Business Owners should be planning for their own future

Business Owners are so busy running their companies every day, they never seem to have time to plan for exiting the business.  But they can’t avoid planning for this critical time in their lives.  Presenting a business for sale is very different than managing it with the business owner’s personal management style and priorities.  It can take years to properly prepare a business for sale to get the highest price.  Business Owners should start creating an exit strategy at the earliest possible opportunity!

Do you have small business questions you would like answered about this article or others?  Please visit www.VRWindsor.com or call 519-903-7807. 

William Sivell is a sales representative of VR Windsor Inc., Business Brokerage; his blog appears every Tuesday.

Raise my prices? You gotta be kidding me!

Don’t be a business owner who is afraid of raising prices.

Good profit margins are what it is all about.  Too many business owners are scared to death to raise prices for fear of losing customers.  In many cases, competition does make it difficult.  But there are many situations if business owners would do some research, they would find out there isn’t as much resistance as they thought.  And when they finally raise prices, they find out they lose very few customers and make a lot more money (also increase the value of the business).

Don’t wait too long.

Start by…

·         Check out you competition, have they adjusted pricing in the past 6-12 months.

·         Connect with a similar business that operates out of town, what sort of adjustments have they made to their prices

·         Do the math, if you are a restaurant owner, have you measured the impact of increases in food costs to your cost of goods sold, if you have vehicles in your business, have you considered how gas prices have impacted your overall expenses.

·         Be creative, many businesses have found ways to creatively increase prices through surcharges, add-ons, and value added services. 

·         Warn your customers in advance.  A well formulated letter can help communicate your future increase, plus can provide a marketable point of contact.  Who says you can’t offer an incentive to your customers for buying now, versus waiting till prices are higher?

·         Do what you say.  Raise prices in an orderly fashion, as you have promised.  Be systematic; ask for feedback from your front-line staff and customers.  You will learn lots from what they say.

·         Be patient and track results.  In a short time you will realize you have made a good decision, and make amendments where you need to.

Bottom-line, healthy profits margins make business owners more money, and help increase a business’ value.  You will make your business more marketable to buyers and increase the likelihood of a successful transfer when the time is right for you to sell. 

Do you have small business questions you would like answered about this article or others?  Please visit www.VRWindsor.com or call 519-903-7807. 

William Sivell is a sales representative of VR Windsor Inc., Business Brokerage; his blog appears every Tuesday.

Dispelling the myth about seller financing

It’s probably not surprising to learn that the first question most business owners will ask is “How much is my business worth” , however, often times more sensitive to the seller are fears about “seller financing” the sale of their business.

A popular myth is that sellers should always press for an “all-cash deal”.   The problem is Buyers will interpret this stipulation as a lack of confidence in the business, the buyer’s chance to succeed or both which can seriously diminish the chances for a deal. 

A seller who wants to proceed in this manner should take a hard look at the benefits associated with seller financing….

Firstly, it increases the pool of prospective buyers. 

Secondly, sellers will not have to discount their sales price.  Also the interest on a seller financed deal can be substantial.

Finally, another benefit is due to low interest rates, sellers can get a higher rate from a buyer than they could from a traditional financial institution.

What sellers need to realize is that just like there are risks with owning their own business, there are risks with selling it.  Similarly, just like they can minimize their risks when starting a business, they can also minimize their risks when selling it.

Securing the services of a good business broker to help the seller navigate through these issues can be good preventative medicine. Although there are no guarantees, a combination of recommendations from a qualified facilitator will structure the transaction to ensure that potential potholes are covered.

Do you have small business questions you would like answered about this article or others?  Please visit www.VRWindsor.com or call 519-903-7807. 

William Sivell is a sales representative of VR Windsor Inc., Business Brokerage; his blog appears every Tuesday.

Tip for sellers with special relationships with customers

Special relationships that business owners have developed with customers can be a real issue when selling the business.  A new owner may have a problem continuing that relationship and this could jeopardize the sale of the business,  It is recommended that business owners begin delegating any special relationships with customers to other company employees as soon as possible.

Do you have small business questions you would like answered about this article or others?  Please visit www.VRWindsor.com or call 519-903-7807. 

William Sivell is a sales representative of VR Windsor Inc., Business Brokerage; his blog appears every Tuesday.