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You Need To Know These 5 Things You Can’t Control When You Want To Sell Your Business

exitYou Don’t Have 100% Control Of All The Things

That Will Impact The Sale Of Your Business

We often hear business owners state the specific year when they will sell their business, such as “I will sell the business next year,” or “I will sell the business in the year 20XX….”

While it is good to have specific goals, when selling a business the outside world plays a surprisingly large role in determining how many potential buyers may be interested, and the price and terms you may ultimately receive. Selling your business for the maximum value involves careful timing.

There are five external factors nobody can control, but any or all of them may play a significant impact on your success at sale:

1. The Availability of Financing. When money is tight and buyers lack access to cash at attractive rates, generally this depresses business prices. For example the graphic below from the U.S. Federal Reserve Bank* shows the surge in banks tightening their commercial and industrial (C&I) lending standards in the midst of the recent US “Great Recession.”

2. The Overall Economy. When the overall economy is strong, business sales prices generally rise. In the reverse, during a weak economy business sales prices tend to fall. A rising tide lifts all boats, and a falling tide lowers all boats. The chart below shows median EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) multiples paid for U.S. companies purchased over approximately the last ten years.** As the economy has cycled through recessions and expansions, the chart shows median multiples have changed by 25% between highs and lows. 

3. Your Geographic Region or Country. In many cases, different regions of the country (and different regions of the world if your business operates internationally) will be growing at different rates. If your area is experiencing difficult economic conditions relative to other locations, than can reduce your business sale price. Of course the reverse can be true as well, raising a business’s sale price.

4. Your Specific Industry. Industries go through hot and cool spells, where demand for businesses in that industry will rise and fall. These cycles can greatly raise or lower business sale prices and favorable terms.

5. Tax Policy. Known or anticipated changes to relevant tax rates can impact business sale prices, both gross and net. For example, several years ago in the U.S. federal long term capital gains tax rates increased by about 20% for most taxpayers, a change everybody knew was coming. We witnessed multiple business owner clients sell their businesses earlier than planned, before the tax rates increased.

All five of these external factors change with time, sometimes quickly. To sell the business for the top price, owners need to build timing flexibility into their exit planning, and carefully monitor these outside factors. Owners also must start seriously planning their exit years prior to the actual event. An owner who wishes to exit anytime within the next five years or less needs to realize that it’s crunch time.

When you sell your business is not likely to be determined by the year you choose, but rather by whenever a willing buyer shows up with a price and terms that you are willing to accept.

We’d like to offer you the NO COST opportunity for You to get your “Value Builder Score”.  This is a score from 1-100.  Your Value-Builder Score is calculated through an analysis of your businesses performance on eight attributes proven to be important to acquiring companies when evaluating a business as a potential acquisition target.

If you haven’t gotten your copy of the FREE REPORT… “12 Fatal Mistakes You Can Make When Transitioning Your Business”

If you would like learn more about how you can plan for a successful sale of your business, call Coach Michael Stelter at Advanced Business Coaching, Inc. (262) 293.3166.

Business Owners: Do You Know The Answer To This Question?

VB Gas Guage

Get Your Value Builder Score Today!

 “WHAT IS MY BUSINESS WORTH?”

This is a question that most business owners ask, but NO ONE really knows for sure.  Every accountant, CPA,  Business Broker, M & A specialist, etc. might have an opinion, but they are just that – opinion.

The fact is that your business is worth ONLY what someone is willing to pay for it.

WHO will be buying it may have as much to do with the price as WHAT they are buying.

If you want to sell your business to a family member(s), or to a key employee, the price may be much different than if you decided to sell it to multiple employees, to your competition or if you were to sell it on the open market.  Providing the guidance, insights and systems needed to successfully transfer a business to a willing buyer could take years – 3-5 year minimum and, in some cases, even longer.

The Value of your business is determined by many factors… industry standard valuation formulas, assets included in the sale, you’re willingness to fund some, or all of the purchase price, growth potential, competition, your customers and their satisfaction with your business, cash flow / margins of the business, your employees, your role in the business and how important will that role be in the future, and many many more.

We’d like to offer you the NO COST opportunity for You to get your “ValueBuilder Score”.  This is a score from 1-100.  Your Value-Builder Score is calculated through an analysis of your businesses performance on eight attributes proven to be important to acquiring companies when evaluating a business as a potential acquisition target.

Your value builder score is derived from the sum of these eight scores using our proprietary waiting bottle design using a quantitative survey of business owners in the professionals serving.

Along with your score, you will receive are result on all eight of the attributes the drive your ValueBuilder score.  You will also see the average score for each attribute among the companies in your industry.  To improve your overall value builder score, start by improving the areas you scored lowest of.  At the end of each section there are series of questions for you to consider with your advisor.

The information you’re provided the means to guide you in increasing the value of your business

CLICK HERE FOR YOUR VALUEBUILDER SCORE

Scores: less than 50 points

    • A score of left less than 50 me to have a number of opportunities to significantly improve the value of your company.  According to our analysis of thousands of businesses like yours you could double the estimated value of the company by increasing your score to 80 or higher.

Score: 50 to 80 points

    • A score  between 50-80 means you have a number of opportunities to significantly improve the value of your company.  According to our analysis of thousands of businesses like yours you could improve the value of your company by up to 71% by increasing your score to hire 280 are higher.

Score: 80 to 100 points

    • A score of more than 80 major company is much more valuable than the average business we analyze.  There are still further opportunities to increase the value of your business by pushing your score is close to 100 as you can.

Get Your ValueBuilder Score.  Its FREE and and the answers and report will give you some valuable and needed information for you to understand about the current state of your business.

Identify WHO You’d Like to Buy Your Business.  This isn’t the time for you to WISH or dream.  This is time for some honest communication and justifies some serious discussion.  Just because someone once said “it might be nice to own a business” doesn’t mean they are ready, willing and able to make it happen.  If selling your business to a family member or Key Employee, there is much to consider.  The more conversation and discussion the better.

Get your copy of the FREE REPORT… “12 Fatal Mistakes You Can Make When Transitioning Your Business”

I wish you all the insight and wisdom need to set your plans in place.  Until next week.

Health, Happiness and Abundance

Michael Stelter

Advanced Business Coaching, Inc.

“We help entrepreneurs leave their businesses with health, sanity and fair compensation for what they’ve created”

Watch the video and download your Free Report to learn how we can help!

Michael@ABCBizCoach.com

262.293.3166

Are You A “Baby-Boomer Business Owner”? If YES – You Need To Read This…

What do all these changes mean?

There is a way to successfully Exit your business and get to retirement.

If you were born between 1946 and 1964, and you currently own a business, this information is intended for you

I’m part of the Baby-Boomer generation.   Many owners of small businesses are, too.    Over the past 25 years, many of my clients have been part of this generation, and we’re now starting to think about retirement.

But, like many things in business, thinking about something and making it happen, are two completely different things.  Establishing a plan to Exit the business is one of the most important things you can do for yourself, your family, your employees and your business.

A successful plan takes time,  effort and energy.  But – it can happen and you can find the right path to your dream retirement.

Some key numbers you should know…

  • 14% of business owners plan to fund their retirement with their business
  • 19% of business owners plan to draw an income from their business
  • 59% of business owners think they will achieve most of their retirement income by saving current earnings
  • 40% of business owners don’t save at all
  • Of all the businesses that go up for sale, less than 10% ever sell.

 As the owner of your business, you need to take control and leave on your terms.  To do that, we suggest you consider the following…

  1. START NOW – Exit planning can be complicated and take time. Assemble  your team now
  2. CLARIFY YOUR GOALS – Share your dreams with your exit planning team.
  3. BUILD YOUR PLAN –Work with people that know the process There is much to consider
  4. MANAGE YOUR RISK – A strong plan should account for all the things that could derail the plan.  Protect yourself, your family and your business.
  5. VALUE YOUR BUSINESS – Find the right valuation formula for you.  Your exit planning team can help
  6. REVIEW YOUR PLAN – The only constant is change.  Review your plan yearly to identify any changes

Get your copy of the FREE REPORT… “12 Fatal Mistakes You Can Make When Transitioning Your Business”

I wish you all the insight and wisdom need to set your plans in place.  Until next week.

Health, Happiness and Abundance

Michael Stelter

Advanced Business Coaching, Inc.

“We help entrepreneurs leave their businesses with health, sanity and fair compensation for what they’ve created”

Watch the video and download your Free Report to learn how we can help!

Michael@ABCBizCoach.com

262.293.3166

Is Retirement From Your Business Really An Option?

exit-strategy

Exiting A Business Is Not Something That Happens Without A Plan

IS RETIREMENT REALLY AN OPTION?

If you’re the owner of a business with less than 50 employees, you may not be sure of the answer, but the short answer is YES. 

It will take time, it will not all be easy or simple and will take some planning, but it is absolutely possible.

You’ve built the business.  You’ve put your blood, sweat and tears into its planning and growth.   You’ve given it your all; invested in inventory, hired and trained your family and others as employees and bent over backwards to serve your customers.

There have been times that you really love the business… helping your customers, supporting your employees and growing your, then there’s the other times that left you frustrated, alone and not knowing if you could go forward.

For all the plans that you’ve made, all the ‘To-Do’s’ put on a list, all the projections and conversations asking ‘what-if…’,it was all to avoid problems, grow sales, increase your customer base and improve profitability.  Never did you take any time to plan for your EXIT or how you were going to truly transition the business to your family member or Key Employee.

Its not that planning for this part of your future wasn’t important – because you know it is, its just that there were other priorities and your time was better spent on something else that was a more important.

But now – here you are.  You have a profitable business and you’d like to know that there is really going to be an opportunity to have your business really provide you the retirement that you’ve talked about, but probably haven’t planned because you were really sure it could happen.

One of the first things you can do is allow yourself to dream.  Often our dreams take a subordinate position to other things in our lives and, for some, the process of ‘DREAMING’ can create a wide range of emotions… like fear, frustration, excitement and even embarrassment (because they don’t believe they deserve to DREAM).  Let yourself go and imagine what your life ‘could’ look like AFTER you leave the business.

Pick a date for you to retire.  Choose a specific date and year that you will be out of the business.  Make sure its at least 3 years away.  But you should know that selecting a date can create some anxiety.  Don’t worry, you can always change the date, but there is magic in the exercise of selecting a date and putting it down on paper.  If you really want to feel a rush of emotions… try sharing the date with your spouse, children and grand-children.  The most common immediate emotions experience are happiness and excitement, but then the questions start coming… How are we going to do this?, Where are we going to retire?, and many, many others.  But don’t worry – we’ll get them all answered.

Get your copy of the FREE REPORT… “12 Fatal Mistakes You Can Make When Transitioning Your Business”

I wish you all the insight and wisdom need to set your plans in place.  Until next week.

Health, Happiness and Abundance

Michael Stelter

Advanced Business Coaching, Inc.

“We help entrepreneurs leave their businesses with health, sanity and fair compensation for what they’ve created”

Watch the video and download your Free Report to learn how we can help!

Michael@ABCBizCoach.com

262.293.3166