18 Dec Around the Web: A Week in Summary
A recent blog post from Sunbelt Business Brokers entitled “State of the Market: Selling Your Business in 2020” provides some insight into the current state of the market as well as recommendations for business owners considering selling their business in the coming year.
There are always multiple factors that contribute to the decision to sell a business. Timing and the condition of the market are two factors that play a very heavy roll. With concerns of an impending recession and the upcoming elections, business valuations have begun to drop for small businesses while lower middle market businesses are still seeing higher than normal sale prices. If your business falls within one of the following industries, it may be a profitable time to sell:
- Construction and Engineering
- Biotechnology and Health
Regardless of the market predictions, it’s never a bad time to begin exit planning. Even if your intentions aren’t to pull the trigger on a sale in 2020, reaching out to a business broker to begin assessing your business’s exit needs is always a good thing to do.
A recent article from Entrepreneur entitled “7 Steps to Acquiring a Small Business” details the sequence of events a first time buyer may want to follow in their quest to purchase a business.
No matter what your motivation is for becoming a business owner, there are always multiple ways to come into entrepreneurship. As a beginner, you may not always have the resources you think you need in order to enter the field. However, you may not always need them either. To purchase a profitable business, without spending your own money, follow these tips from an experienced investor:
- Identify what you want – It’s necessary to be clear on what features you’re looking for in a business. Obviously profit is one of them, but also consider your strengths, interests, the business model and industry.
- Find Motivated Sellers – A seller who is highly motivated is more likely to negotiate a lower selling price that would work to your benefit.
- Do some calculations – Verify that the business is bringing in more money than is going out consistently over the past three years.
- Connect with the business owner – For many owners, they’ve built their business from the ground up and are attached to the prolonged wellbeing of the company after their departure. Get to know the owner and help to ease their concerns about your ownership and protection of everything they’ve worked so hard to build.
- Finance the deal, sometimes with little or no out-of-pocket costs – Look for business deals that are either willing to let you pay them back over time using profits from the business or for investors who are willing to front any capital needed to close the deal in exchange for a stake in the company.
- Dive into due diligence – Clarify the plan with your lawyer, the company’s key employees and your advisors. Make sure everyone is on the same page and everything is in writing.
- Leverage the business owner through the transition – Lean on the knowledge and expertise of the business owner during the transition, and preferably have a clause specifying the length of time they will stay to help in your contract.
A recent article from Rogerson Business Services entitled “Timing is everything – including selling your business” discusses important factors to consider regarding the status of your business as 2019 comes to a close.
There are many reasons to consider selling your business in 2020 including potential changes in the market that are well out of anyone’s control. As a business owner, the two major factors that contribute to it being the ‘right’ time to sell your business are that the market is in good condition and that you are ready to sell. The sooner you start the exit planning process the better.