There is the old anecdote about the immigrant who opened his own business in the United States. Like many small business owners, he had his own bookkeeping system. He kept his accounts payable in a cigar box on the left side of his cash register, his daily receipts – cash and credit card receipts – in the cash register, and his invoices and paid bills in a cigar box on the right side of his cash register. When his youngest son graduated as a CPA, he was appalled by his father’s primitive bookkeeping system. “I don’t know how you can run a business that way,” his son said. “How do you know what your profits are?” “Well, son,” the father replied, “when I came to this country, I had nothing but the clothes I was wearing. Today, your brother is a doctor, your sister is a lawyer, and you are an accountant. Your mother and I have a nice car, a city house and a place at the beach. We have a good business and everything is paid for. Add that all together, subtract the clothes, and … [Read more...]
Selling Your Business? Expect the Unexpected!
According to the experts, a business owner should lay the groundwork for selling at about the same time as he or she first opens the door for business. Great advice, but it rarely happens. Most sales of businesses are event-driven; i.e., an event or circumstance such as partnership problems, divorce, health, or just plain burn-out pushes the business owner into selling. The business owner now becomes a seller without considering the unexpected issues that almost always occur. Here are some questions that need answering before selling: How much is your time worth? Business owners have a business to run, and they are generally the mainstay of the operation. If they are too busy trying to meet with prospective buyers, answering their questions and getting necessary data to them, the business may play second fiddle. Buyers can be very demanding and ignoring them may not only kill a possible sale, but will also reduce the purchase price. Using the services of a business broker is a … [Read more...]
Rating Business Buyers in Today’s Market
Making the initial decision to sell is tough, but once that decision is made, there are many diverse options. Small businesses are more sophisticated than ever, and the individuals purchasing these businesses are complex and come from varied backgrounds. Here is an overview of the most active categories of business buyers in today's market: Groupings of Family Members People within a business owner’s own family often opt to buy the family business. In fact, this stands as one of the more common types of small business buyers. One reason is that business owners are more comfortable with a relative taking over the prized business, as they often built it up from nothing. Quite often the family member looking to take over the family business has been carefully groomed and tested over the years to ensure that he or she is ready to be the true "heir apparent." In this kind of situation, the family member truly is the best person to buy the business. However, there is a downside. … [Read more...]
Want to Sell your Business? Preparation is Crucial
Article by: Alan Brind, President Business Brokers New York LLC In our experience the majority of business owners are inadequately prepared when the time comes to sell their business and transfer ownership. But, the way to ensure that the business owner maximizes the value of their business and minimize the objections raised by a potential buyer is to have squeaky-clean financials. Starts with the Financials When a potential buyer becomes interested in your business, their first port of call is to examine your financials. This is an opportunity for you “the business owner” to create a favorable impression and set the tone for the buyer’s whole experience in dealing with you as the seller. An astute buyer will often have a cadre of professional advisor’s, the most notable in the early stages of discussions with the seller, is his accountant. Any CPA worth his salt will scrutinize your financial statements, with particular attention being paid to the balance … [Read more...]
What Does a “Unique Business” Mean?
Quite commonly, business owners feel that their business is unique, but is it really? There are a variety of different ways that businesses can be unique. Yet, there are some key variables and factors that simply must be in place if a business is to be simultaneously unique and valuable. This leads us to an important question, are these unique and valuable factors transferable to a new owner? Here are five key factors to look for in a business. Factor One-The Assets Having an intangible asset, such as the perfect location with a locked in long-term lease (which would, of course, transfer to a new owner) is of vital importance. However, this is not the only example of critical intangible assets. Other examples would include a robust mailing list of past and current clients that was built up over a series of years, a popular franchise relationship, trademarks and copyrights or a respected and known product line. Factor Two-Is the Business Easily Replicated? If a … [Read more...]
Who Are Potential Buyers?
Once a business owner has made the decision to sell, he or she should be aware of the variety of possible business buyers. Just as small business itself has become more sophisticated, the people interested in buying businesses have also become more divergent and complex. The following are some of today's most active categories of business buyers: Family Members Members of the seller's own family form a traditional category of business buyer – a category of buyers that is “tried” but not always "true." There is something appealing about a family member taking over the business. There is a sense of keeping the business in the family and an assumption that such an arrangement will translate into the prime advantage of continuity. Continuity may in fact be the result as long as the family member buying the business treats the role as something akin to a hierarchical responsibility. This can mean years of planning and diligent preparation, involving all or many members of the family … [Read more...]
Reuters: Some small business owners see ’12 as year to sell
By Deborah L. Cohen CHICAGO | Thu Jun 28, 2012 2:43pm EDT (Reuters) - Jim Angleton did not plan on selling his small financial services business this year, but when a foreign buyer approached with the right offer he went ahead without regrets. "There's uncertainty moving forward," said Angleton, 56, who sold a unit of his Miami-based company, AEGIS FinServ Corp, which issues debit and credit cards to U.S. government employees working abroad. "Tax rules are constantly changing and they don't make sense. This time next year I'll probably be thankful I did this." Like many small business owners, Angleton cited jitters about the future of U.S. tax policy and an uncertain regulatory environment that could affect his company - specifically, the Dodd-Frank Wall Street Reform and Consumer Protection Act which entails tighter controls over banks and financial services providers. Such worries may be one reason why business brokers say they are fielding more calls this year from the … [Read more...]
Why Sell?
There are a number of different reasons why selling a business can be an emotional event. The business may have been in the owner’s family for generations. The owner may have built it from scratch or bought it and then poured the necessary energy into it to grow it into a successful, profitable business. For these and many other reasons, “seller's remorse" is actually one of the major causes of a deal falling through. However, despite the emotional ties to a business, there are times when selling is the best course to take. Here are just a few examples of those times. Burnout According to industry experts, burnout is a major reason owners consider selling their businesses. Over time, the long hours and 7-day workweeks can take their toll. On the opposite end, business owners who thrive on challenge may get to the point that the business has just become boring - the challenge of creating it or growing it has been replaced with the mundane daily activities of running it. Losing … [Read more...]
Rating Today’s Business Buyers
Once the decision to sell has been made, the business owner should be aware of the variety of possible business buyers. Just as small business itself has become more sophisticated, the people interested in buying them have also become more divergent and complex. The following are some of today's most active categories of business buyers: Family Members Members of the seller's own family form a traditional category of business buyer: tried but not always "true." The notion of a family member taking over is amenable to many of the parties involved because they envision continuity, seeing that as a prime advantage. And it can be, given that the family member treats the role as something akin to a hierarchical responsibility. This can mean years of planning and diligent preparation, involving all or many members of the family in deciding who will be the "heir to the throne." If this has been done, the family member may be the best type of buyer. Too often, however, the difficulty … [Read more...]
Why Sell Your Company?
Selling one's business can be a traumatic and emotional event. In fact, "seller's remorse" is one of the major reasons that deals don't close. The business may have been in the family for generations. The owner may have built it from scratch or bought it and made it very successful. However, there are times when selling is the best course to take. Here are a few of them. Burnout - This is a major reason, according to industry experts, why owners consider selling their business. The long hours and 7-day workweeks can take their toll. In other cases, the business may just become boring - the challenge gone. Losing interest in one's business usually indicates that it is time to sell. No one to take over - Sons and daughters can be disenchanted with the family business by the time it's their turn to take over. Family members often wish to move on to their own lives and careers. Personal problems - Events such as illness, divorce, and partnership issues do occur and many times force … [Read more...]
