20 Reasons You Shouldn't Use A Broker When You Sell Your Business

Nearly 80% of all business owners, even highly successful ones, admit that they don't have a plan for exiting their businesses.

Owners often fail to make succession plans because they have assumptions about the future which may or may not be true.

For example, a business owner may believe that his business will naturally pass to his spouse or other family member. What happens, though, if that designated family member is unwilling or unable to take the reins?

Another common assumption owners make that causes them to avoid succession planning is the idea that they will be able to run the business until they die. They don't put a plan in place because they don't like to think about the possibility of having to leave the business sooner than planned, perhaps due to ill health or family problems.

What happens in the absence of proper exit planning is that am owner can find him or herself in the unanticipated position of having to sell quickly, perhaps for less money than they need in retirement.

Frustrated, tired, stressed, and sometimes ill, business owners who need to sell make what they feel is a logical decision and turn the process over to their local business broker.

Over the years, my partners and I have reviewed over 300 selling deals and have come to the conclusion that using a business broker might be the worst decision any seller can make.

We began to question the entire sales process, wondering why most businesses in America never sell, and those that do sell often do so under extremely unfavorable terms for the sellers.

Looking for common threads in those deals, we eventually came to the conclusion that a major culprit hindering the business selling process is the typical business broker.

This came as a surprise as we initially assumed the logical fallacy that someone with the title "broker" is sctuslly experienced in facilitating deals.

The vast majority of business brokers we have run across, however, have disproved this assumption time and again.

Here are just a few of the reasons that I believe you should NOT engage the services of a business broker if you are trying to sell your successful business.

1. Most business brokers have never owned a business themselves.
2. They are often more motivated by commissions than they are by doing what's right for both buyer and seller.
3. In most states, brokers are not required to have any training, licensing, or continuing education, unlike real estate or insurance brokers.
4. Many of them are super at selling their services, but poor at actually providing those services once you've paid.
5. They could care less if they get referrals, so they don't care if clients complain about them to others.
6. A lot of times they are simply lazy and don't do much of anything to help the seller.
7. Many brokers lack basic financial literacy, business intelligence, and organization that is essential to a successful outcome.
8. They don't know how to plan and excute a successful sales strategy.
9. They try and cover their lack of knowledge and training with slick self-serving rhetoric that makes them look better than they really are.
10. Many brokers get into business because they've failed at other ventures.
11. They often have no clue of how to properly valuate a business, thus potentially cheating the seller out of thousands of dollars or causing the sale to drag on longer than necessary.
12. They don't understand risk.
13. Often business brokers let sellers think a business is worth whatever the seller wants, however unrealistic that figure may be, just to get the listing. They then pass the buck to the potential buyer, who is made out to be the bad guy for showing the seller the business isn't worth anywhere near that much.
14. Business brokers often ignore confidentiality agreements.
15. Many are willing to lie, as long as it serves their purposes.
16. Commission-hungry business brokers are obsessed with getting mass listings because they know that without a listing there is NO possibility of getting a commission.
17. Focusing on mass listings means they don't have the time to push the listings they get, causing listings fall through the cracks.
18. Many business brokers don't understand due diligence.
19. Most brokers will never tell a seller the truth about their success rates: 87% of listings NEVER sell at all, and of those that do, 3 out of 4 FAIL to meet the sellers initial goals. Sellers have less than a 4% chance of a successful exit.
20. Brokers have been known to lie about their personal track records. Many brokers are lucky to complete just 2 successful deals in a year, much less the 10-20 about which they will brag to you.

These are only a few of the reasons why I urge potential sellers of businesses to avoid using business brokers.

Instead, it is much better to seek out the advice of a business acquisition specialist; someone who has experience in the process of buying and selling businesses, who thoroughly understands valuation, and who is not focused on getting as many listings as possible but rather on the needs of the seller and buyer.

Having such a mentor can assist you in developing a viable business exit plan. This means that you will not be forced into making hasty decisions if you are forced by circumstances to sell.

A good business acquisition expert does not work on commissions, and has the best interests of both buyer and seller in mind. He or she also has a tried and true process for selling and a verifiable record of success, along with references and client testimonials.

My suggestion is that before you ever need to sell, you should contact a business acquisition expert first. Most selling specialists are more than wiling to give you a free telephone or in-person consultation.

Prior to this meeting, be sure to write down all your questions, your goals for the sale, even your fears and apprehensions about the process. This will help you make the most of this initial consultation and get a gut feeling for how this particular business solutions provider operates.

If your primary reason for meeting is to ask for business succession planning assistance, discuss fees and expectations and ask for some professional references.

This will help you determine if this is the kind of person you want partnering with you on one of the most important changes you will ever experience in your life.

If you'd like to learn more about the selling process and how to be successful with it, please download the free resources on the website listed below or email me at admin@deltabusinessservices.com

Delta Business Services is the leader in business acquisition processes. Our highly-trained staff is competent in every nuance of selling a business and has a particular expertise in attracting qualified, motivated buyers.

We are not business brokers, but rather acquisition professionals who understand and respect the needs of both buyers and sellers. Most importantly, we are actual business owners who have completed dozens of successful deals ourselves. The Delta Solution (tm) is the result of years of painstaking research and real life experience. Visit our website now and learn how you can avoid making mistakes selling your business that could cost you thousands of dollars and cause you a lot of headaches as well. http://www.deltabusinessservices.com

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Ground Rules for Successfully Selling Your Business

Sooner or later you are going to exit your business. The question isn't whether or not you will be ready. The sixty four thousand dollar question is whether or not your business will be ready.

It is estimated that seven out of ten privately held businesses have no succession plan to transfer the business to the next generation of owners. What does that mean to you? It means that if you do not currently have a plan in place to transfer your business to family members, existing partners, management or employees, someday you will think about selling your business.

That day might come sooner than you anticipate. Don't make the mistake of thinking that just because you are not currently ready to retire that you have plenty of time to prepare your business for sale.

As a business broker, I have been involved in a number of transactions (and potential transactions) where the business owner wanted to sell, or in some instances, was forced to exit the business earlier than expected. In fact, retirement is NOT the number one reason why businesses sell.

Here is a list of the most common reasons why owners sell (or otherwise discontinue) their businesses:

Burn-out (the number one reason for selling)

Health issues

Personal diversification

Retirement/semi-retirement

Death

Divorce/partner disputes

Business growing too fast

Second generation not up to the task

Loss of market share

TAKE GOOD CARE

The sad truth is that many business owners do not take good care of their most valuable asset: the business. They don't groom someone to continue the business in their absence, and do not keep the business in salable shape during the time they operate the business.

Business owners tend to get too bogged down in the day to day business operations to worry about--or plan for an event that they perceive won't occur until sometime in the distant future; selling the business.

Unfortunately, fate sometimes dictates circumstances beyond your control, and tough decisions must be made. If your business isn't ready to sell when the time comes, what are your alternatives?

1. Liquidation of business assets--may be a solution, but one that usually returns very little money to the business owner. If the business had been an operating business, the underlying assets (except for real estate) may be outdated and of little use to anyone. At auction, the assets will bring only what the attending bidders are willing to pay. In some instances, underlying assets are sold to liquidators (or scrap) for only pennies on the dollar. Liquidation of a going business often occurs where the owners have become ill or disabled, or need to retire and have not planned adequately for their exit from the business.

2. Closing the business--is even less attractive than liquidation. That is because many who find themselves in this situation have a tendency to "put off" liquidating the underlying assets in hope that maybe someone will come along to buy this business. This almost never happens.

BUILD WEALTH NOW BY PLANNING FOR THE SALE OF YOUR BUSINESS

Okay, so you think you have enough to do without throwing more onto the pile. Am I right? That is why I have written this article for you. It provides a "down and dirty" overview of things that you ought to begin thinking about and planning for right now. Doing so will provide you with an additional safety net that will help safeguard your valuable business asset.

Here are just a few of the benefits of planning now:

A planned sale allows for your goals and objectives on your timetable

You may begin to identify potential buyers

You may be able to create an attractive acquisition candidate

You can begin to understand why a buyer may want to buy

You might learn why buyers would not want to buy--and be able to fix the problems

You may begin to realize the worth of your business now, and learn how to increase the value as part of your retirement planning

BUSINESS VALUE HOUSEKEEPING CHECKLIST

Record All Sales

Business owners often invent remarkable ways to beat the tax collector. But the taxman can be a business owner's best friend when it comes to selling one's business. Income taxes are a great investment in the years immediately preceding an anticipated sale of the business.

Paying income tax proves to the buyer AND the banker that your business operations have been profitable.
Nobody wants to pay more income tax. But consider this example: Ronald Bunk systematically underreported business income by an average of $20,000 per year. Assuming a combined tax rate of 40%, Mr. Bunk saved $8,000 in taxes per year. But, the underreported income also reduced the company's earnings base by $20,000 per year. If, for example, the business could be sold for a multiple of 5x the company's reported earning base---the company would sell for $100,000 less ($20,000 average earning base not reported times the price multiple of 5) than it is really worth!

Without considering the time value of money, it would take in excess of twelve years of (illegal) tax savings to make up for the loss of $100,000 in business value. The lesson: In trying to screw the government, business owners often find themselves on the short end of the stick; often in more ways than one.

Eliminate co-mingling of business and non business assets

A common practice among closely held companies is to co-mingle non business assets and expenses with business assets and expenses. I have seen businesses owning motor coaches, boats and airplanes; all reported as business assets. The costs of maintaining and operating the assets were expensed as regular business operating expenses.

It is true that those businesses (not audited by the IRS) are saving a certain amount of income tax, and providing an extra "fringe" benefit for the owners of the company.

Wise business owners should endeavor to separate non business assets from the business in the three to five years before a planned sale of the company. Doing so will make it much easier to accurately measure and reflect the true earning power of the business, as it will be unfettered by the capital investment in non business assets and the associated costs.

Buyers of your business are generally purchasing future income and benefit streams that will be produced by your business. The leaner and more productive your business is--the more it is worth. It is never too early to begin segregating non business assets from your business, as it may take some planning and time.

Do your own due diligence

Some executives of both public and private firms get a physical check-up once a year. Many of these same executives think nothing of having their personal investments reviewed at least once a year, if not more often. Yet, these same prudent executives never consider giving their company an annual physical, unless they are required to by company rules, regulations or some other necessary reason.

Anyone interested in purchasing your business will perform "due diligence" procedures on your business before closing on the purchase. All too often, sellers are surprised at the skeletons purchasers can find in the closet. These skeletons can reduce the value of your company, and in some cases, kill any chance at closing a sale. What skeletons are your company's closets?

Why not give your business a periodic physical? In essence, I am suggesting you would do well to treat your business as if someone else owned it--and you were the potential purchaser. What problems would you discover that could cause you and your advisors to reduce or withdraw your offer?

Spending the time and money to discover and fix your company's problems now will pay huge dividends in the form of increased company value--which is exactly what you want when it's time to sell.

Compliance with taxing and regulatory authorities

Mountains of regulation often seem to impede a company's growth and profitability. Some regulations might seem rather easy to "slight" or ignore.

Take for example one of my recent sellers who swore to me that the business had no regulatory violations of any type. I reminded the seller that anything "hidden in the closet" would most likely be discovered in a buyer's due diligence (investigatory) process. "Nope--no problems of any kind" I was assured.

Well, guess what the buyer's due diligence turned up? Seems the seller had a couple of shipping/storage containers sitting behind the building--which the sellers KNEW were in violation of local zoning ordinances. How did they know? They had received four previous "reminders" from the trustees about the containers, and the need to remove them.

"Why didn't you mention that to me, or disclose that fact on your disclosure statement?" I asked. "Gee, nothing ever happened and the township never did anything--so we just figured it was no big deal." Was the seller's reasoning.

No big deal, except when the purchaser turned up the non compliance issue, it threw a few extra wrinkles into the mix. In that case, the issue was easily resolved (yet, much to the additional cost and chagrin of the sellers). But, sometimes known violations are not so easily remedied. In those instances, a seller runs the risk of blowing a good deal.

What's the bottom line?

Clean up any tax, industry, OSHA, EPA or zoning issues with which your company does not comply.

Organize and keep records available. One never knows when opportunity might knock. If and when it does knock, will you be ready to strike while the iron is hot? How many times have you heard someone say something like, "I'd sell anything, including my business for the right price?"

Maybe you have even said it yourself. But would you know what paperwork and documents a serious buyer will immediately need in order to pursue the purchase? When a qualified buyer is ready to begin serious due diligence, they will need a variety of company documents.

Following is a partial list of things a buyer will ask for:

o Three to five years income tax returns

o Copies of one to three years quarterly payroll reports

o Three to five years CPA prepared financial statements

o Current year to date financial statements

o Detailed depreciation schedules listing each fixed asset owned by your company

o Corporate Minute Book with updated minutes

o Recent aged accounts receivable trial balance

o Recent aged accounts payable trial balance

o Company organization chart

o Copy of the Summary of Insurance Coverage (provided by your carrier)

o Information about Employee Benefits provided by the company

o Information about Employee Retirement Plans

o Copies of labor contracts

o Copies of other contracts to which the company is a party

o Copies of licenses, registrations for patents, copyrights, trademarks, etc.

The foregoing list is an example of the types of records your company should have up to date and on hand at all times. These records are extremely important to speed the sales process along. Though this advice sounds basic, I often encounter companies whose records are not complete and up to date. This situation can dramatically affect a potential sale.

I suggest using a three ring binder to keep the basic updated records available at all times. This also makes other business needs for the documents much more manageable.

CONCLUSION

You can increase your wealth by knowing a few simple ground rules for successfully selling your business. Just like other owners of closely-held businesses, you know how to operate your business on a day to day, month to month and year to year basis. But your experience in running the business has not prepared you to know how to sell your business.

While the information I provided in this article is not all inclusive, it should help you get started in preparing your business for a successful sale--no mater when the business might be sold.

Grover Rutter has over 30 years' experience advising business owners. A sought after business broker and consultant, Grover is a CPA, Accredited Business Valuator, Certified Valuation Analyst, Business Valuator Accredited in Litigation and an Empire Certified Business Broker. http://www.gruttercpas.com

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Is it Time to Sell Your Business?

As an experienced broker, I will tell you that most business owners are so involved with operations and management, they cannot do a good job marketing their companies for sale.

BEWARE OF SCHEMES. I have represented business sellers who previously paid in excess of $30,000 to a marketing company that was going to sell their business. It began with seminars about how to sell your business. The fee was necessary for marketing materials and an elaborate valuation. The sellers report not a single buyer prospect was produced. Commitment fees to sell a business should never exceed 10% of the entire success fee for a completed transaction.

KNOW WHOSE INTERESTS ARE FIRST. Unlike with real estate, business brokers are not required to cooperate with other brokers. I have experience first hand a broker saying no to a buyer prospect because they were represented by another broker. YOUR BROKER COULD BE KEEPING BUYERS FROM YOU. Make sure your representation agreement states that your broker will cooperate. Trying to keep the entire commission for themselves does not serve you, the client.

ALWAYS ASK FOR REFERENCES. A good broker will have proven themselves to a number of clients and advisors. Accountants and attorneys are a good place to ask. Most of these advisors are not salespeople or expert marketers, but should point you in the right direction.

KEEP GOOD RECORDS. Without good books, any business is most difficult to sell. Be current on your tax returns. Always track any expenses that will go away with a new owner. These can create more value in your business.

Feel free to contact me with any questions you may have at [http://www.jpbusinessbrokers.com].

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What Baby Boomers Must Know Before Hiring Someone to Help Them Sell Their Businesses

If you've been in business for any length of time, you've certainly earned your right to a healthy dose of skepticism. Most business owners have endured more than their fair share of eye-glazing, brain-numbing sales pitches and vendor-sponsored events. They've been pushed to try numerous products, procedures, and systems; many of which have failed to deliver anything but mediocre results.

That's why, even though you might be near retirement and more than ready to start the process of selling your business, solutions presented to you that promise a better, more financially lucrative, and less stressful way of doing so might you on the immediate defensive.

"Too good to be true." "Heard it before." "If this works so well, then why doesn't everyone do it this way?" are a few of the familiar, yet understandable, responses that Baby Boomer business owners give when urged to look into alternative selling strategies.

Business owners over 50 are looking to sell their businesses without encountering adverse tax consequences and without having to pay commissions and unnecessary fees. They also want to sell within a more reasonable time frame than is usual and they want the fairest price for the business.

Perhaps most importantly, sellers fear outliving the proceeds from the sale of their businesses and seek a way they can create a lifetime income which they cannot outlive.

These are concerns which, unfortunately, the old school method of selling a business is simply unable to address.

Pre-retiree business owners are slowly coming to grips with the consequences of a huge demographic shift, not just in the United States, but in the entire world.

For many years, there has been a dwindling supply of qualified business buyers. That lack has been exacerbated by the simple fact that the generations following the Baby Boom are getting smaller and smaller.

Unfortunately, the shrinking pool of buyers, coupled with economic uncertainty and tighter credit, has created an untenable situation for boomer sellers.

Increasingly, they are having to make tough choices when it comes to retiring.

Boomer business owners who are not leaving the company to their heirs are often finding themselves:

• Running the business for a lot longer time than they ever planned.
• Selling the business in hurry at a bargain basement price, thus increasing the odds that they will not have enough money to retire comfortably.
• Resorting to using a business broker and having their companies on the market for months, perhaps even years.
• Closing down and walking away- even though the business is still profitable.

Within a few years, the number of business owners ages 55-75 who want to sell, or who must sell due to health or other adverse life circumstances, will double.

For many of these owners, the successful sale of the business is the cornerstone of their retirement plan, comprising the bulk of income they expect to receive in their later years. Most of these pre-retiree entrepreneurs have just one shot at selling their companies. A small mistake could cause them to run out of money in retirement or have to drastically alter their lifestyles to accommodate limited income.

Unless there is an actionable exit plan in place at least two years before they want to retire, boomer owners could face a truly painful situation when the time comes to leave.

After all, the current "old school" sales process has a lackluster 3% success rate right now. It's not a stretch of the imagination to suggest that this rate could go even lower as the critical mass of pre-retirees wanting to sell builds.

If you are a business owner over 55 who is planning on selling a business to fund your retirement, then you need to find a qualified mentor to help guide you through the complexities of the exit process.

Business brokers should always be the LAST resort if you are serious about selling your business for more money, with less stress, and with a view to creating a stream of income you can't outlive. Most brokers cannot do that for a seller, even if they want to. It's better instead to seek guidance from an experienced business owners who has been in the trenches and understands what selling a business is all about.

If you do, however, decide to use a broker, or if you seek the advice of a business acquisitions mentor, you must exercise due diligence or risk an adverse outcome.

Be certain you thoroughly check out the qualifications of these advisors.

Always insist on someone who:

1. Has a minimum of 10 years experience in the real business world. An MBA is nice, but ask your mentor about actual businesses he or she has bought and/or sold. Theorists and philosophers have zero value when the time comes to actually SELL a company. Look for solid, quantifiable experience.

2.Can produce verifiable client testimonials. Any worthwhile mentor or broker ought to be able to produce real clients with whom you can speak. If the only thing he or she is willing or able to give you is some vague written testimonial from "Sam S." (who may or may not be a real person) then you should avoid that consultant.

3. Asks you important questions about your desires and goals for the sale. Part ways with any so-called expert who doesn't want to hear your wishes, concerns, and ideas.

4. Has the knowledge, tools, and business acumen that are essential to a successful business transition. This is no place for hobbyists or dabblers. Demand someone who specializes in buying and selling successful businesses. Don't be afraid to ask the question, "How many deals have you personally done?"

5. Knows how to structure the sale proceeds so that you get a predictable, reliable stream of income for life. Ask potential mentors the question. "What can you do to help me ensure that I never outlive my retirement income?"

There are several other important factors to consider when partnering with an expert, including some less tangible, but nevertheless important factors that should be present.

For instance, is it easy for you to tell that this person actually enjoys what they do? Does he or she seem to radiate genuine enthusiasm for helping retiring business owners build a prosperous, successful life after business? Are they truly grateful for the opportunity to work with you? Does this person respect your achievements in building the business and seek to preserve its' legacy of success?

Pairing a worn-out, frustrated seller with a mentor who is equally burned out, distracted, or just not that in to helping others, is a recipe for failure. You need a fresh pair of eyes focused on the most important transition of your life- not someone with a cynical, jaundiced view of things.

Any expert you hire to help you transition out of your business must be capable of crafting a workable blueprint for selling success that is the direct result of their own experiences and passion for business. They must be able to translate this real life experience into a plan of action that does not frustrate or confuse you. They must also be 100% committed to your vision of success, whatever that vision may be.

Remember, you probably only have one chance to sell your business the right way. It pays to plan, prepare, and partner with an expert on whom you can rely until the deal is done.. and after.

In addition to having the tools and skills necessary to reach a seller's goals, Delta Business Services adds several intangible elements to the mix.

We LOVE what we do. We are grateful for the opportunity to locate, acquire and manage great businesses. It gives us experiences we could have never otherwise had. We actually enjoy writing checks to our baby boomer business sellers every month, helping them ensure that they won't outlive the proceeds from their sale.
Learn how you can sell your business for more money, with less stress, and create a lifetime stream of income you can't outlive. Check out our webinar replay here:
https://www.youtube.com/watch?v=ohWTQZBOYYA

Article Source: https://EzineArticles.com/expert/Heath_Frantzen/1803730

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Can You Sell Your Business Without a Broker?

Yes, you can sell your business yourself, but you have to do it the right way! As a professional business intermediary, I have many clients with quality businesses who come to me after failing to sell their businesses on their own. The flaw in their effort to sell always comes down to the same four basic things: no professional presentation of the business; poorly presented financial information; pricing the business wrong; and not understanding how to find buyers, work with those buyers and get a deal to closing. If you want to sell a business yourself, you can, but you have to put the right pieces in place, including:

-An effective presentation for selling a business

-A business valuation to help you understand your company's value

-Customized strategies and resources for finding the best buyers

-Resources to help you work with those buyers and get a deal to closing

A Professional Business Sales Presentation This is the centerpiece of your marketing effort. When a potential buyer contacts you, you don’t want to simply fax over some scattered scraps of paper. First impressions count. You need a genuine, professional marketing presentation of your business. At the very least, it should include an Executive Summary, a Business Overview, a Facilities Profile and a Financial Summary. The financial information must be in an intelligent format that emphasizes the cash flow value to a new owner.

What’s Your Business Worth? This is the most important question you will ask yourself in the selling process—and you will probably have the wrong answer. Many of us have an idea of what we think our companies are worth but, unfortunately, we are usually wrong. Pricing your business is one of the most important steps in the process. Price it too low, and you’re stealing from yourself. Price it to high and you’re kidding yourself—but no one else—and you won’t achieve the goal of selling your business. Any business valuation, regardless of the method used or who completes it, will have an element of subjectivity to it, but it can give you some reasonable guidelines and expectations for value and suggest a proper pricing strategy.

Finding the Best Business Buyers This is where the rubber meets the road. It doesn’t matter if you have a great presentation and the right price on your business if you don’t know how to find qualified buyers. It takes more than a couple of classified ads in the local paper or online if you want to get the best price from the best buyer. Multiple strategies including online ads, newspapers, direct marketing and industry publications must be employed. And you must write your ads the right way with the right information.

Closing the Deal This is where a good business intermediary earns his keep—keeping the deal together until you get to the closing table. But business owners are smart, hardworking people. If you know and pay attention to the details along the way, you can make it happen, effectively paying yourself for the work by keeping the commission—often tens of thousands of dollars. You need a good outline of the selling process, access to critical documents like letters of intent and asset purchase agreements and, before committing yourself to a binding contract, the advice of an attorney and a CPA with experience in business sale transactions.

If you put the right elements in place, you can sell your business yourself. Be sure you price it right, package it professionally, and make your buyer search a thoughtful, systematic process.

http://www.bizbyowner.com

Donald L. Beezley is COO of BizByOwner, LLC, and a professional business intermediary. BizByOwner gives business owners a complete online solution that helps them sell their own companies without the expense of a broker. BizByowner.com helps sellers value their companies, professionally package the business sale, and then takes sellers through the process of finding the best buyers and how to sell their business—from initial offer through final closing. http://www.BizByOwner.com

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How to Sell My Business - The 7 Biggest Mistakes Business Owners Make When Selling Their Business

If you are a business owner, there will come a day when you look at "how to sell my business" as the main question you ask yourself and perhaps the first thing to type in the search box in Google or your favorite search engine.

When you type in "how to sell my business" I am sure you will find all kinds of information on just that. I have compiled 7 of the things most business owners don't know about or don't think about before that day (or the day of) that would certainly make the day you do sell your business a more profitable one.

Most companies who visit with us are looking to find out what their business is worth first. Most business owners have no idea what their company is worth. Wouldn't you like to know about what it is worth before you hire a broker (we're not brokers, by the way).

Before I go into all that let's look at the 7 biggest mistake business owners make when they get to the point of asking "how to sell my business"

1. They assume they "know" what their company is worth and make up a price - Look the first problem with this approach is that your business is usually "your baby". If you have owned your business for a long time you know that you have spent more time with it than perhaps even your family, spouse and kids! It's always there, even in the back of your mind.........and sometimes it is hard to understand why someone can't see your business worth the way you see it. That's okay, but it is better to have a certified 3rd party give a certified opinion or appraisal of your business.

Look at it this way, if you and I were going to go downtown and buy the Hilton Hotel, we would find a qualified appraiser to give us his professional opinion, wouldn't we? We certainly wouldn't take the owner's word for it or even their accountant's word for it. We would want an independent opinion and official analysis.

But you say, hey my business isn't worth that much to justify the cost. What? Even if your business is only worth $25,000, at least you would have an official 3rd party appraisal and a "floor" price you could start at. And with the discounts available when you go through someone like valuationbroker.com, you could literally add thousands if not tens of thousands to your sales price, and only pay a small percentage to have it done.

I would not even consider selling any business without this step, no way, ever.

You see, most business buyers are smart, like you, they have done a lot of right things to get where they are and unless they have recently inherited the money, they are sophisticated to a degree and will do their homework when looking for a company to purchase. The real advantage to having your company appraised first (by an independent 3rd party certified appraiser) is that you are the one driving the appraisal, not the buyer.

2. They ask their accountant what their company is worth and use that number - You accountant is probably a very smart individual, however when coming to valuing a business or having one in on the sales process, I have one rule. I make sure they have been in on at least 10 business sales in the past 12 months, no exceptions. I have seen more deals killed by well meaning accountants. Don't make this mistake.

I don't care what your accountant thinks your business is worth. I don't care what MY accountant thinks your business is worth. I want to know what the market tells me. So that's why I want an independent look from a qualified third party to tell me the current "market value". I have seen hundreds of business owners make this mistake and it can (and has) literally meant the difference of getting only half of what they could have! Half!

What's also most interesting about accountants is that they tend to favor using the book value of your business as a starting point and not the market value. Big big mistake. You'll leave a ton on the table this way. Don't do it!

3. They take the number off their balance sheet and say that's what their company is worth - You balance sheet tells you the hard value of the assets you have, that's it! It doesn't take into consideration what the value of your assets are that have already been depreciated or your blue sky value, or good name, or customer base..........all things that can add tremendously to the bottom line value of your business!

4. They read a few articles in INC magazine and guess a number (even saying something like "companies in my industry are selling for 3 Times earnings") They may even refer to their latest tax return for a number - Don't be fooled by this! There are so many variables even with similar businesses in the same industry. The true value of your business is NOT the same as the guy down the street, even if you do the same thing!

The true value of your business is NOT like real estate, where you can compare with the property down the street.

That is like saying the space shuttle is like a bicycle. True they are both forms of transportation, but one is a bit more complicated than the other. Again, have it appraised by a "market appraiser". Best money you will EVER spend. Ask ANYONE who has EVER sold a business!

5. They trust a FREE tool on the internet to give them the value of their business - While these free tools are valuable to help obtain a "range of value" (we have one too), they are not the complete answer and you can't use them to justify your asking price. If you have a properly done market appraisal, it will include a "justification of purchase price" section that says, "this is what your business is worth in this market, and here is why it is worth that"

That is such an important step. Buyers are smart and want to know how you came to the price you did. Now you know what to do so you can stand behind your price. Plus you will know just what the market is doing. It isn't the accountant or the balance sheet or your uncle attorney that dictates the price, it's the market! So knowing this, it is important to know just what the market price is. I have seen market prices be twice what the accountant says the business is worth!

6. They haven't made their business run without them - This is a no-brainer, yet many business owners don't think of it. Your business will be worth a lot more if it can run without you there. Otherwise whoever buys it will be buying a "job". Nothing wrong with that, but realize, those businesses just are not worth as much when you go to sell them.

7. They hire the wrong attorney to help them with the final paperwork (the wrong attorney could be their best friend) - This is just like the accountant, unless the attorney you use has closed 10 or more deals within the past 12 months, don't use them! So many well meaning attorneys have killed countless deals, UNNECESSARILY!

I wish you well and hope you take these things to heart (and action). I have seen so many sellers walk away with a lot less than they could have, had they JUST used these few tips!

Good Luck, I wish you continued success! (don't forget to get a certified third party, independent report for your business BEFORE you list it to sell) You'll be glad you did!

Buying a business? Use the same concepts!

Cheers!

Did you find those tips useful? You can learn a lot more about how to sell your business by clicking here: http://www.valuationbroker.com You can contact Marty Collins at: mcollins@valuationbroker.com

Article Source: https://EzineArticles.com/expert/Marty_Collins/172286

Article Source: http://EzineArticles.com/2818659

Steps you can take to position yourself for a more secure retirement

A recent Manta survey of 1,960 small business owners revealed that one-third don't have a retirement plan.

"That's a lot of entrepreneurs whose futures are filled with a great deal of uncertainty right now," said John Swanciger, CEO of Manta.

Don't be part of that one-third. Here are simple steps business owners can take to position themselves for a more secure retirement in the future.

1. Set a goal.
In planning for retirement, envision where you want to end up – whether living a modest life in a little bungalow, traveling around the world in your own yacht or somewhere in between.

"Defining retirement goals and lifestyle expectations now may help the business owner start from the target and work backward," said Aaron Milledge, co-founder and financial advisor at Targeted Wealth Solutions.

Once they identify the components needed for a comfortable retirement, business owners can then craft an appropriate plan to sell their business or pass it along to an heir.

"Whether a business owner chooses to sell the business, hand it down to family or a colleague, close the business (which often requires selling assets like equipment) or sell out a partnership, this decision will ultimately inform how to prepare for retirement," said Jay DesMarteau, head of commercial specialty segments at TD Bank.

For instance, he added, many small businesses are sole proprietorships. If the owner's goal is to grow their business, they'll need to increase the value of their business, add at least three to four employees and increase revenue.

2. Develop a succession plan.
"In the corporate world, there's almost always another employee waiting in the wings to take the place of a co-worker who has retired," said Swanciger. "That's not usually the case for small business owners, who typically have a difficult time relinquishing control to just anyone."

According to the Manta survey, 34 percent of small business owners don't have a succession plan in place. "But it's crucial to your legacy and your company's future that you prepare a solid strategy," said Swanciger.

To get started on a succession plan, Swanciger advises consulting with a trusted lawyer to figure out the next steps. Next, meet with the family member or employee you have in mind to take over the business and ensure they're the best person for the position.

"While these processes – and eventually handing over the reins to your business – may seem daunting, taking the time to plan ahead will alleviate many of your future headaches," he said.

Another option is implementing an employee stock ownership plan (ESOP), which allows employees to become beneficial owners and provides tax advantages for the selling owner, said Brian Colvert, CFP, CEO of Bonfire Financial.

3. Build a support team.
Business owners are expected to know the ins and outs of their market, but they may not be so savvy when it comes to selecting the best retirement savings plan available to them or considering the tax implications of selling a business. Therefore, it's crucial to build a team of professionals – an attorney, accountant, financial planner, etc. – who will help you navigate uncharted waters.

"A financial advisor – from any financial institution, including your local bank – can help you take the next step with a retirement plan, and a plan provider can walk you through the various plans available and help you identify the most financially viable and ultimately beneficial retirement option for you," said Paul Davidson, director of human resources at Paychex.

"As an SBO builds scale in the business, they can often increase revenue, but a banker or accountant can help better forecast the business' potential and help determine which risks are smart to take," added DesMarteau. "They also can consult on a plan and factor in how debt level can impact retirement goals."

Additionally, depending on your succession plan, you should involve experts to help you prepare for your business goals.

"If you do plan to sell your business in the future as part of your retirement plan, talk to a business broker or consultant early on for advice on how to best position and grow the business for a sale," added Colvert.

4. Position your business to be valuable without you.
If your ultimate goal is to fund your retirement from the sale of your business, do all you can to make sure it's in the best shape for potential buyers. Small business owners should start preparing for the sale of their business at least three to five years before they want to retire, according to Kevin Vandenboss, a broker with Vandenboss Commercial.

"All too often, business owners come to me when they're at the point of being desperate to sell," said Vandenboss. "They haven't been preparing for the sale of their business, either because they don't know how or because they always thought their kids would take over the business."

To avoid this situation, Vandenboss recommends that business owners get an accurate valuation of their business and consult a tax professional to understand the tax implications of a future sale.

Once that's done, owners should begin decreasing their role in the business.

"Small business owners should work toward a goal of being less involved in the day-to-day activities of their business, because businesses that require the owner to work long hours are less attractive to buyers," said Vandenboss.

One way to curtail an owner's involvement is to employ a stellar staff. "Consistently recruit and retain top talent and treat your employees well with good retirement options and benefits of their own," said Davidson. "Loyal employees and customers are a great selling point when the time comes."

5. Start a diversified retirement savings plan.
Though selling a business is one way to fund a retirement, many experts warn about the dangers of relying solely on money from a sale to bankroll your golden years.

"What if your company suffers from a sudden downturn in business, severe property damage or any number of possibilities?" Swanciger said. "In these cases, it's unlikely that you could find a buyer – putting your retirement savings and livelihood in jeopardy."

According to Davidson, owners should have a contingency plan in place and begin saving as early as possible in case their business does not sell at the right price or the right time. These retirement plan options can come in the form of SEP IRAs, SIMPLE IRAs, self-employed 401(k)s or a combination of these plan types.

When determining which savings plan to select, business owners need to consider a host of issues, including how much income they expect to earn, the amount they want to contribute and the complexity of administering any given plan.

It's important to explore your options, because no one plan is perfect for every business owner.

"The best retirement plan for entrepreneurs is specific to each one's individual circumstances, so it's important to research various options and consult with an expert before deciding," said Davidson.