Category Archives: business broker florida

8 Biggest Reasons I want to Sell My Business or Buy a Business

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8 Biggest Reasons I really want to Own My Own Business Can  look very much like the 8 Biggest Reasons I really want to Sell My Business.

Reasons to buy sell a business

Why does someone buy a business, and what does drive a business owner to the decision to sell their either long term ownership of a business or short term ownership of a business?  As  Former and current  business Owner I have owned a couple  businesses,  I have started businesses, I have bought multiple businesses, and I did sell my business.  As a  Florida Business broker I have both represented Buyers and Sellers of businesses.

So much goes into the decision  of buying a business or into the thought process of selling a business, but often it can be similar criteria that just sits on the opposite side of the ledger….

Owning your own business can be one of the most satisfying processes in ones life.   Why does someone want to own a business.  Very often it becomes the same reasons one wants to sell his or her own  business.

Reasons For Owning Your Own Business: “I want to Buy a Business because” –

1)MONEY– want to make lots

2)PASSION– I love making widgets- I love helping people with my products/ services
3)ACCOMPLISHMENT– It just feels good and a feeling of success
4)OBLIGATION– It is my best means to support myself and or family.
5)EXCITEMENT– I love working 24/7
6)CONTROL– I control my own destiny. I am the boss, I wont have to report to anybody. I can do whatever I want!
7)OPPORTUNITY– I’m young-limitless full of health, energy, optimism
8) TIMING – “I’m Ready” to buy own my own business

Reasons For Selling A Business: “I want to sell my Business because “-

 

1)MONEY-Not making enough, money is less important.  Or Ive done well and ready to cash in on my efforts.
2)PASSION– I used to love making widgets, now I’d rather collect shells, golf, work for someone else or do anything but make another widget. of ” If I have to deal with another customer I’ ll scream”.
3)ACCOMPLISHMENT– The feeling of accomplishment is gone and or less significant, or Ive accomplished all Ive wanted in this business.
4)OBLIGATION– My family is no longer around, Im not going to pass business on to my kids
5)EXCITEMENT– after working 24/7 I am now burned out and I get excited about the idea of not having to deal with it anymore
6)CONTROL-Insurance Companies,employees,IRS,State, Federal policy control my destiny, and run my business more than I do!
7)OPPORTUNITY– I feel old,  have health issues, tired- lack the energy this company needs- exceeded my limit
8) TIMING– “I’m Ready” to sell my business and move on…

While the list could go on and on, Contrary to common belief—– Its not always just about the money

When do I think it is a  good time to buy a business?  When YOU are “ready”

When  is a good time to sell my business –  When YOU are “ready”

 

 

 

Fear-Unspoken Emotion when Buying or Selling a Business

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How much is the business worth?  How much can I make if I buy that business?  What is the value of the Inventory?  What is the  rent the business pays?  What is the Revenue per Sales Channel?  What can I sell my business for?  What will it cost me to start a business?

These are all financial question that very often get discussed during the process of buying or selling a business.  So often the perception of buying or selling a business… or starting a new business is all about the financial elements surrounding the transaction.  The emotional and psychological elements in my opinion are under-served and often minimized.

Selling Your Business

I am a business broker based in Florida and in my profession I work with both buyers and sellers and can have rather intimate conversations regarding the goals and  desires of these current or future business owners.  I cant pretend to always know what truly is going thru the mind of someone I represent that is buying a business or someone I represent that is selling their business.  But I can speak of my experiences that I realized personally as I both bought several businesses as a business owner and also sold my business of 20 years.

Should You Ignore Emotions When Buying Or Selling A Business?

The money is a very important component that cant be minimized, but the emotional side should not be minimized as well.  What emotions did I experience as I personally was the buyer and seller of a business?

  • Concern,
  • Trepidation
  • Joy
  • Satisfaction
  • Worry
  • Relief
  • Uncertainty
  • Fear

Is there a book written that states these are the emotions one should realize when going thru the thought process of buying a business, selling a business or starting a business? If so I am not aware of it.  Is it ok to worry 24/7, to have some fear when making the substantial investment of buying a business?

Is it ok to have a certain level  fear when evaluating the decision to sell a business that you may have started and or been owning running for 10, 20, or 30 or more years.   I personally think all these emotions are both acceptable and normal. I feel if there isn’t a certain level of fear then possibly the enormity of the situation may not be fully understood.

When working with business buyers and those selling a business, and also in consulting for several starting a business, I do not attempt to advise that certain emotions are right, wrong, or indifferent.  My approach is to share my experiences and suggest that these emotions may be realized in the process of buying or selling a business.   I have many conversation with business owners that may want to be selling their Business.

Fear

Photo (c) profitguide.com

The Fear Of Selling Your Business

They want to sell their business but the uncertainty that is so intertwined with the process can create fear,  fear can create in- action.  Business owners may want to sell or exit their business, but their business is a known entity.  The business owner knows what to expect with running his business-relatively.  Selling ones business can create so many unknowns that uncertainty,trepidation, concern worry and fear can result in just taking the path of least resistance which may mean to just keep running your business- even though you may not want to.

But a properly analyzed and thought out approach to buying or selling a business can produce some very desired emotions like relief, joy, and satisfaction.  In my opinion emotions are a big part of the process of buying or selling a business.  But you should not let your emotions get in the way of pursuing your desired goals.

Selling My Business Next Year

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Getting a business ready for sale is both advisable and prudent.  Waking up one day and deciding you want to sell your business tomorrow may not be a good idea.  Deciding that you would like to sell your business as an exit strategy and putting together a plan is likely to maximize your gain from the sale of your business.

You could easily Google Preparing your business for sale and find many many articles/list and sources of information.   I had written a related article in the past as well.  But beyond the list- what of these methods are most important?  Are all of these measures necessary or are they just guidelines?

I had sold my own business of 20 years, I had entertained several offers over the years, I went thru various stages of decisions as to how I would exit my business.  At some point I realized that my exit strategy would be to sell my business if I could find the right situation.  But from my perspective the most important part of my approach was to commit to running my business as if I would own it  perpetually.

Sell A Business

Photo (c) smallbiztrends.com/

So many businesses that try to sell- don’t sell.  A business owner needs to realize this and allow this fact to influence their thought process.  Currently I am a business broker in Florida and work with Florida small business owners with the process of buying and selling a business.

Be Realistic When Deciding On Selling Your Business

Many components and aspects of your business should be looked at from a realistic standpoint, critiqued,  and adjusted as needed when preparing your business for an eventual sale.  Some important areas to address when looking to sell your business include:

  • Either develop, establish, or refine your business operational procedures, practices, and methodologies and have them documented
  • Does your business rely on you the business owner?  If so, make changes to reduce that reliance.
  • Clean financials-  Does your Income statement and Balance Sheet make sense ?

But the question to pose is what of these measures is most important or essential as it relates to preparing for the sale of my business?

In my opinion it is accurate , sensible, reliable Financial records.

The Importance Of Reliable Financial Records

Financial Records

Photo (c) bristoltn.org

Typical financials involved with the sale of you business can include Profit/Loss or Income Statements, Balance Sheets and   Tax Records.  Further into the due diligence process of your business good  Sales Journals, Customer Information, Inventory Info,   all can go a long way to maximizing the value of your business.

Clean financial records are so essential to all parties involved with the acquisition of a business. And all involved includes the Seller, the buyer, and possibly a bank, lender or third party investor.

So when looking to Sell your business-

If you have a great business that is producing great margins, produces a great bottom line, and a very high owner benefit- but the financial records do not support this – what do you have?

If you have a business that you own and run it semi-absentee, great systems, increasing sales, good industry but poor financial records- what do you have?

If you have the nicest looking, shiniest looking store, website, equipment, office or vehicles, but your financial records don’t make sense- what do you have?

Looking to sell your business next year?  Start working on your financial records today.

 

Starting Or Buying A Business-Own or Rent Building?

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Starting a business, or buying a business involves many decisions  ranging from what one should  put on your business card to where to locate your business.  Many small businesses are run from ones own personal residence,  and there are many advantages and disadvantages that can come along with that strategy.

But operating your business from a leased space, rented space, or a space you or your business would buy, can be a very important decision for your business.  The business that I had owned for 20 years, I had owned the building and surrounding property, (I still own and lease back, even after the sale of the business).

Owning A Real Estate For Your Business

Currently my role as a business broker has me working with business owners that both own the building they operate the business from they are selling and business owners that rent their space. Of  almost 1000 businesses sold in the state of Florida in the last year,  thru the Business Brokers of Florida of which I am a member of, less than 8% of them involve real estate.

Is it better to Own or Rent your Businesses Property?  

Most business owners in Florida that sold their business rent their buildings.  There are just way more non- owner occupied properties than owner occupied properties.  Again I owned and currently own and rent out the building I operated my business out of.  My thought process was that I had long term plans for my business and I viewed it as a means of building equity.  I do look at it a little different in today`s economy.

I do know of several business owners here in Florida that bought their building 5-10 years ago, ( they viewed the acquisition as an investment) and while the business may be doing somewhat ok during these difficult lean times, the building is so upside down that it may take 5, 10+ years or more, before the amount owed on the building is equal to or greater than market value.

To exacerbate that dilemma, ” like spaces” may be rented at a fraction of what monthly mortgage, insurance, and taxes payments may be.  It would be nice to be able to treat this expense as other expenses and when you have a more cost effective means just pursue that route, but buying/selling a building (or a business)  is not a very liquid investment- especially in today`s market.

Some Pros of owning a building may include:

  • more control, no landlord to report to and changes to your building allow you greater flexibility
  • potentially over the long haul you can accumulate equity
  •  If you are buying now, are you buying at a real value price, and its hard to argue that locking in at todays interest rates would not be a good thing.

On the Con side:

  • One must consider the opportunity cost of the money that is devoted to a down payment when buying a building- how much could that money have helped you grow your business?
  • If you need to move your business a  rental/lease agreement may allow you greater flexibility.
  • Owning a building is more responsibility

Operating lean, low overhead, low monthly expenses greatly enhances the likelihood of acceptable profits.  I am pleased I had owned my building I operated my business out of, but would I make the same decision today to buy a building to run my business from?

If I were buying a business here in Florida would I require that I can buy the building along with the business I am buying- today I am not so sure. Leaning  towards the flexibility of renting until  further clarity on where  on economy is truly heading seems to be a reasonable approach.

Florida Business For Sale Florida Businesses Sold Activity 2011

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Florida Business For Sale  Florida Businesses Sold Activity 2011

I am a Florida Business broker working with business owners selling their Florida  businesses, and business owners and individuals 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 brokers that are members of this Association.  These business brokers 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 website.  Valuable information regarding Florida business for Sales and Florida Businesses Sold help me as a Business Broker Professional  keep track of the ebb and flow of the Florida Business Acquisition Market.  Understanding a business to assist in selling that business requires an understanding of the numbers behind  that business.  And understanding the marketplace in which this 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 Activity for 2011

Businesses Sold in Florida through Business Brokers of Florida  in  2011  – 859  vs 931  in 2010.  About a 7% drop.

Averages of all businesses sold in 2011:

Average Sales – $541,000   Average Price Sold For- $243,000   Average Adjusted Net- $96,000   Days on Market  224 (note all DOM (days on market) numbers DO NOT include those taken off the for sale market)

Florida businesses sold in 2011  Items of note:

  • Restaurants sold in Florida – Number sold- 199   Avg Sales-$326k  Avg  Sold Avg.Price-$140k     Adj Net-$67k  DOM 211

over 20% of all businesses sold in 2011 were restaurants!  Currently 670 are for sale

  • Dry Cleaners/Laundry Business sold in Florida-39  Avg. Sales-$174k Avg.  Sold Avg. Price-$119k   Avg. Adj Net-$64k

fairly active sector- fairly low business entry point, and fairly easy learning curve.

  • Manufacturing businesses sold in Florida- 15   Avg. Sales $1.3M   Avg.Sold price-$713k Avg. Adj Net-$148k DOM-275

Florida is a very service oriented business community, not a lot of manufacturing activity, relatively.

  • Lawn Service Businesses Sold in Florida-33 Avg. Sales-$190k   Avg. Sold Price- $ 115k  Avg. Adj Net- $73k  DOM-186

lots of lawn service business sold and for sale in Florida but almost exclusively “smaller” with average sales of $190k

  • Insurance related businesses Sold in Florida-15  Avg. Sales- $226k    Avg. Sold Price-$335k  Avg. Adj.Net- $110k  DOM -166

I took note of insurance because they received a very good multiple when compared to most other industries 3+ times adjusted Net. and the average days on market less than 6 months- a fairly fast sell time.

As of December 28,2011…

Businesses Currently For Sale through Business Brokers of Florida – 3392 vs. 3373   in last 30 day period.  about same.

  • Number of Business Currently for Sale in Jacksonville Florida Area (Duval County and St.Johns County) – 209
  • Number of Business Sold in Jacksonville Florida Area in2011- 48
  • Number of Restaurants for Sale in Jacksonville Fl Area-56 (about 25% of all Jacksonville businesses for sale)

Current Business Interest and Activity Observations: as of  December 28,2011

Is there a pent up supply being created.?  Every year business owners get closer to exiting their businesses.  Another year has gone by.  How many business owners planned or intended to sell their business in 2010 or 2011 and have decided to delay that action?

Will this “supply” of businesses for sale affect the price that a business may realize due to a potential increase in supply?  If demand stays consistent and supply increases, prices by market forces tend to move down.  So how does one balance the strategy to wait until company performance improves vs selling into a potentially lower valued market?  I always like to think tomorrow will be better as I am a fairly optimistic person- things will get better, just not sure how many tomorrows its going to take.

 

  • *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