07 Aug Around the Web: A Week in Summary
A recent article from The Bakersfield Californian entitled “Why most businesses don’t sell and what owners should know” explains the major reasons why 70 percent of businesses do not sell when listed and what business owners can do to increase their chances.
There are many reasons why businesses do not sell. Reasons can range from the business not making sufficient profits to attract a buyer, to the business being too reliant on the owner to run, or a lack of transition plan being in place. A series of guided actions and some planning can better position any business for a sale. The earlier a business begins the planning process, the better. Here are some tips to kick-start the process:
- Clean up your financial statements
- Consider your corporate structure
- Update your estate plan
- Invest in the business
As an owner your goal should be to maximize the value of your business to a potential seller. For assistance in realizing this goal, a business broker or advisor is a great resource.
A recent article from Forbes entitled “Ready To Sell Your Business? Follow These 3 Tips to Find the Best Buyer” provides actionable steps that a seller can take to narrow down the pool of buyers into potentials that match their needs and values.
As a business owner, it is imperative to choose carefully when deciding who, when and how to sell your business. A lack of taking your exit plan seriously can cause unnecessary harm to both your bank account and your ex-business. It’s not always the best choice to jump into a deal with the first buyer who presents an offer. In order to find a buyer who will make an offer that will benefit both you and the future of your company, follow these tips:
- Consider your successor – Make sure you have a solid plan in place to properly prepare the individual taking over your business. Whether a long-term employee, a family member or a third party buyer, you should know ahead of time how you will train them to successfully take over the reins.
- Explore your business broker options – Interview different brokers before choosing to work with one. Get a good idea of how it feels to work with them, what their skill level is, how they intend to market your business and if you feel as though they understand what makes your business valuable.
- Find a prequalified buyer – Before agreeing to any deal, no matter how good it may sound, make sure to confirm that your buyer is good for the money through the proper channels. If you’re financing the deal, verify that your buyer can afford to maintain their end of the deal.
A few months of being picky and putting in the extra effort can save you years of regret in the long run. No matter how tempting it is to run off into the sunset with the first offer that comes by, it pays off to follow the proper steps to selling a business.
A recent blog post from Exit Value Advisers entitled “How do I sell my business fast?” details the business sale process and the time each piece of the process takes to walk the reader through the potential scenarios that would have to unfold in order to sell a business quickly.
A typical business sale from start to finish takes about 1 to 3 years depending on the industry, business and economic conditions. Although it is not unheard of for a business to sell within a few months, it is most certainly not the norm. The most time consuming piece of the business for sale process is often preparing the business for sale. This step involves maximizing profits, cleaning up accounting, creating consistent growth and overall making the business as attractive as possible to a buyer. If a business owner wanted to sell their business in a brief amount of time their best bet would be to come prepared. Implementing a business exit strategy years before any intended sale would position a business for optimal attractiveness and minimal pre-marketing work, thus saving time.