while you are trying to sell their business and its easy for some overlap or conflict to occur.   She made me welcome every time I walked into their business. She would encourage my efforts with a hug or offering some take out lunch as we strategized the sale of their business.    She is watching from above to make sure I help her husband complete her request to have their business sold so that he can enjoy life after the sale of the business. Even though its painfully obvious it won’t be the same.  And yes we still have a way to go in the process, but I do say to myself, what if I could have sold it a few months earlier…

I don’t know if I ever want to get good at selling a business for a dying client.   I don’t know if I am doing everything right this time.  Her husband and I had discussed and had a Power of Attorney to be signed by his attorney representing him in the sale… just in case.  He called just hours after she passed away.  I didn’t know how soon was too soon to go see him.  I went over to his business just days after her passing- unannounced with the hope of catching him at the office.  Over the years I had always made an appointment- but fortunately he was there. , I brought flowers, gave him a hug, and offered any support I could.   Behind closed doors we balanced our talk between life, and what we need to do going forward to accomplish what she wanted done- selling of the family business.   First he had to take care of the services and family.   Sometimes it is very much more than Just Business.

(April 2014-this article was written just days after a dear client passed away.  The business sale closed approx. 2 months after.   We experienced further difficulties in the closing process which made matters even more difficult for the Seller (husband of the deceased wife).  After numerous delays, we closed on the sale of the business.  This post touches on some personal matters, and it was only until recently that I asked Seller to read and give his approval for me to post and share these events )                     

Florida Businesses Sold in Florida 2013 Year End Summary

Florida Businesses Sold in Florida 2013 Year End Summary

 

SellaBusinessFlorida.com

Florida Business Sales and Business Sold in 2013

 

I am a Florida Business broker based out of Ponte Vedra Beach (near Jacksonville)  working with business owners selling their Florida  businesses, and individuals and business owners looking for acquisitions.  Prospective business buyers I work with are located in Florida, US., and Business buyers in Europe and throughout the world.

As a  member of Business Brokers of Florida, which is the largest state Association of Business Brokers in the United States we have access to significant data regarding businesses being bought and sold .   Thousands of businesses for sale are represented by over 1000 Business Professionals involved with business acquisition and sales that are members of this Association.  Business brokers in this association  list their respective businesses for sale and prospective business buyers on a centralized listing site and buyers and sellers of businesses are brought together.

Several thousand businesses for sale are listed, modified, and advertised thru this Association.  They can also be viewed on my website here at Florida Businesses For Sale.  To further my knowledge,  I believe understanding the marketplace in which Florida  business may be sold is furthered by a review of the data surrounding businesses being bought and sold in Florida. The below are a few statistics, totals, and items of note surrounding the business acquisition and sales market in the State of Florida. Other businesses are bought and sold without the assistance of members Business Brokers of Florida, and that info is not included in this analysis.

Businesses Sold in Florida through Business Brokers of Florida  in  2013 – 909

  • Businesses Sold in 2012- 950
  • Businesses Sold in 2011- 859
  • Businesses Sold in 2010- 931

Averages of all businesses sold in 2013:

  • Average Sales – $572,000   Average Price Sold For- $286,000   Average Adjusted Net Cash Flow- $114,000  
  • Days on Market  225 (note all DOM (days on market) numbers DO NOT include those taken off the for sale market)
  •   Florida Business Sold in 2013 for $1M or more-30
  •   Florida Business Sold in Florida that included Real Estate- 47 (only about 5%)
  •   Category with most Businesses Sold- Restaurants- 199 sold in 2013  currently there are 3209 Florida Businesses For Sale and of those for sale  717 are Restaurants. (22% of all businesses for sale are Restaurants)
  •   Florida is a highly Service based economy, the other categories with highest number of Sold Businesses in 2013 in Florida  are in the service sector and include Hair Salon, Dry Cleaners, Lawn Service, Pools Service Businesses.
  •   Florida Businesses for sale requiring Down Payment of $50,000 or less – 480
  •   Florida Businesses For Sale with Net Income of $100,000 or more- 1264
  •   Florida Businesses For Sale with Net Income of $300,000 or more- 239

I am a Business Broker based in the Jacksonville Florida area ( main office is in Fort Myers Florida area).  Below is some 2013 information about Business Sold in the Jacksonville Florida area and Businesses For Sale in the Jacksonville Florida area.

  • Jacksonville Florida area Businesses Sold in 2013- 53
  • Averages for the 53 Jacksonville Florida Businesses Sold in 2013:
  • SALES- $558,000      Average Sold Price- $226,000   Average Adjusted Net Income- $142,000    Average Days on Market*- 218 Days  
  •   Total Businesses For Sale in Jacksonville Florida area as of Jan.1 2014. -227
  •   Jacksonville Florida area Businesses For Sale with Net Income of $100k or more- 99
  •   Jacksonville Florida area Businesses For Sale that require Down Payment of $50k or less- 33
  •   Jacksonville Florida area Businesses For Sale that have Net Income of $250k or more- 26
  •   Averages for the 53 Jacksonville Florida Businesses Sold in 2013:

I have been following  Florida Business Sales over the last 4-5 years and the above numbers have been somewhat consistent.  I believe there remains a pent up demand in both the Buyers and Sellers side.  The buyers still are slowed down by financing options and some potential Sellers are still delaying putting their business up for Sale due to uncertainty.  As a former long term business owner, I realize the thought and contemplation that goes into the decision to sell ones business.  The only real certainty is that another year will come and go, time marches on, at this time next year will your activities be included in the 2014 year end summary?

*All above info compiled from data available via the bbfmls website. And addresses information about businesses being bought and sold and reported thru this Professional organization of Business Brokers of Florida.

For more info or questions regarding the Florida Business Acquisition Market or Florida Businesses for sale please contact

Scott M Messinger

Scott@Sellabusinessflorida.com

239.770.2421

 

What does a Business Buyer look like

Florida Business Buyer

What does a Business Buyer look like

What does a Business Buyer Look Like?

Are you a Business Seller Looking to Sell Your Business and wondering what does a Business Buyer Looks Like?

Do you represent a Business Seller and are looking for a business buyer for your client- What should you look for in a business Buyer- What Does a Business Buyer Look like?

I am a Florida  Business Broker  working with both business buyers and business Seller.  I am also a Business Buyer.  Prior to being a business broker I started and owned my own business of 20 years and utilized business acquisitions along with organic growth to advance my business.  I had bought multiple businesses as a stategic business buyer.  I am also a business Seller as I actually did sell my own business.  The “Business Buyer”  I sold my business to was represented by a business broker and we experienced a successful business transition.

The person that bought my business is a business buyer -He is not a Business Buyer Prospect.  So much of the work and efforts involved with the process of buying and selling a business is the extensive involvement with Business Buyer Prospects.  Very often “business buyer prospects”  are referred to as Business Buyers. There is a significant difference between a business buyer and a prospective business buyer.  Each deal has 2 sides- a Buyer and Seller.  I like to use the term Business Buyer Prospect for someone contemplating an acquisition.  Most Prospective Business Buyers dont buy a business.  Various business brokers, M&A people, and related professionals have  their own personal experiences as to how many “Business Buyer Prospects” turn into actual “Business Buyers”.

Personally I think that anywhere between 75 %-95% of those that state an interest in buying a business do not buy a business.  So approximately 9 out of 10 (plus/minus)  of these “Business Buyer Prospects” never become “Business Buyers”.

SO What does a Business Buyer Look like?   How do they look different than the 75-95% of the “Business Buyer Prospects” that do not buy a business.

I contend that looks have nothing to do with what does a business buyer looks like.

A Business Buyer Acts a certain Way. A Business Buyer acts different than a Business Buyer Prospect.

What Does a Business Buyer Act Like?

1)     They have a plan-  “When you buy the business in Florida ,and you now live in Chicago-How will you run the Florida business?”

Business Buyer Prospect- “I dont know”

Business Buyer- ” I just sold my house and have a rental in Florida and plan to move there in December”

 

2)     They have funds or funding plans-  “How much money do you have available to buy a business?”

Business Buyer Prospect- ” If I find the right business- I can get the money” or ” Im not sure yet”,”I’m not worried about that yet”

Business Buyer- “I have x amount available for down payment on a business, so I know what the maximum I can spend and need to find a business that fit this budget”

3)     They understand  certain information will be required from them-

Business Buyer prospect- “why do I need to sign this NDA and give you some financial or background information on me? I just wanted to know what the Sellers Taxes look like”

Business Buyer- ” I have returned the requested NDA and personal financial statement. what is our next step”

 

4)     They ACT,they make necessary steps/moves to move the deal forward

Business Buyer Prospect- ” Yes that business looks to be exactly what I said I was looking for but think I will wait to see if Seller drops price or another opportunity becomes available.”

Business Buyer- “Yes that business looks to be exactly what I said I was looking for- what is the next step so I can get closer to ensuring I dont miss out on this opportunity.

 

What does a business buyer look like? – They are tall, short, fat, skinny, young,old, wearing shorts, wearing dress pants, wearing a dress, have tattoos all over their body.  They are from many different backgrounds,  they are many different religions and races. They look “normal” like you and I.

When I was growing my business though acquisition and I identified an acquisition opportunity I would worry about not securing that opportunity.  I made the decision that the opportunity was good for my company and would be disappointed if I missed out on that business opportunity.  I knew I needed to ACT like a business buyer.   You wont know what a business buyer looks like based on appearance, “business buyer prospects” and “business buyers”  look very much alike.  Are you looking to sell your business?  As a business Seller you will know what a business buyer looks like by the way a business buyer acts. Are you a prospective “business buyer prospect” and are you genuinely looking to buy a business?  I could suggest that you act like a business buyer and you will both stand out from all the others out there looking and also achieve your goal.