Getting Your Business Ready For Sale

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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 Are there any outdated entries on any of your financials.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

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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

Selling a Business to a Soldier

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Selling a Business to a Soldier

I am a Businwww.SellaBusinessFlorida.comess Broker based in the Jacksonville Florida area. Most of the business I represent to Sell are in the state of Florida and many businesses I represent for Sale are in the Jacksonville Florida area.

Buyers of businesses come from everywhere.  Prospective business buyers    come from right down the street and  from elsewhere in the State.   Very often business buyers buying a Florida business come from another state.  Currently I am working with a business buyer from Ukraine.  I am also working with a soldier stationed in Afghanistan that contacted me regarding a Meat Shoppe I have for sale in Jacksonville.  This 12 plus year military vet, while still serving, has extended an offer to buy this business I represent for sale.  The Seller has accepted the offer and potentially this person that has spent the last 12+  years serving the USA military,  will be a small business owner after his final discharge date.  It is potentially a life changing event for him and his family

Every business sale I see as unique  with its own unique set of issues, challenges, and obstacles.  Some business sales have less obstacles than others, but they all have obstacles.  Selling a business to a Solider that is currently serving overseas brings on its own unique set of challenges.

Observations about Selling a Business to a Soldier-

  • This prospective business buyer is seeking an SBA loan we think we do have a good lending source lined up that is working hard on behalf of this veteran,- I have yet to locate any special lending programs for military veterans, and find that surprising.
  • As many know prior experience  in the industry is a standard requirement of SBA lending.  again I was surprised that the experiences in the military do not carry more weight in the lending community.
  • Obviously the logistics of calls, emails, faxes, signatures,  along with the big time zone difference and  are just not as easy as me working with a prospective buyer in Chicago Il.
  • Business sales that are contingent on appraisals, loans, and standard due diligence are the norm.  Drafting an offer that is contingent upon “not becoming another statistic before being  scheduled to leave theater “(Afghanistan) brings a new and sobering  element to the process.

On a somewhat related note, yesterday I volunteered at an event in Jacksonville Florida  called Hired Our Heroes.  (sponsored by the US Chamber of Commerce Foundation).  It was a job fair and workshop geared towards transitioning  Military veterans.   My role was to help military veterans that are preparing their transition to “civilian life”.  I also assisted with resume reviews and providing a “civilian business owner perspective”. During my 20 years as a business owner I interviewed and hired 100’s of employees and prospective employees.  At this event I had the chance to spend time with what turned out to be very qualified individuals.  One individual had a very lengthy resume.  We spent a lot of time  trying to simplify it and cut it back.  Problem was that during his 21 years in the military he had  managed  and coordinated so many impressive feats that his resume was long because he has accomplished so much.  Another I spoke to inferred not wanting to point out his involvement in “hostile environments” as he thought this may dissuade a prospective employer from hiring him.  He had been advised that this may be viewed as a negative from a prospective employer.

Our military is and has been producing so many impressive individuals.   Buying a business as a soldier should be a plausible and viable transition.  But pursuing buying a business   as a soldier has its own special challenges.  I think more could be done to assist a soldier  that desires to own a business after their time serving our country is completed.  In this case am I, the lender, and the Seller working a little harder because this prospective business buyer is currently serving our country?- yes.  But after working on this business sale I think  pursuing  the dream of owning a business after serving our country should be easier and more common place.

When Business is not Just Business

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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 )                     

7 Steps to Buying a Florida Business

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7 Steps to Buying a Florida Business

buying a Florida business

Steps to Buying a Business 

Buying a Florida business or Buying a Business anywhere requires planning and an organized approach.  Many Business Buyers that are Buying a Florida businesses do come from out of state.  I am a Business Broker based in Jacksonville Florida.  Prior to being a business broker I started and owned my own business and purchased 8 businesses to to supplement our organic growth.  The last 2 business I sold about a month ago had both business buyers from “up north”. The steps to buying a business in Florida can vary depending upon each individuals situation and goals.  Below are some steps that may apply to many business buyers.

1. Have you had “the talk” with your significant other?-  Have you discussed your thoughts, ideas with your significant other?  Does buying a Florida business mean a relocate?  If so how does that affect those most important around you?  I started and owned and sold my own business and to think about making any of these decisions without my wife is unthinkable. I work with a lot of potential business sellers, and when I ask if they have discussed with their wife of 10-20-30 years and they say no, I know  that the decision still has further steps to take.

2. Consider your capabilities.  What are your realistic financial means to buy a business.  Do you need a business that offers Seller financing or do you plan to seek financing from a bank or other?  What is both your true skill set and what sort of businesses do you have an interest in.  And, do you have the financial capabilities to buy such a business, and or or their technical or license requirements that could me met by you.

3.   Geography- Florida is a big state!  Are you looking to buy a business in a certain part of Florida.  Florida really has 3-4 different markets which include the Miami Dade area, Southwest Florida (Ft.Myers/ Naples area), Tampa area, Central Florida (includes Orlando), Northeast Florida (includes Jacksonville), and the Panhandle area.  Are you looking for a business anywhere in Florida, or do you want to be in a certain part of Florida.

4.  Start Looking around.  It’s easy from anywhere in the world to jump on the internet and search for Florida Businesses For Sale.   This is a very easy part of the process.  But how do you advance your search from casual looking around to trying to reach a goal of for example wanting to buy a business within 6 months.  For every hundred of people that “look to buy  a business”  only a few actually do.  Looking  thru websites is generally a free and fairly benign exercise.  Engaging with someone that understands the Florida market advances your efforts from “looking around” to trying to fulfill a goal.  Contact a business broker and have a dialogue and seek out assistance from someone that engages in this process on a regular basis, and understands the marketplace.

5.  The vetting process.  Getting information from the internet on businesses for sale can provide certain minimal information.  To receive detailed info confidentiality agreements will be signed.  Expect information exchange to be a “2-way street”, you will desire information on a business sellers business including financials, company background and  history.  A business Seller will require information on you, including your financial capabilities and  your background.

6.  Meeting with the Business Seller.  A Business buyer can “meet” a business owner via a phone conference call, but a face to face visit with the owner will allow both the prospective business buyer and Business Seller, to either develop a comfort level to move forward or move on. A successful meeting could result in a contingent offer being generated/presented.

 

7. Generating a business offer to Purchase-  After finding the business that meets your requirements, an offer is generated and presented to the business Seller.  At times an LOI (Letter of Intent) may also be utilized.  The business Seller has the option to accept, reject or make a counter offer.

If accepted, due diligence is pursued with the goal of satisfying the wants of the business buyer and reaching a business closing date whereas the prospective business buyer achieves the goal of being a business buyer. The steps to buying a business can vary greatly.  Having an organized approach and realistic expectations can go a long way towards finding and buying the right business.