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It’s Time to Exit. Are you Ready?

Posted by & filed under Build Business Value, Building Business Value, Business Owner, Exit Planning, Seller Articles, Seller FAQ, Selling a Business.

Thinking about whether or not you are ready to exit is an important question.  It’s something that every business owner will have to address at some point.  Importantly, you don’t want to wait until the 11th hour to prepare to sell your business.  There are far too many pieces in this particular puzzle to wait until the last minute.  You’ll want to begin the process sooner by asking yourself some key questions. 

Determining Value

First, you’ll need to determine the actual value of your business.  It is a harsh truth, but what you think your business is worth and what the market feels that it is worth may be two very different things. 

This point serves to underscore the importance of working with a business broker or M&A advisor early in the process.  An experienced broker knows how to go about determining a price that will generate interest and seem fair.  Remember that at the end of the day, it will be the marketplace that determines the value of your business, but working with a seasoned professional is an excellent way to match your offering price with what the market will ultimately bear.

Going Within

Secondly, you’ll want to consider whether or not you truly want to sell.  It is not uncommon for business owners to begin the process of selling their business only to realize a few hard facts.  Wanting to sell and the time being right to sell are often two different things. 

Upon placing your business on the market for sale, you may learn that you’re not emotionally or financially ready.  If this happens to you, consider it a learning experience that will serve you well down the line.

Get Your Ducks in a Row

If you have done a financial assessment, a little soul searching and have begun working with a business broker or M&A advisor to determine that now is a good time to sell your business, then there are several steps you’ll need to take.  You can be sure that any serious prospective buyer will want a good deal of information regarding your company. 

At the top of the list of items potential buyers will want to see are three years of profit and loss statements as well as federal income tax returns for the business.  Other important documents ranging from lease and lease related documents, lists of loans against the business and a copy of a franchise agreement, when applicable, are all additional documents that you will need to provide.  You should also have a list of fixtures and equipment, copies of equipment leases, lists of fixtures and equipment, and an approximate amount of inventory on hand.  A failure to not have this information organized and ready to present at a moment’s notice could be a costly mistake.

Working with professionals, such as accountants, lawyers, and brokers, is a savvy move.  Owning and operating a business can be a complex process, and the same holds true for selling a business.  Investing the time to seek out experienced and professional advice is the first step in selling your business.

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Whether you are looking to exit your privately held business, represent an acquisition-minded corporation, value your business, or are personally interested in owning or building value in your own company or franchise, Colonial Business Brokerage offers the professional services that successfully bring buyers and sellers together.

Copyright: Business Brokerage Press, Inc.

Rido81/BigStock.com

10 Questions To Ask Yourself About Your Business: Part 1

Posted by & filed under Build Business Value, Building Business Value, Business Growth, Business Owner, Exit Planning, Seller Articles, Seller FAQ, Selling a Business, Uncategorized.

 

After over 160 episodes of Built to Sell Radio and more than 20 years interviewing and researching entrepreneurs, John Warrillow, host of Built to Sell Radio and five-time entrepreneur, shares the 10 questions all business owners and entrepreneurs need to be asking themselves — whether they are ready to exit their company or not.

On this episode, John tackles five questions from listeners and business owners that address the practical nature of raising capital as well as how to handle some of the most difficult aspects of an exit. To hear from past Built to Sell Radio guests who have put the answers into practice, check out the additional podcast episodes linked below.

 

1. How and when do I tell my employees I’m selling my business? Breaking the news can be tricky. Listen as John shares how to get the timing right.

Then listen to Episode 88: What Happens When The Big Dog Sells to find out how Anthony Amos handled telling his employees he was selling his company.

2. Should I bootstrap or raise money? John helps in understanding how funding can impact your long-term vision for your company and your role within it.

In Episode 152: This Grasshopper Learned Well, David Hauser built and sold Grasshopper using nothing but cashflow.

In Episode 118: The Founder of the “Female Viagra” Sells Her Business For $1 Billion, Cindy Whitehead talks about the benefits of raising capital to scale your business.

3. What’s the most overlooked term in a sale? It’s not actually a term but a document, and John will give you practical tips on how to negotiate for it.

In Episode 73: The Second Most Important Thing To Negotiate When Selling Your Business, Eric Sit overlooked a key detail and lived to regret it.

4. How do I figure out who the strategic acquirers are for my business? Find out how your buyer might be closer than you think.

In Episode 161: 4 Big Exits, 1 Smart Entrepreneur, we met Steve Murch. He had a strategic buyer in mind almost from the day he founded his business, which really paid off during his exit.

5. Can you use the same criteria to buy a business? John shares what he’s learned over the years.

Check out Episode 149: How Chris-Craft and Indian Motorcycle Were Built to Sell to find out how Steven Heese knew a failing brand was something worth investing in.

Listen Now

Do you want to improve the value of your business?

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Whether you are looking to exit your privately held business, represent an acquisition-minded corporation, value your business, or are personally interested in owning or building value in your own company or franchise, Colonial Business Brokerage offers the professional services that successfully bring buyers and sellers together.

Do you know who your ideal client is?

Posted by & filed under Business Growth, Business Owner, Marketing, Small Business Marketing.

Do you know your ideal client… even when you see them? Your ideal client is much different from your typical client. How?

Your typical client NEEDS what you sell, and your ideal client WANTS what you sell. That difference is huge. Prospects may or may not buy what they need, but they always buy what they want. If you know how to find your ideal client, you can literally dominate your market.

What you need to know…

Prospects buy based on emotions, and wants are emotion-based. Needs are logic-based. When your product or service matches what your prospects specifically want, you will immediately begin to attract your ideal client.

Why you need to know this…

Your ideal client makes you the most money. In fact, for most business owners… 80% of your entire revenue is generated by only 20% of your clients. Those are your ideal clients. They love you and what you provide to them. They buy from you and you alone. They’re loyal and will never leave you. They sing your praises from the highest mountaintop. They send you tons of referrals and they give you unsolicited testimonials.

The cost to you if you fail to act…

Think about this for a moment. A mere 20% of your current clients are producing 80% of your total business revenue. What if you could replace that remaining 80% of unproductive clients with more of your 20% clients? Do you realize your income would explode by 16 times?

If your revenues right now total $50,000 annually, you have the potential to increase your revenue by an additional $750,000. No kidding!

• What could you accomplish with that much additional revenue?
• What would that revenue mean to you personally? To your business?
• And especially to your family?
• Can you afford to continue to watch this much additional revenue fall into the pocket of your competition?

It’s up to every small business owner to take the initiative to develop these critical skills. Once they do, they often find themselves dominating their market.

To take a Test Drive on our system visit http://increaserevenueandprofits.com/guidedtour

To your success,

Tom Flowers

P.S. Please remember that at any time you feel ready and qualified to move forward and acquire the professional help that can enable you to build the business of your dreams, just click here and check out our E-Learning Marketing System™. It’s helping small business owners just like you get the answers and the help they need to build the business they have always wanted.

We created the E-Learning Marketing System™ with the perfect combination of online resources, tools and support to get you out of any financial distress you’re presently experiencing… help you get laser-focused on your highest income-producing activities… and help you develop and then apply the fundamentals that build multimillion dollar businesses. click here to see for yourself.

3 Ways to Position Yourself and Your Family for Future Success

Posted by & filed under Build Business Value, Building Business Value, Business Growth, Business Owner, Exit Planning.

3 Ways to Position Yourself and Your Family for Future Success

Many business owners support their families through their businesses. If something were to happen to you, such as a sudden death or permanent incapacitation, it may affect both your business and the lifestyles of the people who rely on you. Here are three things you should consider when planning for the future success of your business and your family.

Keep ownership agreements up to date

Many owners create ownership agreements early in the business’ life. As your business has evolved, those agreements may have fallen out of date. The most common type of ownership agreement that doesn’t evolve with the business is a Buy-Sell Agreement. Having an outdated Buy-Sell Agreement can be worse than having no agreement at all. Consider two examples about how outdated ownership agreements can harm a business and an owner’s family.

Maurice Belcher was the sole owner of a successful construction company. Each year, he brought in a salary of $275,000 for his family, on top of health benefits and other perks. One day, Maurice had a heart attack and died.

Maurice had created a plan for his business 25 years ago through his estate plan, which named his wife, Dina, as the owner should something happen to him. Maurice was not a good candidate for a Buy-Sell Agreement because he did not have anyone (at that time) who would be able to buy him out if something happened to him. So, this was his best option. Dina had no experience running a business and immediately called Maurice’s advisors, asking them to help her sell it for as much as they could.

When the company’s key employees found out she was selling the business, they began looking for new jobs and left. Revenue crashed, and Maurice’s bank began to call in the company’s debts. Dina couldn’t find a buyer for the business, so she liquidated it for $375,000. After repaying the company’s bank debts, Dina was left with just $100,000, no health coverage, and no income.

In this example, a sole owner put his wife in an impossible situation. By failing to update his plans as the company grew, he left her stranded without direction.

Now, consider a co-owned business with outdated ownership agreements.

Janelle Black and Sierra White were co-owners of Black & White Distribution. Their business was appraised at $5 million. Each brought home $375,000 in salary. According to their Buy-Sell Agreement, which they created just five years earlier, if one of them were to die, the surviving owner would purchase the remainder of ownership.

While driving home from work one night, Sierra was killed in a car crash. As 50/50 owners, Janelle and Sierra had each taken out a life insurance policy on each other. After Sierra’s untimely death, Janelle used the insurance funds to pay for Sierra’s half of the business. The $2.5 million lump sum wasn’t enough for Sierra’s family to continue living their current lifestyle. Rather than the $375,000 annual salary, Sierra’s family income fell to just $100,000 a year, based on their decision to follow the rule of thumb that one would withdraw just 4% of a critical asset’s value each year.

In this case, the Buy-Sell Agreement worked as planned, yet Sierra’s family still suffered. If your family relies on the business to maintain a lifestyle, you should consider the consequences of your untimely departure from the business and keep any ownership agreements up to date with the goal of protecting yourself against the unexpected.

Separate fairness and equality

If you have children, planning for future success becomes more complex. Consider a business owner, Joe.

Joe has three children: Doug, Glen, and Jania. Jania has worked in the business for 20 years, growing it from a $1 million enterprise to $15 million. As Joe approached retirement, he planned to transfer ownership to Jania and leave $1 million apiece to Doug and Glen after he died. When the brothers learned how much the business was worth, they demanded an equal amount in cash from their father. They didn’t think it was fair for Jania to receive what they considered to be more money, even though the company’s value was largely illiquid and they had nothing to do with its success.

To mitigate situations like this, you should have a plan to communicate your goals to your children. Consider how you’ll determine what’s fair in terms of how each child contributed to the business’ success and how any ownership or monetary transfers can reflect those contributions. Equality and fairness aren’t the same, and only you can determine what’s fair.

Have a backup plan

It’s important to have a backup plan when planning for a successful future. The surest way to do so is to install Value Drivers in your business. Regardless of whom you want your successor to be, all potential buyers/recipients of ownership will want Value Drivers to be present in the business.

Another way is to determine whether your chosen successor can continue to grow the business. Implementing strong incentive plans is a way for you to determine this and reward high-performing potential successors.

If you’d like help thinking through the ways in which you might be able to plan for a more successful future for your family, please contact us today.

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Whether you are looking to exit your privately held business, represent an acquisition-minded corporation, value your business, or are personally interested in owning or building value in your own company or franchise, Colonial Business Brokerage offers the professional services that successfully bring buyers and sellers together.

 

What You Need to Know About the Golden Age of Business Acquisitions

Posted by & filed under Build Business Value, Building Business Value, Business Growth, Business Owner, Buyer Articles, Buying a Business, Seller Articles, Seller FAQ, Selling a Business.

Business acquisitions are red hot, and all kinds of businesses are being snapped up.  Some people are under the impression that only large businesses are being acquired, but this is far from the reality of the situation.  It would surprise many to learn that so much of the “action” is, in fact, small businesses buying other small businesses. 

In his Forbes article, “Take Advantage of the Golden Age of Business Acquisitions,” author Christopher Hurn explores the true state of the “acquisitions game.”  His conclusions are quite interesting.  In Hurn’s opinion, there has never been a more active time in the realm of business acquisitions.

If you own a business and are looking to grow, then you may want to consider acquiring a competitor in order to consolidate the market.  As Hurn points out, there are many reasons that you might want to consider acquiring a business in addition to consolidating the market.  These reasons include acquiring a new product or service, acquiring a competitor that has superior technology or even identifying a business that you believe is primed for substantial growth.

Yet, there are other forces at work that are combining to make this moment the “golden age of acquisitions.”  At the top of the list of why now is a good time to investigate acquiring a business is demographics.  According to a 2019 study by Guidant Financial and Lending Club, a whopping 57% of small business owners are over the age of 50.  The California Association of Business Brokers has concluded that over the next 20 years about $10 trillion worth of assets will change hands.  A mind-blowing 12 million businesses could come under new ownership in just the next two decades!  As Hurn phrased it, “The stars are aligning for the Golden Age of business acquisitions.”

This all points to the fact that now is the time to begin understanding what kind of acquisition would best help your business grow.  Hurn believes that turning to the Small Business Administration in this climate of rapid acquisition is a savvy move. 

In particular, he points to the 7(a) program and a host of reasons that the SBA can benefit small businesses.  Since the SBA lowered equity injection requirements, it is now possible to finance a staggering 90% of business acquisition deals with loan terms up to 25 years and lower monthly payments.  Additionally, the SBA 7(a) program can be used for a variety of purposes ranging from expanding or purchasing an existing business to refinancing existing business debt.

Hurn truly does have an important insight.  Baby Boomers will retire by the millions, and most of them will be looking to sell their businesses.  With 12 million businesses scheduled to change hands in just the next 20 years, now is a highly unique time not only in the history of acquisitions but also in the history of business. 

Business brokers understand what is involved in working with the SBA and acquisitions.  A seasoned business broker can point you towards opportunities that you may have never realized existed.

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Whether you are looking to exit your privately held business, represent an acquisition-minded corporation, value your business, or are personally interested in owning or building value in your own company or franchise, Colonial Business Brokerage offers the professional services that successfully bring buyers and sellers together.

Copyright: Business Brokerage Press, Inc.

Grand Warszawski/BigStock.com

Strategies for Reducing Risk and Improving Outcomes

Posted by & filed under Build Business Value, Building Business Value, Business Growth, Business Owner, Exit Planning.

As a business owner, you make decisions constantly that you believe will reduce your risk and/or improve your business outcomes. There are countless ways to do this. In this article, we’ll present ways to leverage your internal strengths to reduce risk and improve business outcomes. We’ll also show you how these strategies can affect your longer-term, post-business planning.

An effective strategy for reducing risk and improving outcomes is having a management team that can run the business in your stead. There are numerous benefits of having such a management team. First, it reduces your company’s reliance on you. This can give you more time to focus on the biggest goals you have for yourself, your family, and your business.

Second, it can act as a source of new ideas to improve the business in general. This is especially true if your management team has a diversity of experience. Different experiences can lead to different, sometimes unconsidered, strategies to improve business outcomes.

Third, it often increases the value of your business. Whether you hope to sell to a third party or an insider, or even work until you die, having people other than yourself who can keep the business humming makes it more attractive to potential buyers.

Having a strong management team also ties into your long-term, post-business planning. If you hope to eventually sell your business to insiders, the management team may end up being a qualified buyer, or they may be critical to supporting your children as they take over leadership. This can give you a head-start on bolstering future performance for a strong and healthy company, leading to a more successful transfer.

For example, incentive plans for your management team give them more responsibility, which lets you determine whether they’re fitting successors or high-level executives. Incentive plans also motivate the team to continuously improve the business because any rewards are contingent on achieving goals that contribute to your future success. This can allow you to wind down your responsibilities without giving up control while increasing your income, reducing your risk, and improving your outcomes.

To take it one step further, a common misinterpretation is that owners must transfer all of their ownership to insiders at once. This isn’t necessarily true. There are many ways to transfer portions of ownership over time, which are often tied to good incentive planning. This can keep you in control while you delegate more responsibilities to other people. It also gives you an out if your management team proves incapable of meeting or exceeding expectations, which protects you against risk.

If you intend to sell to a third party or work until you die, you can set up different kinds of incentive plans to make your desired path and tenure easier. You might consider a “Stay Bonus” structure in your incentive plan. It rewards managers who stay with the business through and after you transition out of it. This reduces the risk that important players will abandon ship and negatively affect your company’s value.

How can you know whether you have a management team that can reduce risks and improve outcomes? A good indicator is how the business operates in your absence. If you’ve ever taken extended time off only to find yourself addressing business issues on your time off, it’s likely you don’t have a strong management team (the same applies if you feel like you can’t ever take extended time off). If you aren’t confident that your management team can run the business well without you, you may want to consider finding managers that can.

To reduce risk and improve outcomes, you’ll likely need to look outside of yourself. But this can be extremely beneficial to yourself, your family, and your business. However, leveraging your internal strengths (or finding strong external managers to join your company) can take time. This means that it’s likely in your best interest to start this planning now, before you absolutely need it, rather than when you need it.

If you’d like help in working through the ways you might reduce risk and improve outcomes in your business, please contact us today.

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Whether you are looking to exit your privately held business, represent an acquisition-minded corporation, value your business, or are personally interested in owning or building value in your own company or franchise, Colonial Business Brokerage offers the professional services that successfully bring buyers and sellers together.

 

Can changing your mindset really improve your business bottom line?

Posted by & filed under Business Growth, Business Owner, Marketing, Small Business Marketing.

Most business owners start their own business based on their passion for what it is they do. Unfortunately, it takes much more than passion to build a successful business. You must have a specific vision for what it is you want your business to accomplish and the direction you want to take to produce the results you expect your business to achieve.

Thought is the most powerful force in the universe. Our thoughts are the controlling factor in what we manifest and create in our lives. Use your thoughts to create a specific vision for your business and then apply the right strategies and tactics to grow and develop that business.

What you need to know…

Creating a millionaires mindset requires action on your part. You must create a mindset that’s focused on performing your highest impact and highest income-producing activities on a daily basis.

If you’re not happy with your business’s current results, then ask yourself a question and be brutally honest as you answer it. WHY are you getting such poor results? WHY are you failing to attract clients? WHY are you attracting the wrong clients? WHY are you failing to generate the revenue and profits you expect from your business?

One of the things that we have found over the years is that people who are broke, struggling or just getting by – don’t think the same way as people who are financially abundant. They don’t believe the same things as financially challenged people do, and therefore they don’t behave the same way. In short, they take different actions.

Why you need to know this…

Small business owners have been mentally conditioned to behave a certain way. They have specific beliefs… such as “in order to make more money, I have to work harder.” “Money is the root of all evil.” “No pain, no gain.” “Money doesn’t grow on trees.” “If I don’t do it myself, it will never get done.”

These beliefs lead to specific actions such as working more hours and putting forth more effort in a vain attempt to increase revenue and profits. That leads to specific results such as feelings of overwhelm, anxiety and frustration… and a deep-seated belief that more and more effort is required, even though results seldom if ever appear.

Do you know what your current beliefs may be costing your business today? For example…

Do you succumb to mental barriers that may be sabotaging your success?

Are you laser-focused on your highest income-producing activities?

Are you hiring, assigning, delegating or bartering all of your non income-producing and less productive tasks?

Do you know the specific steps you can take to immediately create a “millionaires mindset?”

Would you like to know how you can learn to develop these critical skills?

Our E-Learning Marketing System™ does all of this… and much, much more. But don’t take our word for it. Let me show you right now how a business owner can change the way they think about their business… and do so in such a way that it creates a dramatic increase in effectiveness and revenue visit http://increaserevenueandprofits.com/guidedtour for a Test Drive.

To your success,

Tom Flowers

P.S. Please remember that at any time you feel ready and qualified to move forward and acquire the professional help that can enable you to build the business of your dreams, just click here and check out our E-Learning Marketing System™. It’s helping small business owners just like you get the answers and the help they need to build the business they have always wanted.

We created the E-Learning Marketing System™ with the perfect combination of online resources, tools and support to get you out of any financial distress you’re presently experiencing… help you get laser-focused on your highest income-producing activities… and help you develop and then apply the fundamentals that build multimillion dollar businesses. click here to see for yourself.

The 7 Cs of Business Planning Success

Posted by & filed under Build Business Value, Building Business Value, Business Growth, Business Owner.

The 7 Cs of Business Planning Success

Success can be a nebulous concept. What one business owner considers success might only be a step on the path to success for you. What are some of the guidelines that you can use to foster the kinds of planning that achieve the success you want?

Tom Morris—a pioneer of business thinking—proposed the 7 Cs of Success. These seven Cs speak to how successful people achieve excellence, regardless of field or industry. Let’s look at these seven Cs and you can apply them when planning for your successful future.

A clear CONCEPTION of what you want, a goal clearly imagined

The very first C speaks to having defined goals. Goals are the foundation of all future success. You may have goals for your future success, and you should make those goals SMART (Specific, Measurable, Actionable, Realistic, and Time-bound). Once you’ve done that, you can adequately act.

An emotional COMMITMENT to the importance of what you’re doing

An emotional commitment to your cause is a major aspect of successful planning. Like most people, you likely make decisions and act based on your emotions and gut reactions, in tandem with logic and analytics. This can be a good thing. If you can harness the emotional side of planning, it can encourage you to move the planning process quickly and efficiently.

A strong CONFIDENCE that you can attain your goals

Laying out all the wants and needs you have might cause you to ask, “How can I possibly do all of this?” One way to accomplish even the most ambitious goals is to have a written road map of what to do, by when, and by whom. Writing goals down can make them more manageable and give you the confidence to formulate strategies to tackle them.

A focused CONCENTRATION on what it takes to reach those goals

Planning for future success is more of a marathon than a sprint. It’s normal if you’ve ever found yourself focused on fending off each day’s problems and postponing the future. This is where it can be prudent to call on expert advisors who can focus on bigger picture planning items to keep you concentrated on both your present operations and your future goals.

A stubborn CONSISTENCY in pursuing your vision

Having a consistent planning process can increase the likelihood of successfully pursing your vision of a successful future. When unexpected hurdles arise, having a consistent planning process can give you the means to keep planning moving toward achieving your vision for yourself and your company.

A good CHARACTER to guide and keep yourself on a proper course

Planning for future success hinges on trust. From the key employees in your company to any outside advisors you work with, you should be able to trust the people who play a role in achieving your goals. Ask yourself, “Are the people working for me doing everything they can to keep me on track?”

A CAPACITY TO ENJOY the process along the way

Planning for future success can be challenging. It’s possible that you’ve never engaged in this type of planning before, which can make you reluctant to move forward. To make planning enjoyable, you should set realistic, achievable, and actionable goals. Usually, these goals involve growing the business and its cash flow. You can then establish the means of achieving growth in value and cash flow. Enjoyment and satisfaction occur as you see your planning and implementation efforts bear fruit.

Conclusion

The seven Cs of success all share a common theme. They give you control: control over your present successes and control over how you pursue future success. If you’d like to discuss how you can maintain the most control over your future and implement these seven Cs in your planning, please contact us today.

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Whether you are looking to exit your privately held business, represent an acquisition-minded corporation, value your business, or are personally interested in owning or building value in your own company or franchise, Colonial Business Brokerage offers the professional services that successfully bring buyers and sellers together.

Determining the Right Time to Sell

Posted by & filed under Build Business Value, Building Business Value, Business Owner, Exit Planning, Seller Articles, Seller FAQ, Selling a Business.

 

Determining when it’s finally the right time to sell can be a tricky proposition.  If you are thinking about selling your business, one of the best steps you can take is to contact a business broker.  A good business broker will have years, or even decades, of proven experience under his or her belt.  He or she will be able to guide you through the process of determining what you need to do in order to get your business ready to sell.

One major reason you should contact a business broker long before you think you might want to sell is that you never know when the right time to sell may arise.  Market forces may change, unexpected events like a large competitor entering your area, or a range of other factors could all lead you to the conclusion that now, and not later, is the time to sell.

In a recent The Tokenist article, “When is the Best Time to Sell a Business?”, author Tim Fries covers a variety of factors in determining when is the best time to sell.  At the top of Fries’ list is growth.  If your company can demonstrate a consistent history of growth, that is a good thing.  Or as Fries phrases it, “What never varies, however, is the fact that growth is a key component, buyers will look for.”  Growth will be the shield by which you justify your price when you place your business on the market. 

If your business is experiencing significant growth then you have a very strong indicator that now could be the time to sell.  Fries points to a quote from Cerius Executives’, CEO, Pamela Wasley who states, “When your business has grown substantially, it might be time to consider selling it.  Running a business is risky, and the bigger you get, the bigger the risks you have to face.”  Again, growth is at the heart of determining whether or not you should sell.

Knowing the “lay of the land” is certainly a smart move.  For example, have there been a variety of businesses similar to your own that have sold or were acquired recently?  If the answer is “yes,” then that is another good indicator that there is substantial interest in your type of business. 

Reviewing similar businesses to your own that have sold recently can help you determine how much buyers are paying for comparable businesses.  This can help you spot potential trends.  In short, you should be aware of market factors.  As Fries points out, everything from relatively low taxes and low interest rates to strength in the overall economy and an upward trend of sales prices can impact the optimal times for a sale.

Now, as in this exact moment, might not be the right time for you to sell.  Getting your business ready to sell takes time and preparation.  Fries points out that smart sellers “look for a good time, not the perfect time” to sell a business.  Working with a business broker is a great way to determine if now is the right time to sell your business and what steps you have to take in order to be prepared for when the time is right.

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Whether you are looking to exit your privately held business, represent an acquisition-minded corporation, value your business, or are personally interested in owning or building value in your own company or franchise, Colonial Business Brokerage offers the professional services that successfully bring buyers and sellers together.

Copyright: Business Brokerage Press, Inc.

shurkin_son/Bigstock.com

How Do Business Performance and Health Affect Your Planning?

Posted by & filed under Build Business Value, Building Business Value, Business Growth, Business Owner, Exit Planning.

How Do Business Performance and Health Affect Your Planning?

Many successful business owners don’t feel any urgency to plan for the futures of their businesses. When owners are comfortable where they’re at, they may struggle to plan with a longer view of their business futures, perhaps asking, “Why change what works?”

One way to answer this question is to define what makes a business strong. Strong businesses are a marriage between performance and health. The difference between business performance and business health as follows:

• Business performance is the business’ ability to win today.

• Business health is the business’ ability to win tomorrow.

As a successful business owner, your business may perform well right now. But have you considered the shape of your business’ health? For example, many successful businesses meet or exceed various expectations based mostly on the owner’s presence. If that owner were to leave unexpectedly (via death, injury, or otherwise), the business would most likely suffer, if not fail altogether. In this example, the business may have a strong performance. But its health—its ability to win tomorrow—is in jeopardy because if anything were to go wrong with the owner, it’s likely that things will go wrong with the business.

Compounding that challenge is the fact that many owners are incredibly optimistic about themselves and their businesses. They may say, “We can worry about that when it’s time.” But the time to worry about the business’ health is now, especially if you, your family, and others rely on your business to support their lifestyles.

Let’s look at two ways you can marry business performance to business health.

Pinpoint problems in the context of how your business affects you and others

Business owners typically don’t answer to anyone. You’re likely the boss, the decision maker, the interrogator. If your business consistently turns out a strong performance, you may question why you need to plan for your business’ future.

One way to confront this (sometimes false) sense of comfort is to ask yourself, “How does this business affect me and others I care about?” Though some answers may be obvious (e.g., “The business is my nest egg”), other answers may be less apparent. For example, you may ask yourself, “Can my business run smoothly without me?” If the answer is “no,” then how might that affect your family and employees if you were ever forced out of the business by death, incapacity, or something else?

Your business is likely a vehicle to financial security, but it might also be much more than that. If you want to eventually transfer your ownership to children, you should know whether your children want to run the business, whether they’re capable of running the business, and how any differences in management styles might affect the business. Likewise, if you intend to sell to a third party, you may need to determine whether you have a management team that can continue smooth operations.

An ounce of prevention is worth a pound of cure. Diagnosing your business’ long-term health often begins when you dig into how your business affects you and the people or causes you care about most.

Calculate consequences

Knowing how your business affects yourself and others gives you a baseline to consider consequences. For example, your business may have enjoyed years of success. During those years, your business may have provided your family with a lifestyle that you could have only dreamed of when you founded the business. You may wonder why you would change what’s worked.

In this case, a question you might ask is, “Is this business that has provided my family and me with so much protected?” Even without going into vivid detail, the idea that your business might be vulnerable can get you to consider the consequences of not having a plan for future success. Perhaps there are threats or risks you’ve ignored for years, because those threats and risks haven’t yet affected the business or simply because you don’t have a solution to address them. This is fairly common among successful owners.

By calculating consequences, you can focus on what it will take you to maintain the business’ long-term health. It can also encourage you to act, because other people may be counting on you.

Marrying business performance and health is rarely a one-person show. If you’d like to talk about how your business affects yourself and others, and what the consequences of not having a plan for future business success might be, please contact us today.

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Whether you are looking to exit your privately held business, represent an acquisition-minded corporation, value your business, or are personally interested in owning or building value in your own company or franchise, Colonial Business Brokerage offers the professional services that successfully bring buyers and sellers together.

Special thanks to Chuck Hollander of Red Flag Advantage for providing the definition of a strong business.