4 Oversights That Make Your Business Less Valuable

Don’t wait until you decide to sell. Set your business up right with these critical steps

We've all heard at one point or another that in order to get the best price for your business, you should maximize sales, identify new growth opportunities, build cash flows, differentiate between your key competitors, and minimize the owners role.

Taking these steps improves management practices, and can improve the desirability and marketability of your business.

But there are other critical steps that, if overlooked, may cause your ideal buyer to discount the selling price, or worse, simply walk away.

1. Transitional training

If you've set a hard and fast end date you may alarm quality buyers.

No one knows more about your business than you. Buyers assume that the outgoing owner will assist in training and the transition of leadership with current staff, suppliers and customers.

Buyers get scared off when the training doesn't match up with the complexity of the business and the experience they bring to the table. Ask your prospective buyer up front about their expectations—and try to understand why they're worried. Share your experiences with training new incoming employees in the past, as this is often an indication of the learning curve.

If you're open-minded and realistic you'll settle on a training period both parties are comfortable with.

2. Cash deals

You need to show all your results on the books and be open, honest and accurate about all things.

Growing up I could never figure out the saying, "You can't have your cake and eat it too." It was only recently, when I met a retailer who was experiencing double-digit growth for years but not showing it on the books, that I came to understand the saying.

He was disappointed that he could only secure an offer based on his "official" books, not the dusty ones he kept in the credenza behind the desk. Not to mention the line-up of buyers who quickly passed on the deal, wondering what else wasn't recorded on the books.

Buyers don't trust results they can't verify. The documented financial performance of the past three year's cash flows will be the basis from which price and terms are determined.

If the results on the books won't get you the offer you want, you may want to think about whether now is the right time to sell.

3. Lack of a long-term lease

If location is important to your business, you should secure a long-term lease before selling.

The lease terms can be a major consideration for a buyer. A restaurant with a long-term lease on a good location can be attractive. Plus, an expiring lease could spook buyers worried about possible rent increases.

On the other hand, a long-term lease can be a detriment for a business that needs more space to grow. When it comes time to negotiate a new lease, think carefully about your plans for growth and expansion, your marketing strategy, operating costs AND potential plans for exiting the business. Preplanning in advance can go a long ways towards a successful transaction.

4. Failure to diversify

Buyers know the impact of losing a customer that represents 20% or greater of your overall sales could be devastating. Yet, a lot of companies do have a single customer or a few large customers that dominate their overall sales. Nobody wants to turn down business! But when it comes time to sell the company, this becomes a huge problem.

Find a way to diversify your customer base BEFORE you ever decide to sell their business—a few years in advance.

Start by nurturing the relationships with current customers who represent a much small percentage of your overall business. Generally a small volume increase with a handful of good smaller customers will mitigate the impact of one large customer.

From budding entrepreneurs to sophisticated strategic acquirers, the opportunity to buy an existing company can be very rewarding. It can also be very frightening. That's why it's so important not to spook quality buyers. Even when everything is set up properly, it can be months before you attract the ideal buyer with the finances and skill sets necessary to buy your business. The last thing you want is lose the sale because you overlooked something that you could easily have addressed ahead of time.

Do you have a small business question you would like answered about this article or others?

Bill Sivell is a Business Broker with VR Windsor Inc., which sells businesses to buyers across Canada and around the world. His 14-year career includes diverse senior management positions in marketing, advertising, sales management and operations management. He blogs about selling businesses at Maxbizvalue.blogspot.ca

 

 

Critical Questions to Ask Before You Buy a Business

If you are considering a decision to buy a business, and you just so happen to have found the perfect opportunity here are a few questions to help to ensure that you will be happy with your decision.

The broker will set up a meeting with the seller once you select a business you are interested in. This will give you an opportunity to speak candidly with the seller and find answers to your questions.

A popular question you may consider asking is, “why are you selling”. Ensure you are comfortable the answer, make sure it is honest and consistent.  This will put you in position to dive much deeper into the interview.

You will ALSO want to ask questions about:

The product and service mix, are there opportunities for additional services or new products in the pipeline with the existing customers?

The customer mix, do they have any 1 customer that represents greater than 10% of the overall gross sales?

The competitive environment, who is the largest/strongest competitor, what is your competitive advantage?

The key employees, what is the role of the owner and which employees are critical to the operation of the business?

The cash flows, how do you bill customers, up front, during or after a project is complete?

The sales and marketing, what is the current strategy, are there any changes necessary in the future.

Just to name a few.

If you are still interested in purchasing the business after a discussion with the owner, the broker will help you draft an offer based on the price and terms you feel are appropriate.

The legal language that makes up a professional business brokers letter of intention will be thorough. In fact, two of the most important clauses in our Offer make the transaction contingent upon your lawyer reviewing the legal language of the Offer and your accountant's analysis of the seller's financial statements.

Once these contingencies have been satisfied, the broker will carefully manage the rest of the transaction to make sure that all the conditions of the Offer are satisfied through the closing.

Do you have a small business question you would like answered about this article or others?

Bill Sivell is a salesperson with VR Windsor Inc. [www.vrwindsor.com] 519-903-7807, which sells businesses to buyers across Canada and around the world. His 14-year career includes diverse senior management positions in marketing, advertising, sales management and operations management. His blog appears every Tuesday.

 

The Hard Truth: What Your Business is REALLY Worth

The danger in thinking your business is worth more than it is—plus tips to increase its value

Equipment and inventory are tangible assets required to generate sales and earnings. They are certainly critical to many business operations. But when it comes to determining a business' value, the hard truth about hard assets is that they make no difference.

What really matters is the cash flow generated from these and other operating assets. Yet, so many business owners believe there is some mysterious process that will allow them to add the value of these assets to their grand total when it comes time to sell.

The danger with setting an inflated asking price is that your business may be passed over by good, qualified buyers. The longer it its on the shelf, the less appealing it becomes. You also open yourself up to experienced buyers leveraging an inflated price to get the upper hand during the negotiating process.

Why the "add on" philosophy doesn't make sense

Consider the following examples of two businesses.

The first is a trucking company with $500,000 in trucks and dispatch equipment, all of which it needed to run the business. The second is a roofing company with a small number of employees and only $45,000 in inventory and equipment.

The trucking company generates $200,000 in cash flow, whereas the roofing business earns $800,000. Even though the trucking company has more hard assets, most buyers would find the roofing business much more attractive because of its far stronger cash flow.

Proponents of the "add-on" philosophy would argue that if the above two businesses each had a cash flow of $300,000, the trucking company would justify a higher price. But this doesn't make good business sense. Ask yourself, would you pay more for the same level of earnings?

Knowledgeable buyers are interested in cash flow and cash flow alone. They will insist that the assets needed to generate that cash flow are included in the sale price.

The level of inventory will have virtually no impact on value. Business owners often try to rationalize this "add-on" logic because their inventory fluctuates throughout the year. Unfortunately, this method increases the risk for any given business. The inventory at closing may not be enough to support the cash flow, thus requiring the buyer to invest within to support the business.

At best, adding inventory to the price of a business increases the risk that the buyer won't get their expected rate of return on their investment. At worst, this method could lead to business failure because the firm will be undercapitalized and unable to acquire additional funds to buy the necessary inventory.

The reality for many businesses is that there aren't significant variations in the amount of inventory that they carry throughout the year. Those businesses that do tend to see those fluctuations only during a few months of the year, such as holiday seasons. It's not that difficult to determine the inventory that should be included in the price to support the annual gross sales and cash flow.

Exceptions to the rule

There are some situations in which assets are considered in valuing the business. Equipment, inventory and other assets are considered when a company is being sold under less-than-ideal conditions, such as when it has no profits or cash flow. In those cases, assets would be used to determine the value of the business. Problems then arise in establishing the worth of those items. Typically, buyers aren't interested in these businesses because the seller already has proven that the company hasn't made a profit.

But for the most part, cash flow is crucial to building value.

Three ways to increase cash flow

1. Stay active and focused: Countless owners have watched profitability slip away as they became more interested in the next stage of their life. Get active in the development of key employees, because they will be the catalyst for driving sales, operational efficiencies and customer satisfaction. Plus, stay focused on limiting your role in the day-to-day operations of your business. The less customers need you personally, the better the chance for growth.

2. Build a bigger mousetrap: Size matters. Find ways to add sales volume. By opening new geographic markets, you may be able to take advantage of organizational synergies and build a larger volume of customers and sales. Alternatively, look to introduce new products or services you may sell to existing customers and build some depth with folks with whom you already have a relationship. Finally, similar to many businesses, you may find building market share by adding new customers as the most logical step for sales growth.

3. Operate on the cheap: There is little glory in finding more cost-efficient ways of doing things, but these often deliver the quickest road to prosperity. You should regularly review and challenge your suppliers to ensure you're getting competitive pricing in areas such as rent, insurance, utilities, wholesale goods and office supplies. Remember: a dollar saved on operating expenses goes directly to cash flow.

Buyers are looking for businesses with positive cash flow. By focusing your efforts to build value through improved cash flow, you will improve the day-to-day operation of your business, enjoy a higher selling price and improve the likelihood of a successful transaction.

Do you have a small business question you would like answered about this article or othersBill Sivell is a Business Broker with VR Windsor Inc., which sells businesses to buyers across Canada and around the world. His 14-year career includes diverse senior management positions in marketing, advertising, sales management and operations management. He blogs about selling businesses at Maxbizvalue.blogspot.ca

 

3 Reasons Why Buyers Should Use a Business Broker

Many have felt the desire to do something entrepreneurial. There are 2 distinctly different paths to follow – start a business from scratch or buy an existing business.

Fortunately for business brokers many of these individuals are aware of the national statistics that are stacked against the likelihood of developing a successful start-up.

By purchasing an existing business, a buyer can dramatically minimize the risks associated with starting a brand new business. And, a professional business broker can be helpful in many ways including finding and executing on a successful transaction.

Serious Sellers:

Sellers who have listed their business with a broker are serious about selling. This eliminates wasted time dealing with owners who are not motivated to sell. Many business owners started their business to someday sell it, so they may be open to the inquiry. Flushing out the truly motived seller is a process a broker spends a great deal of time perfecting.

Variety of Inventory:

A professional broker will have many different types of businesses for sale, many of which you may not be aware of. Many prospective buyers don’t know what they want, but absolutely know what they don’t want. By working with a broker with an inventory of available business buyers are able to shop the market to determine what is the best fit for your skills and interests.

Valuable Information:

Brokers know the information you need to make an informed decision. Brokers maintain up-to-date information, signed and dated by the seller. They organize their files to be able to address just about every question imaginable, they store facts and data directly from the seller and they are quickly able to work through a business’s profile. Brokers and buyers equally value their time and will put information in play to make sure you hone in on the business that is ideal for you.

For many buyers, the process of purchasing a business is not a familiar process. A broker will be able to help guide you through all the steps and intricate procedures associated with buying a business. This will allow you to concentrate on getting ready to successfully operate your new business.

Plus, they will also have checkpoints along the way where you may bring in other advisors to help you analyze contracts and financial data.

An informed buyer is much more likely to successfully buy a business. Professional business brokers employ numerous procedures that eliminate many of the risks involved in buying a business.

Do you have a small business question you would like answered about this article or others?

Bill Sivell is a salesperson with VR Windsor Inc. [www.vrwindsor.com] 519-903-7807, which sells businesses to buyers across Canada and around the world. His 14-year career includes diverse senior management positions in marketing, advertising, sales management and operations management. His blog appears every Tuesday.

 

Buyers and Sellers Usually Have a Different View of Value

Most business owners think their business should be priced more than it’s worth – mainly because of all of their hard work over the years.

What they need to realize is there are certain economics and realities that dictate the price.

Besides the various methods of business valuation, the cash flow ultimately must provide the new owner a return on cash investment, ability to service debt and a reasonable salary for the owner and/or manager.

One of the most effective methods of getting to this number is the “cash flow” method, which takes the business’s net profit and combines it with the owner’s salary and personal perks. Plus interest and depreciation. Buyers are typically comfortable with this method because when they are buying a business, what they are really buying is its cash flow.

What can be a challenge is to agree on a multiplier that both the buyer and the seller are comfortable with. To illustrate, consider a recent business deal where the seller was marketing his advertising business that was cash flowing $300,000 for $750,000 which represents a 2.5 multiple of cash flow. The Buyer was prepared to pay a 2.2 multiple for cash flows which would result in a sale price of $660,000. You can see a small variation in multiple can have a dramatic effect on value.

What is common is neither side is necessarily incorrect in their analysis. The seller appropriately considered their diversified customer base, key personnel, market share and longevity in the market place. The buyer correctly reviewed the level of cash invested and rate of return on alternative investment choices, the cost associated with the transition and the type of industry.

In this case there are many ways to bridge the gap, however, too many business owners find major disappointment because the marketplace has not accepted their asking price. They must remember the value of their business is what a buyer is willing to pay and they are willing to accept.

Do you have a small business question you would like answered about this article or other

Bill Sivell is a Business Broker with VR Windsor Inc., which sells businesses to buyers across Canada and around the world. His 14-year career includes diverse senior management positions in marketing, advertising, sales management and operations management. He blogs about selling businesses at Maxbizvalue.blogspot.ca

 

Good Profit Margins Are What It's 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.

 

Too many personal expenses will impact credibility

Burying your personal expenses so deep in your corporate statements will make it difficult to find for everyone…. including the bank and business buyers.

You’re not alone, minimizing tax liability is a strategy all business owners think about.

When it comes time to obtain financing or sell the business, buried personal expenses and assets can create a problem in determining the true cash flow.

Consider a recent seller who watched as countless qualified buyers walked away from their interest into his business when they discovered personal Brazilian courier expenses in his local retail hardware store.

Imagine how suspicious buyers became when they discovered a large local printer described her many Meals and Entertainment Expenses as personal in nature despite playing a large front-line role in the sales of the corporation.

Buyers and bankers won’t always give credit to many of these items. As a result, the cash flow can be suspect, and when you apply a multiplier to determine the value of the business, the results can be disappointing.

Plus, the underlying credibility of the seller may be jeopardized which can derail an agreement with a buyer before the train ever leaves the station.

 It is in the best interest of the business owner to show a healthy bottom line and minimize the burying of personal expenses in the years preceding the sale of their business. They will find they’ll improve the likelihood of selling at the highest price and improve the probability of a successful transfer.

Do you have a small business question you would like answered about this article or others?

Bill Sivell is a salesperson with VR Windsor Inc. [www.vrwindsor.com] 519-903-7807, which sells businesses to buyers across Canada and around the world. His 14-year career includes diverse senior management positions in marketing, advertising, sales management and operations management. His blog appears every Tuesday.

 

Get Your Credit Report Before You Buy

Many have felt the desire to do something entrepreneurial. Few prospective business buyers take the time to map out a plan that will improve the probabilities of a successful business transfer.

By purchasing an existing business you can dramatically increase your chances 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 you will need to take an honest inventory of their skills, knowledge and interests. You need to truthfully catalogue skills and talents that can be incorporated into a business.

Plus, you will need to know how much money you are prepared to invest and how much you expect to make. Typically, these two amounts are directly related to one another.

Part of this exercise is getting a solid understanding of your credit score. Whether your eventual purchase includes all cash, Vendor financing or Third Party financing your credit report will inevitably be requested. Knowing ahead of time the information is accurate can make or break a business transaction.

A recent article in the Windsor Star by Ellen Van Wageningen http://www.windsorstar.com/Check+your+money+report+before+others/8073031/story.html provides some great insight and information to consider before you buy a business.

At this point, don’t be too concerned if you’re unable to identify exactly what type of business you’re looking for. The more focused and realistic you are in your personal review, the more attentive you can be in identifying attractive business opportunities and eliminating businesses you’re not interested in.

Having a plan for executing a successful business transfer will help you stay on track, allow you to dedicate the time and energy necessary, and get you a successful business that is ideal for you. 

Do you have a small business question you would like answered about this article or others?
Bill Sivell is a salesperson with VR Windsor Inc. [www.vrwindsor.com] 519-903-7807, which sells businesses to buyers across Canada and around the world. His 14-year career includes diverse senior management positions in marketing, advertising, sales management and operations management. His blog appears every Tuesday.

 

How the Sale of a Business Can Go Off the Rails

Some business sales unravel because of the seller, others because of the buyer and even more due to third parties. The reasons are numerous—but most can be resolved

Like many negotiations in life, business transactions require a willingness to consider the other party’s concerns. If there is no sincere motivation on the part of both the buyer and seller of a business the likelihood that it will fail increases dramatically. There are a number of reasons why. 

Sellers may be the cause…

Some sellers do not have a reason to sell and are merely testing the waters to see if anyone would purchase their business and at what price. Because they are not legitimately interested in selling, they’re not willing to consider the buyer’s concerns or to be flexible enough to overcome the many complexities involved in the transaction.

Even when owners are motivated to sell, there can be problems if they are unrealistic about the value of their business or don’t want to offer seller financing. In either case, credible and legitimate buyers will be lost instantaneously. Unfortunately, some business brokers add fuel to the seller’s cause by sharing with them unreasonable expectations, often in an effort to secure a large upfront non-refundable fee.

Some sellers fail to be honest about their business or its situation. They will misrepresent the financial condition of the business or may not disclose the real reason for selling. Even if the error is not intentional, the sudden appearance of inaccurate information can scare off the most sincere buyer.

If you are a seller:

• Be open, honest and accurate about all things, both good and bad.
• Be prepared with financial documents that are up-to-date and accurate.
• Be ready to articulate your reason for selling. Be honest and hopefully not urgent.
• Get legal commitments in order, such as leases, permits, and contracts.
• Get an objective, impersonal review of your business and its market value

Buyers may be the cause…

Buyers often exhibit many of these same tendencies. They may have unrealistic expectations regarding the price of a business. Or they may have an urgent “need” to get a business but lack the courage to take the leap of faith necessary to go through with the acquisition.

Some buyers have experienced a recent financial setback that impacts their ability to meet their financial obligation as part of the deal. I faced this situation recently when a large deal fell apart after the buyer was unexpectedly served with divorce papers.

If you are a buyer:

• Be open and honest about your skills and competencies.
• Create a personal financial statement and understand your current financial standing.
• Get comfortable with the amount of investment you’re willing to make, and stay within your financial risk tolerance.
• Share your acquisition intentions with your personal stakeholders before you start looking.

Third parties may be the cause…

Outside influences can also hamper the successful transfer of a business. Landlords may become difficult to deal with when it comes time to transfer a lease or grant a new one. This happened this past summer when a landlord wanted to significantly alter a longstanding lease of a buyer who wouldn’t stand for it. 

Sometimes, both buyers and sellers receive overly aggressive advice from outside advisors. Advisors should always work toward the goal of putting the deal together, not erect roadblocks to derail it. A couple of months ago, a large merger of two leading businesses almost didn’t happen when days prior to closing, an innocent letter from a lawyer almost broke the chemistry between the principals.

Accountants can also influence a deal. For instance, rarely have I met a buyer’s accountant who thought his client didn’t pay too much for a business. Conversely, you’d be hard-pressed to find a seller’s accountant who felt their client sold their business for enough money.

For your advisors to be catalysts behind a successful deal, you should:

·         Ensure your accountant has a history of working with both buyers and sellers; they will need to see things from both perspectives.

·         Confirm your lawyer has experience with business sales of a similar size and nature.

·         Understand how your business broker will be able to manage confidentiality, negotiations and both parties’ advisors.

·         Get your advisors talking and working together.

There can be endless reasons for why a business sale does not successfully close, most of which can be mitigated with some thoughtful planning and understanding. Most importantly, they can all be resolved when the parties at the table are motivated to execute a deal. Whether you’re a buyer or seller, start managing these common issues before you get involved in any negotiations and you’ll be on your way to an outcome all parties are happy with.

Do you have a small business question you would like answered about this article or others

Bill Sivell is a Business Broker with VR Windsor Inc., which sells businesses to buyers across Canada and around the world. His 14-year career includes diverse senior management positions in marketing, advertising, sales management and operations management. He blogs about selling businesses at Maxbizvalue.blogspot.ca

More columns by Bill Sivell

5 Ways to Sell Your Business Faster and for More Money

It’s no secret that some businesses are in greater demand than others. The trick is to understand why, and model your business around those characteristics.

When a business is more marketable it means they will typically sell more quickly and the seller will receive a better price. 

Most business do not possess all of the characteristics of a marketable business since you could probably create a list of 50 or more items to consider.  The key is to focus on those characteristics that have the greatest impact.  Here 5 keys to marketability:

1.    3 Years of Growth.  Not only is it important to have financial records that are up-to-date and accurate; a key indicator of success is the most recent trend of sales and profitability.  If one or both are not trending up, you’ll need to put steps in place to turn that around, or you’ll likely find low interest and downward pressure on your business value.

2.    Too dependent on the owner. The more customers need you and ask for you personally, the harder it is to grow your business and less valuable your company will be. Business owners who do not delegate need to make a strong effort to have experienced people in place before they ever try to sell their companies. 

3.    Your equipment is in good condition. There is little question that buyers of businesses are looking for good, positive cash flowing businesses.  They also realize that in order to sustain a level of cash flow a business has historically achieved they will likely need to continue to maintain and invest in Equipment.  Businesses that require an immediate investment to improve and upgrade Equipment will find Buyers looking to discount value to compensate for that investment.

4.    Diversification of Customers.  Any 1 customer representing more than 10% of sale increases instability which increases risk in the Buyers eyes.  Buying businesses is risky and that risk is exaggerated if there is fear that a failed transition with one customer could result in a drop in sales of greater than 10% of the overall sales. The better you are able to diversify your client base the more like you can mitigate the risks associated with buying your business.

5.    Size Matters.  The “Small Company Discount” is the perception that smaller companies are riskier than larger businesses because they have not found a way to grow beyond the efforts of the owner and therefore are reliant on the owner. While growing for the sake of growth is not wise, finding ways to either develop more customers, or sell more things to your existing client base will improve marketability.

When selling a business it must look good in as many areas as possible.  Although preparation might seem time-consuming, many owners find that working on the above keys to marketability not only improves the desirability and value of their business, it can improve their management practices as well. Plus, when a buyer makes an accepted offer, the aforementioned preparation can help the deal close quicker.

Do you have a small business question you would like answered about this article or others?

Bill Sivell is a salesperson with VR Windsor Inc. [www.vrwindsor.com] 519-903-7807, which sells businesses to buyers across Canada and around the world. His 14-year career includes diverse senior management positions in marketing, advertising, sales management and operations management. His blog appears every Tuesday.

 

Oh, it's just a Closet!

The skeletons will have to come out at some point.

Whether applying for a loan or selling the company, business owners must be prepared to disclose EVERYTHING.

Some popular ‘skeletons’ the find their way to the forefront are:

·         Outdated Inventory – obsolete or redundant inventory only artificially inflate your balance sheet.  They do not necessarily add value to your business.  Cleaning and purging on a quarterly basis is a good way to stay on top of this measure.

·         Obsolete Technology – every industry is different, but it’s important to regularly be reinvesting in your business.  Tradeshows, suppliers and trade publications are great sources for information on the latest and greatest technology in your field.

·         Largest Client that just Closed – if you have any customer that represents greater than 10% of your overall gross sales you run the risk of dramatically affecting your profitability and business value. Diversification is the key to long term stability.

·         Key Employee who just Quit – Do you perform regular performance evaluations, do you stay on top of industry trends for wages and benefits, are you continually motivating and challenging your top people?  For key people remuneration levels are important, but often times they are motivated by other factors like workplace culture, challenging work, effective leadership, learning opportunities, internal relationships, etc.

When selling a business it must look good in all areas.  To not be disappointed, business owners must plan, address weaknesses, and be realistic in their expectations if they don’t have solutions.

Do you have a small business question you would like answered about this article or others?

Bill Sivell is a salesperson with VR Windsor Inc. [www.vrwindsor.com] 519-903-7807, which sells businesses to buyers across Canada and around the world. His 14-year career includes diverse senior management positions in marketing, advertising, sales management and operations management. His blog appears every Tuesday.