Category Archives: buy a business

What Can I Sell My Business For?

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As a Business Broker Based in Florida,   I talk with small business owners daily about their businesses.  Reliable and usable information on the small business owner that is selling their business , buying a business, or contemplating a potential sale or acquisition is usually hard to acquire.  What does the market for those selling a business in Florida and those looking to Buy a Business in Florida really look like?

Pricing Your Business

One or the benefits  of owning a privately held corporation is that you are private.  So information regarding small privately held small businesses that are sold and bought   is both minimal and hard to obtain, because of the private nature of the transactions.  I am a member of the Business Brokers of Florida (BBF) , which is the 2nd Largest Association of Business Brokers in the World.  I have for my own purposes reviewed and evaluated  Business Sales Activity in Florida, (figures obtained via BBF websites) along with trends of businesses sold in Florida, Cash flows, and business values of those sold by members of the Business Brokers of Florida These numbers involves thousands of businesses over several years.

As I plan going forward,  for my business broker activities, understanding these trends and activities is one of my 1st steps in my planning process.  Here are some figures and observations:

The number of  businesses sold in Florida in 2010 were 5% less than  2009.  The Price for a business was sold for in Florida in 2010 was lower than 2009.  Both 2009 and 2010 were down years in the business acquisition and sales market in Florida. Most business brokers I speak to  believe  business acquisition activity will increase in 2011.

2010- 860 Florida Businesses Sold

Sales Sold Price Adjusted Net Days on Market
592,931 232,120 107,427 222
2009 – 910 Florida Businesses Sold
Sales Sold Price Adjusted Net Days on Market
594,449 270,327 106,251 233

More Restaurants are Sold in Florida  than any other type of Business. Accounting for over 20% of all Florida Businesses Sold by Members of the Business Brokers of Florida.  Do you wonder why so many restaurants sold?  Currently, As of today- 693 Restaurants are for Sale in Florida thru BBF Members. !!

Restaurants 2010  Averages   (187 Total Sold)
Sales Sold Price Adjusted Net Days on Market
360,242 131,343 73,258 210

 

Restaurants 2009  Averages
Sales Sold Price Adjusted Net Days on Market
361,493 162,087 72,703 211

It could just be me, but I do speak to a lot of business owners that “feel “their business is worth $1,000,000.  Only 4% of all business sold in Florida thru members of the Business Brokers of Florida were greater than $1M.  Florida  business climate, while having some diversity, is very strongly service based with a lot of small businesses with 10 employee or less.

Businesses Sold in Florida for $1,000,000 or More (38 Total or approximately 4% of all sales)

2010 Averages  (38 Total or approximately 4% of all sales)
Sales Sold Price Adjusted Net Days on Market

2,739,402 1,894,700 576,038 378

 

2009 Averages
Sales Sold Price Adjusted Net Days on Market
2,748,466 2,132,351 574,604 391

Please Note- and this is an important fact- the Days on Market does not included businesses not sold and ultimately taken off the market.

2010 was a difficult year in the business acquisition and sales market in Florida.  Last Wednesday I attended an educational seminar that was attended by 70 plus professionals in the Florida business acquisition and business sales market.  Generally most all I spoke to were both guarded yet optimistic  about the industry prospects for 2011.

The above numbers speak to averages.  All businesses and industries have their own uniqueness.  Businesses generally are sold as a multiple of their adjusted cash Flow.  ( adjusted cash flow attempts to determine actual cash the business generates for discretionary expenses, owner wages, debt service etc.)  Each business and industry will demand a different valuation.  Determining your business value may be dependent upon what similar businesses in your same industry are selling for as a multiple of adjusted cash flow.  If you would like to know what businesses similar to yours are selling for, review a website such as mine, or contact a trusted business broker or other trusted advisor.


How to Sell Your Business for More

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At some point a business owner considers selling their business.  Sometimes it is just a fleeting thought.  Sometimes its a thought of  “I don`t need this anymore, get me out”.  Other times its a well planned out progressive process.  You want to sell your business- how do you sell it for more.

This sounds like a fairly straight forward approach, but just as the selling of a business process can be very involved, the question of how to sell it for more firstly needs definition.  I am a business broker based in Florida and speak to many many business owners about the potential sale of their business.  I also sold my own business several years ago.

Selling Your Business When The Time Is Right

Just consider the simple analogy of having a rusty bike in the garage with flat tires that you want to sell today.  You put it out at the end of the drive way put a For Sale sign on it- what do you think it will sell for?  How can you sell that bike for more tomorrow than you can today?

Selling Your Business For More:

  • Selling your business for more can be a very good thing and very reasonable goal.
  • Trying to sell a business for more than it is worth can ultimately result in your business not being sold at all.
  • Setting the Goal today to improve your business, prepare it for sale so that it is worth more after your improvements is probably your best approach
  • Wanting to sell your business for more than “what you heard a local competitor sold for” can also be a mis-guided path.

Preparing Your Business For Sale

So selling your business for more is a reasonable and understandable goal.  How do you get more for your business?  Start today preparing your business for sale.  Like so many of your other important business decision, prepare yourself a to-do list and systematically address those items.  Below are some items you will want to include on your to-do list to help ready your business to sell for more. Ask and honestly answer these questions about your business.

How  are your financials?  Are there some unusual entries on your P/L that have escaped needed adjustment?  Are all sales accounted for?   Do you have a good clean P/L statement?  For smaller businesses Do you have a P/L and Balance sheet?

How reliant is your business on you.  What can you do today to help your company be more about your company and less about you.?

How documented are your systems, procedures, policies, pricing structure?

Right Customers Base

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Is your customer base as diverse as it should be?  How reliant is your business on a few key customers.  And again do those customers do business with you the business owner or with the company?

Do you have the opportunity to add recurring revenue streams to your business, but elected to not pursue?  Do you have some contracted customers that you just haven’t updated contracts with?

Spend some time to meet with some of your trusted advisers.  Dont rely on information you hear through the grapevine about this person selling their business for this amount.  Talk to your attorney, your accountant , or visit with a business broker start to really learn the marketplace.   Have you scraped the rust off your bike?, painted it ? oiled the chain? pumped up the tires?  put an ad in the newspaper? on the Internet?- Is your bike worth more today than it was yesterday?

How do you sell your business for more tomorrow or next year  than it is worth today?  Start today preparing your business for sale.

Sell or Buy Business with goal of Hybrid Retirement

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Owning a business can be a very rewarding experience.  Many will buy an existing business or start a new business with the thought of building the business to the point that it is a successful viable entity that they can sell and live comfortably on the proceeds.  There currently are millions of small business owners in various stages of planning the exit of their business.

I want to sell my business so I can retire comfortably.  There are also millions of aspiring entrepreneurs that are considering buying or starting a business with the goal of building it and growing it to the point they can sell it and retire comfortably. It seems so often when discussing what one does it is described as working or retired.( In today’s economy unemployed, looking for work is another status).

I beleive there is a  status between working and retired, and I refer to it as Hybrid Retirement. I certainly don’t see myself as any retirement expert or financial planner, but I have been thru the process of selling my business that I had for 20 years  and have developed my own views on retirement that possibly one going thru the daily work day does not have the time to consider.

My current profession is as a business broker in Florida. Within my community I am surrounded by retired people, and also after the sale of my business I did take “some time off”.  As a business broker I speak to many business owners considering the sale of their business. One of their top considerations is “If I sold would I have enough to retire?” .

 Why not aspire to Hybrid Retire?

I personally think the majority of those currently working full days either employed or as small business owners look forward to the day they can retire, stop working, and spend the rest of their days fishing, golfing, or hobbies. Of course your age at the time of cashing in can greatly affect your decision process. If you are 75 years old, maybe you say enough is enough and just head to the golf course.  But if you are fortunate to be successful and exit in your 40’s, 50’s or maybe even your 60’s your perspective, and needs could be greatly different.

The thought process for someone thinking of selling a business goes something like this:

I think I need to sell my business, walk away with $500,000 and that will be enough for me to retire.  But what if you had someone that would buy your business and allow you to walk away with $400,000?  Maybe this is a good time to entertain such an offer and consider Hybrid retirement.

Hybrid Retirement

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If you believe you need $50,000 per year to live off of, and the sale of your business may give you $35,000 to live off of, should you walk away or consider.?  Many small business owners get overburdened with the responsibility of owning a business, and really want to sell those responsibilities away to others.   Maybe making the $25,000 monthly payroll or covering the $100,000 per month fixed overhead cost month after month just gets to be too much.

Perhaps you can consider upon the sale of your business,  you can find another business to buy, possibly one that you have aspired to do for years, or possibly work for someone, under terms conditions that fit your lifestyle.  But this second business you don’t need to make that high monthly expense, and now you are supplementing the proceeds you have from your sale, and what you need to draw from the business is a lesser amount.  “Needing” to make $15,000 per year instead of $50,000 can be somewhat liberating!

Why Hybrid Retirement?

  • Do you really know that you can “do nothing” after working for 20, 30, 40 + years
  • You have someone looking to buy your business near the price you think you need.  maybe consider the offer and plan to supplement the difference with a second career, part time job etc.
  • This is an opportunity to build a profession around your lifestyle, whereas before you may have had to try to build a lifestyle around your business.
  • Are you really prepared to try to live off a “fixed income”- supplement that with something you aspire to do.

I think currently due to economic condition there are many small business owners delaying the exit / sale of their business because the recent performance of their company may not allow them to achieve the “walk away” money they believe they need to retire comfortably on.  There also are eager entrepreneurs ready to start a new venture with hopes of one day selling and retiring off the proceeds.  Maybe planning for both of the above scenarios can best be addressed by allowing yourself to consider Hybrid retirement.

Number 1 Reason For Selling Your Business

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What is the Number 1 Reason I hear when speaking to Business Owners about selling their business?-  Why are you looking to sell your Business?  — ” Because  I Am Ready”.     For those of you who have owned a business for any period of time this is a response that is fairly easy to understand.

I am a business broker based in Florida (and business owner)  and speak to many prospective buyers and sellers of business and understanding  the “Why” for both parties is so important in assisting the buyers and sellers of businesses.  I really think that most people that have given a fleeting thought to buying a business believe that business owners want to sell their business and therefore something must be wrong with the business.  Actually I am currently working on selling a Landscape Business in Florida.

Business Broker

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The business owner has a  good quality business for sale, good cash flow, a comfortable lifestyle.  He has owned the business for x years and is “ready to do something else”.  He will be relocating out of state, he owns a successful business he is looking to sell. Recently we spoke about the potential purchase of another business in an unrelated field and his hesitancy about buying a business because why would someone sell a “good” business- .  And this comment is coming from someone selling a “good business”.

I also am currently helping an owner of a Computer Service Store For Sale who`s revenues are up 30% over last year, Profits are up 20% plus and is seeking to sell his business at less than 1 times annual adjusted cash flow.  He also is anxious to start a new business opportunity with a close friend, and that endevor is awaiting the sale of his business.  A good business at a good price and the owner is “ready to move on”.

Solid Reason For Selling Your Business

Good businesses get sold for very good reasons.  Being “ready to do something else” is a good reason.    A seller of a business needs to be ready to sell.  Really- you only really exit your business by 2 means.

1. By your choice-your timeframe, your plan.

2. Not by your choice– closing due to business failure, business conditions, bankruptcy,Forced Sale.

Granted there may be certain undesirable business or personal events that prompts one to “be ready”.  A business owner may have additional employee problems and decide that enough is enough and that is the impetus to sell ones business.  New frustrating regulation, customer problems, and any one of numerous  problems a business owner may face may be  the “final straw” and induce a business owner to pursue the sale of the business.

But again for any  business owner that has owned and managed a business for an extended period of time problems such as these come and go.  Business can be going quite well and the owner may just be ready to move on.  Actually selling a business while the business is doing well is a well thought out exit strategy for a business owner.  And yes problems can and, do come along with the business.  Problems within the business does not make a business a bad business.

A business owner may “just be Ready” to:

  • retire
  • try  something new- a second career
  • want to move or relocate
  • Just be done running the business I have been running for the last 20 years

I am not aware of the existence of a Perfect Business. Even the best of business opportunities will likely contain issues and or undesirable situations.  But if you truly want to own your own business and move into the role of business owner- Understand that good business are being sold by business owners that are just ready…. to move on.

7 Ways to Improve Your Business that Cost No Money

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It is the norm for Small businesses, startup, new ventures to struggle due to limited financial resources.  There are so many efforts that can improve your business and produce results that are little or no cost.  We all want results, but at what cost ?  Did that $1000 investment or expense produce $10 results?

Part of my profession as a business broker involves consulting with both buyers and seller of business.  I also provide consulting services to businesses outside my role as a business broker in Florida.  Rarely do I experience a discussion based upon “I have too much cash flow to deal with”.  Small business owner  and entrepreneurs are constantly seeking ways to improve thier businesses with limited resources.  Below are a list of several tactics and efforts a small business owner may take that cost little or no money and therefore the Return on Investment ( ROI)  is extremely high.  There are many other practices and efforts that can be utilized outside of the below short list, hopefully this list can change the line of thinking of a business owner from “I wish I could do something but I don’t have the money” to:

What Can I Do To Improve My Business With Limited Or No Money

1.Look at your company from the perspective of a customer.   Can you do that?, can you pretend you are a customer trying to do business with your company.  You send an inquiry via email, you place a call into your company- what happens?.  We all have dealt with companies that customer service seems more like “How to effectively get a customer off the phone”  instead of ” I wont let you hang up the phone until I know I have completely helped you to fulfillment”  IS it a pleasant experience to do business with your business?

2. Attempt to surround yourself with more beneficial  synergistic strategic partners-

As a business broker I have various strategic partners that allow me to best assist my clients.  These professionals include, Attorneys, Accountants, bankers and Financial people.  Not so long ago I relocated to a city 5 hours away.  Among other things, I needed to develop a new “team” that I could rely on that help me help my clients.  I researched banks that do a lot of SBA loans to small business, migrated thru the company website, found a point of contact that I had an interest in meeting with, sent an email, and got an email back saying “going on vacation back in 2 weeks, call me then”.  I proceeded to pursue a relationship with someone that would call me back., passed over this prospective strategic partner and found someone that I feel may develop into a mutually beneficial business relationship. My clients will benefit from my valued strategic partners.

3. Use the Internet more

Improve Your Business

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  • post a blog- how much does that cost?
  • post a tweet about  a sale, a special or event- We’ve all heard/read that this can be a good idea- just do it.
  • check out a site such as Fiverr.com and see if someone can do something for you for $5.  Are there other sites that facilitate low cost solutions? Can you afford to make a $5 error?
  • Try something you haven’t tried- a video, guest blogging, join more related forums or user groups, start a group.

4. Educate yourself– take some time out of your day to read other related blogs info on your industry or specific area of focus. Commit yourself to learn your own financials better than you presently do.  Again the ROI on your time invested in this can be quite high.

5. Go to a network meeting– there are several available in most communities that are either free or cost a couple bucks.  How much could you benefit from making that “right contact”.

6. Consider a Freelancer–  Are there some functions/task that you currently are having performed that may be done more cost effectively thru an outside source such as a free lancer.  Open your mind to it.

7. Treat all customers, prospects, employees, vendors with respect and integrity– The ROI on this no cost effort is immense

Dont ever stop trying something different.  I have utilized the above items in my various business ventures throughout the years and still utilize them on a regular basis.  If you are running a business, buying a business, or growing a business these low and no cost business practices will result in very good return on investment and usually all it takes to get these returns is to consider them and just do them.