Around the Web: A Week in Summary
A recent article from Inc.com entitled “How Every Small Business Owner Can Capitalize on a Strong Market” discusses how the current strong market is an opportunity for business owners to secure the financial future of their enterprises. With the average business sale price up 11% from last year, and the highest recorded since 2007, right now is a prime opportunity for business owners, buyers and sellers alike.
While it’s an opportunity for sellers to receive premium pricing for their company, it’s an equally excellent time for buyers to create a return on their investment and for current owners to benefit as well. Experts recommend that before making a decision on your next step, small business owners should consider their options:
- Sell their business – This option is excellent for baby boomers and owners suffering from burnout to successfully sell one or two businesses for a profit or in exchange for a more passive roll and part-time work.
- Add value – The current market provides a prime opportunity for current business owners to evaluate their business as is and implement a plan to increase the value of the business. This can be in the form of improving client or vendor relationships, upgrading the efficiency of their product or service, or improving the structure of the business.
- Expand – It’s a great time to sell, and it’s a great time to buy. This means if you’ve hit a plateau where you’re currently at as a business then it’s the perfect time to look into a larger location, an added location or even acquiring a competitive company.
A recent article from Certified Business Brokers entitled “Pricing a Business Too High” explains that while it’s normal for business owners to want to list their companies for sale with a price tag that is higher than valuation, it’s not recommended.
The reality is that a qualified buyer will be knowledgeable and capable of assuring that the price is aligned with the economic realities. Also, any lender is going to crunch the numbers to make sure that the return on their investment is feasible before they agree to loan the money for the sale. Therefore, unless the numbers add up, your business may get a few looks but is unlikely to receive any offers.
A recent article from VR Business Brokers entitled “Follow the Necessary Steps to a Successful Business Sale” reveals the six things that every business owner needs to consider before listing their company for sale.
- Evaluate your business before the buyer does – A buyer who is qualified to run your company will do their homework before making an offer. Therefore it’s prudent as the owner to do the same evaluation and make any corrections before listing.
- Clean up the balance sheet – If you do this after the potential buyer has signed a confidentiality agreement then it will appear to be suspicious and raise red flags. Save yourself the trouble and simply do this before going to market.
- Have your financials audited – Having a professional go over your financials will increase their credibility and help to move the process along more smoothly.
- Have stable management in place – A business with capable management will build confidence for the buyer and foster continuity after the sale.
- Use comparisons to better position your company – A business buyer will compare your business to similar companies on the market the same way a consumer is going to compare similar products. Get ahead of them by becoming aware of your competition and using the differences you notice to improve upon your business.
- Publicity generates value- Promoting visibility for your business, whether locally or nationally, is not only good for your revenue, it’s also a great way to attract potential buyers.
Hiring a professional business broker to assist you in the sale of your business is a great way to help you work through each of these pieces and have a better selling experience.