02 May Around the Web: A Week in Summary
A recent article from BizBuySell entitled “Small Business Sale Prices Reach Record Highs to Start 2018” summarizes the results from their First Quarter 2018 Insight Report showing a record-breaking quarter for the business-for-sale market. The report showed strong business-for-sale activity in the first quarter of 2018 with the highest sales prices since BizBuySell started tracking data in 2007.
Median cash flow also increased by 2.3% since this same time last year and 72% of business owners believe financials will continue to increase in 2018. Another increase realized is the number of businesses sold in the first quarter of 2018 which was 13.1% higher from last year. The industries that experienced the most growth were the restaurant and manufacturing industries, while the region that showed the biggest increase in transactions was the Midwest.
Overall, the results of this report confirm that we are still seeing the small business market continue to grow in 2018 and business owners and business brokers are optimistic for the trend to continue. Buyers and sellers should pay attention to tax reform and other factors in the economy, but based on the data it appears the momentum of 2017 will continue well into 2018.
A recent article posted on the CBB Blog entitled “Overcoming Declining Revenue Trends When Selling a Business” explains how to keep your business in growth mode even when you’re in the sale process. If the business is seeing a declining revenue trend, a well-defined explanation of the reasons for this may help lessen the impact it has on the final sale price.
Here are 5 things you can do to highlight the positives over the negatives and get the best possible price for your business despite declining revenue:
- Target buyers that have the skill set needed to turn the business around
- Emphasize the benefits of having a full-time, focused owner
- Formulate a Growth Plan
- Address the concerns that buyers will have about declining revenue with potential solutions
- Be open to the possibility of an earnout
A recent article posted by Vegas Inc entitled “Business owners’ exit strategy shouldn’t start with a for-sale sign” describes how business owners should start thinking about an exit strategy as soon as they open their business. If the business cannot run smoothly when the owner goes away on vacation, then the following checklist will be helpful in preparing a business before it goes up for sale.
- Keep clean financials as this is the first thing potential buyers will look at to determine the stability, value and growth potential of the business.
- Have a good leadership team in place to show that the business can operate when the owner is away.
- Minimize risks and fix any problems in areas such as customer concentration, cybersecurity, improper branding, legal issues, etc.
- Determine the most valuable part of the business so you can show potential buyers something they can’t purchase anywhere else, such as a creative culture or streamlined workflow process.
- Make sure the owner is personally ready for the business sale and that they know what is needed financially for the next stage of their life.
Having an exit strategy requires a lot of planning and if there isn’t a plan, then the business is not ready for sale and the deal could very well fall apart.