Your customer base is the foundation of your company. Knowing who they are is crucial to your business, which is why potential buyers will want to know as much as possible about your customers. Therefore, if your are thinking about selling your business, be ready to provide a basic profile of your customer base. However, […]
When selling a business, it is important to know who the buyers are for privately-held businesses and why they buy. Most owners of small and medium-sized businesses do not think about exiting their business nor do they plan for that inevitable day. They enjoy their work and their lifestyle. Many of them do not even […]
When selling your business, it is important to know that your customer base has a major impact on its value in the marketplace. A diverse customer base means your revenue comes from a number of clients or customers, not just two or three, and preferably comes from multiple sources other than your primary service. Simply […]
The answer is a resounding NO! Confusion and misunderstandings often occur if the soon-to-be new owner takes over or works in the business before closing. In our experience this has never been a winning scenario. There are times when the buyer and seller think it would be a great idea if the buyer began operation […]
We get email alerts every other week or so from the SBA saying that the 7A guaranteed loan program for buying a business only requires a proven history of stable cash flow that can support the debt payments, which means that goodwill (an intangible asset) can be used as collateral. These SBA email updates also […]
When you have closed the deal and are now the new owner of the business, there are a few things to take care within the first month to put your new enterprise on the right path. Nothing drastic Put Your Staff at Ease Have a group meeting with the employees. It is likely that they […]
Potential buyers who read about a business for sale are interested in knowing how it can be grown once they bought it. The growth potential of a business plays a major role in its value. While buyers will purchase a business at a price predicated on current and historical cash flows, their main motivation is […]
If a company is on a downward trend, many business owners think they can bring their companies back from a valuation that doesn’t meet their expectations. But it takes energy that many business owners no longer have. Very few companies can make that leap back to new heights without a strong drive, vision, and leadership […]
Lost Interest or Drive in Your Business? Consider Selling Now. Many business owners have operated their companies for too long and have lost their interest or drive. As a result, the business may flounder or stop growing. Not only will revenues and profits suffer, the value of the company will as well. And it only […]
How can you nail that inevitable meeting with your employees when the time comes? The issue of what you tell your employees when you’re trying to sell your business is a tricky one that requires careful thought. Maintaining confidentiality surrounding the sale typically takes precedence over other concerns, yet it may be impractical — or […]
Many buyers looking for acquisitions today in the small business marketplace struggle with the decision whether to buy or lease the real estate for their business operations. With real estate values having been softened by the economy, now may be the best time to evaluate the pros and cons of small business real estate ownership. […]
What does it mean when we say that we need to “Recast” your financial statements as one of the initial steps in preparing to sell your business? Financial statements and tax returns for most privately-held businesses are prepared for tax purposes, not for business sale purposes. The objective of business owners and their financial advisors […]
The lease terms of the business space can be a major consideration for a buyer. For example, a distribution company with a long-term lease on a good location can be attractive. But a long-term lease on a business needing more space to grow could be a detriment. Or, there can be concerns about an expiring […]
Diversify Your Customer Base Before You Sell Your Business Many companies have a few large customers that dominate their overall sales. After all, nobody wants to turn down business! But when it comes time to sell the company, this becomes a huge problem. Most buyers won’t look at a business whose revenues could drop dramatically […]
Recurring revenue is the holy grail for business owners looking to have a valuable and sellable company. A customer base with a subset of recurring revenue that is contractual and repeating in nature increases the probability that the business will have stable, predictable revenues and cash flow into the future. From a buyer’s perspective, this […]
In today’s business climate a strong online presence is vital. Prospective buyers of your business are googling you and your competitors to determine your standing. Today’s buyers of businesses are much more sophisticated than they used to be. One of the very first places a potential buyer will go to be introduced to and learn […]
The lack of financial integrity is one of the most common hurdles encountered during the process of selling a small business. What is being bought or sold is primarily a future stream of income. Not the assets or property of the business, but the income these assets will generate in the future. Since future income […]
Burying excessive personal expenses in the business financials can lower business value! The most popular method of valuing a business uses a multiple of earnings over a period of years. Business owners should be aware of that while attempting to reduce the bottom line with personal expenses to minimize taxes. Though there are a number […]
Not all businesses need to have cutting edge technology, but a company can’t fall too far behind. Buyers will be concerned if they must make a large investment in the latest technology to get the company to a competitive level. A business owner should do the research and purchase the necessary technology to keep the […]
When a business for sale is being evaluated by a prospective buyer as a possible candidate for purchase, the quality of the human resources element will be considered. The staff is a major component and the backbone of any successful business operation. Any aspect that reduces risk in the continuity of the business under new […]
The following are factors that can have a negative impact on the value of a business and some are issues that can rear their ugly head during the due diligence investigative period. Keep in mind that this list is a compilation of potential problem areas and do not apply to all types of businesses. […]
The capital gains tax rate is presently at historic lows at 15%. However, effective Jan 1 2011, this rate will increase to at least 20%, which represents a 33% increase overnight. Congress has not yet finalized the amount of the increase and it may be significantly higher. This does not include any other taxes that […]
There’s always been lots of discussion about what, exactly, defines a lifestyle business. You can ask 10 people and you’ll have 10 different answers. But is it an antiquated term that has no bearing in the world today? There are many small business owners who are living proof that you can work much less than […]
Most small business owners are not familiar with the dynamics of selling a business because they have never sold one before. Most people only buy or sell a business once in a lifetime. While there are lots of potential deal breakers, avoiding the following ten mistakes will mitigate the possibility of an aborted transaction. […]
When selling a business, maintaining proper inventory levels is essential to maximizing value. Don’t let poor inventory management drag down the value of your business. Inventory is an ever-renewing, moving, and perishing thing. The longer it hangs around, the less valuable it gets, and eventually dies as a viable product. If it’s not turning over fast enough, […]
“A major competitor made an unsolicited offer to acquire my small business. The amount seems significant, what should my next step be?” While the offer may sound great, the real question is whether or not it is an offer that truly reflects the value of the business you have built. So, in order to make […]
Family and private businesses are sold in an environment that is unlike the selling environment of anything else you can imagine! Sound surprising? After you review the following ten reasons that make selling a business different than selling anything else, perhaps you will agree. When the decision is made to sell and the sale is […]
This is a common question from business owners who are thinking about selling. While there are many ways to increase business value without incurring costs, the following quote sums it up in a nutshell. It is relevant to any business and will spark the thought process for a DIY project. “Every business has something that […]
How long does it take to sell a business? The average time on the market for around 82% of businesses is four to 12 months. Fewer than 10% of businesses sell more quickly, and a little over 8% are on the market for more than 12 months. Why does it take so long to sell […]
While all transactions are as unique as the parties involved, in most small business sale transactions the seller keeps the cash and outstanding receivables. They pay off the bills and any other outstanding payables and deliver the business free and clear of debt to the buyer. In somewhat larger business sale transactions, there are many reasons why buyers consider […]
This question was asked by a business owner who is considering the sale of her business. An addback is an expense that is not a normal one for the business and is, therefore, taken out of the equation when performing a valuation and calculating a company’s earning power. The goal when presenting financial information to a potential […]
It has traditionally been a common practice for the sale of a privately-held small business to include some seller financing as part of the deal structure as a key to getting a deal done.  In the U.S., about 60% to 90% of business sales involve seller financing when bank financing is not an option. Seller financing can […]
Two of the most common questions business owners ask is, “How much is my business worth,” and “What information is required to do a market valuation of my business.” The answer to the first question is ultimately answered by the market itself. What we do is approximate the range of the most probable selling price a business might achieve […]
Some people are just born with it! These are traits that successful business owners commonly share. Above all, however, business owners need to have strategic thinking skills, time management skills, and know the job. No one can embody all these traits if they are part of the human species, but varying degrees of these characteristics […]
The following information explains the tax consequences of buying or selling a business. Be sure to see the Seller/Buyer Comparison Table at the bottom of this article. Key Points You are only taxed if there is a gain on the sale or if income is earned Capital Gains tax rate is almost always lower than […]