Tag Archives: small business owner

A Word on Buying or Selling a Business

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Considering Buying or Selling a Business?

 Taxes Transition Risk Future Asset List Owner Benefit  Working Capital License transfer CHANGE Liabilities  Seller Financing SBA,  Trucks, Intellectual Property EBITDA Cash Flow Inventory Debt Depreciation Goodwill  Money  Customer Base When to Tell Employees    Balance Sheet             Business Broker  Attorney  How?    Accountant    Marketing  Adjusted Net  Non Compete     Negotiation  Training  Management  Offer to Purchase  Confidentiality Lease  Accounts Receivable    Franchise Valuation Multiples   NDA      Revenues             Net Income  Depreciation   Earnout  Closing Agreement  Job  Deposits  Employees Trademarks       Fear       Trade Name Retire  Security     Promissory Note  CPA     Personal Guarantee Timing Work UCC  Family Business  Exit Plan   Website   When?  Partner      S-Corp  Clients    Relationships  Price    Payment     real estate  Assignment  Plan    Help!   

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Exit Strategy for your Business

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Exit Strategy for your Business

There are several ways one may exit their business. Business Owner NEED an exit strategy.   Business Owners may want to exit a business they have owned for decades just because they just no longer have an interest.  Or a small business owner may “get out of their business” after a short period of time of just owning it a year or 2.  I am a Business Broker based in Anderson South Carolina and and assist business owners with this very important decision. Most business owners lack an exit strategy

Most all entrepreneurs and small business owners  think long and hard before they decided to buy a business or start a business.  So often so little thought goes into an exit strategy.

A small business can also be and usually is one of the largest asset a small business owner may own.  It can be a passion but it also is an investment. A significant investment.  Most investments one enters into an exit strategy should exist before the investment is made.

You buy a commercial property to rent out with the intention to rent it for 10 years, hope for market appreciation and  plan to sell in 10 years. You have an exit strategy

You buy a stock.  You buy at $10 a share and plan to sell if stock goes to $15  (unless the company fundamentals change). You have an exit strategy.

You decide to start or buy a business, it gets going and does well- is your plan just to run it forever? Well you cant, because none of us are here forever.Greenville Business Broker

 

These are a few methods a small business owner may utilize to exit a business.  Some are good, some not so good.

The Good, the Bad and Ugly Ways to Exit Your Business:

  1. Sell at a Gain/ profit- can include “merger with other companies
  2. Sell at Loss
  3. Close your doors-bankruptcy, long term negative cash flow.
  4. Poor Health, Significant Injury, Death
  5. LBO (Leveraged Buy Out)
  6. Successfully grow it to such a size and take it public
  7. leave to children

Or some combination of the above- one could die and leave the business to the children

But when you look at the above list you recognize that some of the exit strategies you choose on your schedule and others are “chosen for you” and you have less control over the time frame.

Business Exit Strategy

Emphasize On Making Plans For Your Business

If your plan is to start a business grow and run the business until you are 65 and then sell it- you have a plan, a start towards an exit strategy, and are ahead of most.  It is so easy to start and buy a business and spend a lot of time preparing for that acquisition or start up, then get wrapped up in the transition or start-up, then get wrapped up in the day to day, and then one day you get real sick, and you have no one in your business that knows how to run your business, and laying in bed decide that you may need a plan- it may be to late then.

I am currently a business broker  based in Anderson South Carolina and find my role of meeting with small business owners brings awareness to the need for an exit strategy.  I had owned my own small business for 20 years and realized how ensconced with the day to day one can get with their small business.  There are several ways to exit ones business- I primarily work with small business owners looking to sell their South Carolina or Florida businesses, but observe some of the other exit mechanism and have been personally involved with several of these methods.

 

 

 Your plans can change and often do, but I suggest you plan to have a plan.

For assistance on exit strategy planning and for Free no obligation consultation:

Scott Messinger

Scott@GatewayBusinessAdvisors.com

You Want to Sell Your Business Someday How to Prepare Today

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Every Business Needs an Exit Strategy.  Do you want to Run Your Business Forever?  Do you Want to Sell your business?  Do you want to leave your business to your children?  Do you want to sell your business to Your Employees?  Do you Just want to close your doors and Move on?  How do you want to exit your business ?- And when?

I had a good friend of mine that is a successful business owner contact me about the prospect of selling his business in a few years. He asked me to contact him regarding what he may want to be doing now to prepare his business for sale.  He has a successful growing business, he has grown his number of employees from 10 to 50+ over a 2 year period.  He is effective at gaining new contracts and growing revenue, but like so many  businessmen, he has never attempted to sell his business.  How do you plan to sell your business.

Devising An Exit Strategy For Selling Your Business

Normally during the startup of a new business the thought of an exit strategy is not even a consideration.  Then small business owners get so involved with the day-to day operation of their businesses that again an exit strategy is either not even thought of or possibly just put on the back burner.  Taking some time to put some thought into your exit strategy can go a long way to increasing your odds of exiting your business the way you desire to.

Planning, gaining knowledge, and preparing  may be the 3 most important measures you can take when considering an effective exit strategy.

If your exit strategy involves an interest in trying to successfully sell your business in several years, what sort of measures or actions should a business owner take today make this effort successful:

  1. Make sure your financials are in order. Clean understandable Income Statements and Balance  Sheets will add value to your business.  Unexplained/old accounts, entries, or line items ,  should be addressed and handled.
  2. Systematize and document your operations and procedures.  Well documented policies, procedures and practices are a sign of a well run company and  probably would help your company run better, and add value. If you got hit by a truck tomorrow could someone use your documented practices to help continue run your business?
  3. Move your business towards a business that does not rely on you.  Do your customers do business with your company or do customers do business with you.  When you go to sell your business are you selling a business that is dependent on you the owner or a self-sustaining business based on a solid philosophy, solid customer service and reliable employees and practices. Or when you go away, does your business go away?
  4. Speak to your trusted advisers- let them know your intentions see if  they have any input suggestions that could help move you towards this goal.  Trusted advisers may include your attorney, CPA, financial advisor, business brokers.
  5. Learn by speaking to your trusted advisers what are the most important aspects that affect your business value.  How does one value your business? What is most important to business buyers?-  Your Assets, your cash flow, your sales, your number of customers, your patents, trademarks, your competitive advantage.  Learn what the real driving factors are behind raising the value of your business and work on them. Understand that not all businesses that attempt to sell actually do find a business buyer and sell.
  6. Running your business and concurrently, preparing your business for sale is a viable  approach towards business transition. It is not a” one or the other approach”.  Preparing your business for sale does not need to get in the way of running your business, and most measures improve your business. If you make needed improvements to your business and or operations and decide not to sell your business or exit your business, you still most likely will have a better business on your hands.
Planning to sell your business

For planning purposes try to learn what the potential value of your business may be. Also educate yourself on the business buying or selling marketplace.  It is not always the same.  Selling a business during the 90’s was different than selling a business in 2018 and will be different when selling a business in 2020.

If you think you want to sell your business in 5 years for $1M, attempt to understand what realistically your approximate value may be today.  If your business may realistically only be worth $500,000-  change your expectations,  change your time frame, or maybe more importantly get to work on making necessary changes to your business.

Scott Messinger is a Professional Business Broker working with Business Buyers and Sellers in South Carolina and Florida.  For more information contact Scott at Scott@GatewayBusinessAdvisors.com

Is EVERY Business For Sale at “Right Price”

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As a Business Broker based in Anderson South Carolina and work in both South Carolina and Florida,  I spend ample amount of time prospecting/marketing for prospective business sellers and prospective business buyers. I work with many qualified buyers looking for a business for sale.   I use various marketing methods to market to both buyers and sellers.  While in the process of  prospecting for business owners considering the exit or sale of their business it is not uncommon to hear “I would be interested in selling my business  if I can get the right price”.

Business For Sale – The Right Price

In a past discussion with a business owner- the owner told me he would very much like to sell his business and start a new somewhat unrelated business if the could get the right price for his business.  I then asked what he felt may be the right price and he followed up with “I don’t know”.

South Carolina Business For Sale

Business For Sale

The “right price”  may not equal to the business value, or the price a qualified interested buyer is willing to pay. When looking to put a business for sale understanding value may be the best first step.

For an actual transaction to be consummated,  the right price needs to resemble actual business value.  If the “right price”  is actually 2-3 times what estimated value of the business is, it is probably best for all parties involved to spend their time elsewhere.

But is every business for sale?  What if a “sweetheart deal” is presented to  a small business owner in Anderson South Carolina?  If you had a business that is not “For Sale” , and you know it to have an approximate value of $500k  and someone walked in and made you a cash offer of $800k cash is your business now for sale to that party?

Is now the time to Sell My Business?

From my personal experience of business ownership, I think yes most businesses are for sale if the “price is right”.  But not all businesses.  While owning my previous business in the 10th year  I had gotten a significant offer for the business, but I had long terms plans and  aspirations for the business.  At that point in time I had made several acquisitions and made several other offers on other related businesses and was comfortable with valuations, synergy calculations,  and felt I knew what the value of  my business was.

There was a lot of merger and acquisition activity that was occurring in my industry at that point in time and I was presented with a cash offer from a  very strong company, and was at about a 25% premium to what I and my CPA viewed as current value.  So I had a very strong cash offer from a well qualified business- do you take the money and move on.?

Business For Sale – The Value

In my opinion business values are affected by both  macro and micro economics.  What is the state of the economy, what is the state of the merger acqusition economy and what is the state of your industry/your business?  These elements effect what sort of multiple of cash flow your business may be worth.  If the economy is such that valuations were/are  running high do you look to exit your business because valuations, and or those high multiples may not come around again?

In my situation I consulted with my “trusted advisers” around me my CPA, my attorney, my wife.  Yet ultimately the decision was mine.    My CPA did tell me something that strongly influenced that decision.  He had told me “You,ll know when you are ready”.  It was a great price great offer, but I wasn’t ready and ultimately sold my business 10 years later and got fair value for the business. So is every business for sale if the “right price” comes along.  I think that most businesses are for sale if the right price comes along, but not all businesses.  Are you looking to buy a South Carolina Business or looking to Sell a South Carolina Business?

Scott Messinger

(239) 770-2421 (864) 201-8226

Scott@GatewayBusinessAdvisors.com

 

 

 

Number One Reason For Selling Your Business

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What is Number 1 Reason for Selling your Business

– Thinking about Selling your South Carolina Business?

What is the Number 1 Reason I hear when speaking to Business Owners about selling their business?-  Why are you looking to sell your Business?  — ” Because  I Am Ready”.     For those of you who have owned a business for any period of time this is a response that is fairly easy to understand.

Selling Your Business

 

I am a business broker working in both South Carolina and  Florida (and business owner)  and speak to many prospective buyers and sellers of business and understanding  the “Why” for both parties is so important in assisting the buyers and sellers of businesses.  I really think that most people that have given a fleeting thought to buying a business believe that business owners want to sell their business and therefore something must be wrong with the business.  Actually I am currently working on selling a Landscape Business in Florida.

The business owner has a  good quality business for sale, good cash flow, a comfortable lifestyle.  He has owned the business for x years and is “ready to do something else”.  He will be relocating out of state, he owns a successful business he is looking to sell. Recently we spoke about the potential purchase of another business in an unrelated field and his hesitancy about buying a business because why would someone sell a “good” business- .  And this comment is coming from someone selling a “good business”.

I also am currently helping an owner of a Computer Service Store For Sale who`s revenues are up 30% over last year, Profits are up 20% plus and is seeking to sell his business at less than 1 times annual adjusted cash flow.  He also is anxious to start a new business opportunity with a close friend, and that endevor is awaiting the sale of his business.  A good business at a good price and the owner is “ready to move on”.

Solid Reason For Selling Your Business

What is the number one reason for selling your business?

Good businesses get sold for very good reasons.  Being “ready to do something else” is a good reason.    A seller of a business needs to be ready to sell.  Really- you only really exit your business by 2 means.

1. By your choice-your timeframe, your plan.

2. Not by your choice– closing due to business failure, business conditions, bankruptcy,Forced Sale.

Granted there may be certain undesirable business or personal events that prompts one to “be ready”.  A business owner may have additional employee problems and decide that enough is enough and that is the impetus to sell ones business.  New frustrating regulation, customer problems, and any one of numerous  problems a business owner may face may be  the “final straw” and induce a business owner to pursue the sale of the business.

But again for any  business owner that has owned and managed a business for an extended period of time problems such as these come and go.  Business can be going quite well and the owner may just be ready to move on.  Actually selling a business while the business is doing well is a well thought out exit strategy for a business owner.  And yes problems can and, do come along with the business.  Problems within the business does not make a business a bad business.

A business owner may “just be Ready” to:

  • retire
  • try  something new- a second career
  • want to move or relocate
  • Just be done running the business I have been running for the last 20 years

I am not aware of the existence of a Perfect Business. Even the best of business opportunities will likely contain issues and or undesirable situations.  But if you truly want to own your own business and move into the role of business owner- Understand that good business are being sold by business owners that are just ready…. to move on.

Scott M Messinger is a Business Broker in Anderson South Carolina and Florida as well.  I work with both business sellers and buyers.  Looking to sell your Anderson South Carolina business or Selling your Upstate business?  Contact me for a free confidential discussion.