It's better to sell-out than burnout!

The softening of the local economy in the past few years have caused many business owners to re-evaluate how they conduct business, and the amount of time they have to put in it.  A common statement heard these days has been “Business is ok, but I’ve never had to work as hard as I’m working now.”

While I cannot decide for a business owner when they should consider selling their business, I can provide the following advice… it’s better to sell-out than burnout!

The unfortunate result of postponing the sale of your business can be the decision gets made for you.  Poor health, divorce, excess business demands, etc. are very often symptoms of an owner who should have sold but postponed the decision.

The decision to sell is often times the biggest single decision a business owner will make in their lifetime.  Whether it is to retire, relocate or pursue different dreams the decision to sell is both financial and emotional. 

Regardless of the timing I can provide a brief introduction to some questions buyers are asking as they survey the market for the opportunity the suits them best.  They can be important questions for business owners to consider when deciding the best timing for them:

1.    What are the market opportunities for this business?

2.    What makes the business’ product/service unique compared to its competitors?

3.    Is the business dependent on the owner?  If so, what has been done to mitigate this?

4.    What improvements could be made to the product/service to enhance the business performance?

5.    What would have to change to double the number of existing customers?

Too often, business sellers might have been able to secure more for their business if they had operated it a little bit differently.  To have a good chance of getting what they want, sellers should give themselves plenty of time to lay the groundwork for a sale.  This isn’t done in a matter of weeks, but rather months and in many cases years.

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.

Business owners may have to finance the sale of their business

In today’s tough economy, obtaining financing for the sale of a business can be challenging.  Banks might not like the financials or might not be able to supply the funds even if they approved the deal.  If a good qualified buyer doesn’t have all cash, business owners may have to consider providing some if not all the financing for the sale of their company.  Of course there can be risks to seller financing, but there are also potential advantages such as higher sale price, a greater pool of buyers and an easier closing process.

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.

7 Easy Steps to buying a business

Many have felt the desire to do something entrepreneurial. The allure of being one’s own boss can be very rewarding.

By purchasing an existing business you can dramatically increase the probabilities of success.   Existing businesses have a proven track record of profits, they may have a well-known brand, name, location, product mix, etc., and an established customer base for immediate cash flow. 

If you are considering a decision is to buy a business, I can suggest a few things that will help to ensure that you will be happy with your decision.

1.    Take an honest inventory of your skills, knowledge and interests.  Things such as, do you enjoy interacting with people or more comfortable behind a desk?  Do you like being the leader, making decisions and managing people?  Do you have some technical expertise or talents that you can leverage?

2.    Get a solid understanding of your financial situation.  While financing may be available, it is imperative that all aspiring entrepreneurs know how much money they are prepared to invest and how much they expect to make.  Typically, these two amounts are directly related to one another.

3.    Start your search to find the availability of businesses that match your profile.  Scheduling an appointment with a business broker will give buyers a good sense of what is available.

4.    Make an offer.  Once you are focused on a particular business a well written offer will contain all the language necessary to successfully transfer a business while offering a number of conditions that will give the buyer (and the seller) the required safeguards. 

5.    Focus on the issues. When it comes to negotiating, buyers (and sellers) must make sure they focus on the issues that are important to them rather than details that are not critical. 

6.    Do your due diligence.   There is no point in beginning this until the buyer and the seller reach an agreement on price, down payment and terms.  This is the point in time where a buyer’s accountant comes in and verifies the seller’s cash flow. 

7.    Formalize the ownership transfer. The last step in the process is to bring in a lawyer to complete the necessary paperwork to ensure a smooth transition.  This includes lien and title searches, promissory notes, bills of sale, etc. enabling the ownership of the business to change hands. 

With plenty of businesses to choose from in today’s market, it is more important than ever for buyers to make sure that their efforts remain focused on choosing the right business for them.

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.

Leases can make or break the sale of a business!

The lease terms of the business space can be a major consideration for a buyer.  For example, a retail business 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 for an expiring lease when the landlord might demand a large increase.  When it comes time to negotiating a new lease, business owners must carefully think through the timing of their plans for exiting their business.

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.

There's no “one right way” to decide on pricing, but…

A myth often believed by sellers is that if they set their price high, they can always drop it.  When a buyer sees a seller come off their price, they often view it as a sign of weakness and leverage it to get an upper hand in the negotiating process.

Also, think of personal shopping experiences.  Have you noticed how products that have been sitting on the shelf get ratty, dusty and no longer look appealing?  The same thing can happen with a business that has been on the market for a lengthy period of time.

Conversely, buyers need to understand that making a “low ball” offer with the belief that they can always go up may not be the best negotiating strategy.  Although this strategy may be partially true, buyers need to think of the “cost” associated with this strategy.

Making such an offer can create hard feelings and resentment with the seller while eroding the credibility of the buyer.  Since there are many similarities between a business transaction and a marriage, resentment is not a recommended first step in any type of courtship.

When it comes to negotiating, buyers and sellers need to focus on the issues that are important to them rather than details that are not critical.

When both the seller and buyer focus on the issues at hand and stay away from myths, common ground can usually be found that gets both parties what they want.

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.