Category Archives: small business ideas

A Word on Buying or Selling a Business

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Considering Buying or Selling a Business?

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Is EVERY Business For Sale at “Right Price”

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As a Business Broker based in Florida I spend ample amount of time prospecting/marketing for prospective business sellers and prospective business buyers.  I use various marketing methods to market to both buyers and sellers.  While in the process of  prospecting for business owners considering the exit or sale of their business it is not uncommon to hear “I would be interested in selling my business  if I can get the right price”.

Business For Sale – The Right Price

Recently I engaged in such a discussion- the owner told me he would very much like to sell his business and start a new somewhat unrelated business if the could get the right price for his business.  I then asked what he felt may be the right price and he followed up with “I don’t know”.

The “right price”  may not equal to the business value, or the price a qualified interested buyer is willing to pay.

For an actual transaction to be consummated,  the right price needs to resemble actual business value.  If the “right price”  is actually 2-3 times what estimated value of the business is, it is probably best for all parties involved to spend their time elsewhere.

But is every business for sale?  What if a “sweetheart deal” is presented to  a small business owner in Florida?  If you had a business that is not “For Sale” , and you know it to have an approximate value of $500k  and someone walked in and made you a cash offer of $800k cash is your business now for sale to that party?

Is now the time to Sell My Business?

From my personal experience of business ownership, I think yes most businesses are for sale if the “price is right”.  But not all businesses.  While owning my previous business in the 10th year  I had gotten a significant offer for the business, but I had long terms plans and  aspirations for the business.  At that point in time I had made several acquisitions and made several other offers on other related businesses and was comfortable with valuations, synergy calculations,  and felt I knew what the value of  my business was.

There was a lot of merger and acquisition activity that was occurring in my industry at that point in time and I was presented with a cash offer from a  very strong company, and was at about a 25% premium to what I and my CPA viewed as current value.  So I had a very strong cash offer from a well qualified business- do you take the money and move on.?

Business For Sale – The Value

In my opinion business values are affected by both  macro and micro economics.  What is the state of the economy, what is the state of the merger acqusition economy and what is the state of your industry/your business?  These elements effect what sort of multiple of cash flow your business may be worth.  If the economy is such that valuations were/are  running high do you look to exit your business because valuations, and or those high multiples may not come around again?

In my situation I consulted with my “trusted advisers” around me my CPA, my attorney, my wife.  Yet ultimately the decision was mine.    My CPA did tell me something that strongly influenced that decision.  He had told me “You,ll know when you are ready”.  It was a great price great offer, but I wasn’t ready and ultimately sold my business 10 years later and got fair value for the business. So is every business for sale if the “right price” comes along.  I think that most businesses are for sale if the right price comes along, but not all businesses.

 

 

 

When Your Product or Service is You

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Doing business in today’s web based world is changing almost daily.  You work on your website,  get on Facebook,  you try to learn all about social media to either try to just keep up, or maybe to move your marketing efforts forward.

Your competitors may have the ability to learn more than you to stay a step ahead of you.  They may have discovered the next best Facebook app to get them more Likes, Fans, and or interest.  Others may have more money than you and can outspend you, they can Out-Tweet you, out post you, out pagerank you, out comment you, out link you….

Be The Best You Can Be

Small Business Marketing- Selling a Business

But no one can Out-You You.  Or stated in the first person- “You Cant Out-Me Me”  .We all are busy trying to move our businesses forward but do we really know if Twitter will be in ours or others marketing plans 5 years from now.  So how or where does one focus.  Is your product of service you sell- you?  

I am a business broker based in Florida and I help/work with people with the process of buying and selling of businesses.  One aspect of the business that makes a business more saleable is the ability for the business to not be dependent upon the owner so that if/when the owner is “replaced” a transition can be seamless.  So building a business based on the brand or product being “You” can appear counter-intuitive.

My view based on my experiences is that a customer does business as much with “the way a company does business”, “company philosophies”, “company approach”, as much as they do business with a certain individual.  When you think about it we do like the person that we do business with but what is it that we really like?  I tend to think it’s the way that person deals with me,  and it’s easy to assume that approach starts” at the top”.

 

How Important is Business Owner when Selling a Business?

So I think it’s easy to assume if a customer/client likes the approach or way you do business as an owner and your “brand” is based on how you approach service and ethics and business practices- that this is who the company is and the company is NOT you.   If you as the business owner demand honest ethical reliable hard work from yourself and customers see that, they know what your expectations as a business owner are.

So if you as a business owner are not truthful, don’t return phone calls, think it’s ok to quote one price and then demand another price after the work is done why would the customer expect anymore from anyone else in your organization.

Submit Your Business To Your Philosophy

But the product/brand that you are building on the web content that you post to build your brand may not need to be about you by name- it may be your philosophies, your ways and approaches toward running your business.  I have been posting business articles about my experiences, views, and ideas for several years.  When someone engages me as a business broker -they are engaging me, and they can understand me through my writings if they choose to do that as a starting point- or they can choose not to engage me as a business broker because of my writings.

Maybe you don’t have the most experience, maybe you are not the smartest, maybe some of what you offer has some shortcomings- most everything does.  We all have areas of what we do that can use improvements, but you know you do bring something to the table that is unique to you.

So as the internet changes and strategies change on what new  site/app/blog/tweet/hashtag/social bookmark you should be using- you can retain certainty that you and your story will forever remain unique.  There is only one You.  But as the old song goes from The Who – Who Are You? – You are your feelings, your beliefs, your experiences, ideals, likes, dislikes,  the good and the not-so-good of you, and your way of going thru life (and business).

Nobody can do you better than you.  So when you are creating or building a brand,  and the brand is you- no competitor no matter how much money or how smart or how experienced is going to out you- you.

Relocating Your Business and Your Life for Business Owners

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Small business Owners may face the prospects of relocating their business.  Sometimes moving a business may be a matter of moving your 1 person internet business, or may involve moving your brick and mortar, 25 employee business.  But usually when you are relocating your business you are also  relocating your life.    Ten years ago my family and I moved 1500 miles away from my business.  Subsequently I ran that business for 7 years remotely with the significant help of a qualified management staff and eventually sold that business.  My current status as a Dad and as a business broker in Florida has me and my family involved with another relocation.

Reasons For Relocating Your Business

People move for various reasons, and many aspects surrounding the decision and process relocating your business are surprisingly shared with share the decision process of buying or selling a business.  I have said in the past that there are many reasons one may want to sell their business or exit their business, but all those reasons can get reduce to 2 overall reasons. (reasons that your chose, or reasons that “choose you”)  You may choose to sell your business or circumstances make that choice for you (health, death, divorce, bankruptcy etc).  When you look to relocate yourself or your business, it may be a personal choice or situations around you may force/require such a move.

And like buying or selling a business you have a significant effect on your personal life, when you are relocating your business, your business activities, or your job, you are also relocating your life. A decision to move or relocate usually involves family, friends, significant others involvement. A decision to buy a business, sell a business, start a business directly affect your significant others.  You are not just relocating your business activities you are relocating the life that you are experiencing and significantly affecting the lives of those closest to you.

Relocating Your Business

Photo (c) multicube.com

I have always felt the decision to buy or sell a business can be a harder part than the actual implementation.  “Measure twice, cut once”.    In my previous business that I had owned we made several acquisitions.  I had spent many hours evaluating the accreted cash flow of an acquisition, how to afford the capital outlay, what assets we would keep or dispose of, what involvement if any we would have with the seller of the business after the sale, how we would integrate our billing, servicing, and support of the additional customer base that would come along with the acquisition.  

At some point the decision is made and now it becomes a matter of implementing the mechanics of integrating the acquisition. I believe the implementation was the easier part of the process.    If the decision to acquire was thought out the integration should be a fairly known process. Ten years ago when we made a decision to move our family 1500 away from our business and running it remotely, a tremendous amount of  thought and time  went into the decision, and the move worked out well for the business and my family.

About 2 years ago we contemplated moving due to a combination of personal reasons, and my business activities also entered into the decision.  The decision was more based on personal preference and family goals (my daughters education and school)  than business.   Approximately 1 1/2 year ago we made the decision to move 300 miles away to Northern Florida, from the Southwest barrier island we currently live on.  Subsequently, we have sold our home, found a new home, and the movers are loading up our life belongings in 3 weeks. 1 1/2 years ago I started preparing for the move as it relates to my  business activities.  Here  are some of the highlights and:

6 Measures to Take When Relocating Your Business

1. Planning – yes the process of an effective move or relocation does share similarities with the process of effectively buying or selling a business.  Planning is so important in both matters.  When buying or selling a business I have always felt that if you are looking to buy a business or sell  a business or start a business in a year you should start planning yesterday.  Like Selling or buying a business, moving or relocating has so many moving parts and is a very involved process.  Dont really know how you can do too much planning for either.

2. Have that very important discussion and or  discussion regarding the pending move with your significant other early on.  Sort thru the personal, emotional, and logistics up front.  If it is a “voluntary” move make sure you both are on the same page.  If it is a move that is being brought upon you, make sure that is known to your significant other, as you should share a common goal to make the best of it.

3. Try to pre-emptively build develop or expand a client base prior to your move.  To me this was one of the more important steps I made in preparing.   Over a year ago I would travel about every other month to prospect, network and begin developing a presence in the new area.  As I developed clients I started travelling to the new area monthly and currently I go there every 2-3 weeks. I chose this route over moving to a new area and starting at square one to build a client base.  I now am moving into a new area  working with business owners looking to sell their Florida  businesses in this new location.  It is a smaller but developing existing client base.

4.  Make sure your email can follow you–  Back in the old day (and yeah my teenage kids eyes gloss over when I begin a statement in this way), but back in the old day, when you move you go to the Post office to have your mail forwarded or notify them of a change of address.  While that is still one of the items on the moving to do list, moving your digital address for your business can be  so much more important.  I have several emails, and one of my main emails is tied to the local cable provider in the area.  Make sure your email is portable, if not get a portable email address and start using it prior to the move.

5. Update Modify your website.  Does your website reflect your new contact information, your new business locations, your new geographic area of focus, if that has changed.

6. Out with the old and in with the new.  When relocating this is a good time to review old records to see what can be securely disposed of.  Why move all these records only to throw them out at the new location.  Storage and space is a valuable commodity no  matter where one is located.  Using the space around your efficiently is enhanced when unnded paperwork files are gotten rid of.  And it makes organizing at the new location that much easier.

Along with all the above business matters, we had to sell a house (in Florida, not so easy now adays), find a new house, find new location to operate business from, register for school for daughter, hire professional movers, help pack, etc. When you are relocating your business or your business profession you are also relocating your life. When buying or selling a business so many people think about the finanical and business side of the process.  But Buying or selling a business, like moving, has as much to do about the personal, family matters and lifestyle as it has to do about the business itself. Again, if you are thinking about buying or selling a business, or relocating your business next year, start planning yesterday.

Selling Your Business-2 Most Important Ingredients

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Selling your business very often  involves many many moving parts and finding the right Buyer for your business can be a very involved process.  Do you use a business broker to sell your business?  Do you try to sell the business yourself?  These are just a couple of the initial questions a business owner must answer to begin the process of selling ones business.  When selling a business it is easy to think that I will sell my business to “the first person to comes along with enough money to pay my asking price” .

The Right Conditions For Selling Your Business

The sale of a business involves many terms and conditions by both the buyer and seller that must be met to consummate in a sale.  Very often as you go thru the process of due diligence by both the buyer and seller, wants and needs are uncovered, and potential roadblocks to completing the sale can occur. Two important elements have a very strong impact on increasing the likelihood of a successful sale of a business.

When trying to sell your business are you working with:

An Interested-Qualified Buyer?.

  • An Interested business buyer
  • A Qualified business buyer

As a business broker based in Florida, one of my more important responsibilities  when I represent a business owner selling their business is to qualify or “pre-screen” the various inquiries on the business for sale.  There are many people that inquire/ask about a business for sale and probably less than 5% of those buyer prospects actually buy a business at all.

Difference Between Qualified And Interested Buyer

A Qualified buyer can mean many things, but having the adequate available cash, equity, financing, special skillset, proper personal family and life situations are important to establish.

An Interested Buyer is one that wants to buy the business.  They have seen basic information on the business and based on that, if no significant negatives or unknowns surface, they want to buy the business.  There will always be a lot of due diligence, verification, questions and answers, but this buyers desires to see the process move forward.  If my wife and I were looking to buy a new home, and she finds a home that she likes- I am pretty much transformed into an Interested Buyer.

I may turn from looking to buy a home to working to buy this certain home.  Issues may occur when doing the due diligence on buying the home but I task these as issues to overcome, not reasons to get out of the deal- If I am a truly interested buyer (and or my wife really wants the house).

Selling Your Business

Photo (c) kathleenrichardson-mauro.com/

When going through proper due diligence many discoveries and discrepancies can be uncovered.  When you have a Seller that is truly interested in selling their business and you are working with an interested and qualified buyer, issues uncovered in due diligence are not “Gothcha” moments but rather are business related issues that both parties seek equitable resolution and or explanation on. Issues that surface become hurdles but not roadblocks.

Buying and selling a business is a process.  When Selling your business at some point in the process you ascertain that you are working with an interested qualified buyer.  From my perspective, having an interested Seller and recognizing that you are working with a truly interested qualified buyer are two important ingredients towards a successful sale of a business.