Tip #29
The skeletons will have to come out!

Whether applying for a loan or selling the company, business owners must be prepared to disclose EVERYTHING.  The business needs to look good -- in all areas.   To not be disappointed, business owners must plan, address weaknesses, and be realistic in their expectations if they don't have solutions.  Click here for a brief list of items to help in planning.

Tip #30
Time to revise the business plan….. again!

The days of the 5 and 10 year business plan are long over - everything is changing at such a fast pace.  Business owners need to review their plan to determine what has already changed and forecast what could change - competition, technology, demand for the product or services of the business, etc.   Plans must be updated and must be realistic for the foreseeable future.   Click here for free sample business plan formats.

Tip #31
Buyers and Sellers usually have a very different view of the value of a business.

Most business owners think their business should be priced more than it's worth -- mainly because of all of their hard work over the years.   But they have to realize there are certain economics and realities that dictate the price.  Besides the various methods of business valuation, the cash flow ultimately must provide the new owner a return on cash investment,  ability to service debt and a reasonable salary for the owner and/or manager.  Unfortunately, too many business owners find major disappointment because the marketplace has not accepted their unrealistic asking price.

Tip #32
Business owners must take advantage of the new technologies!

Yes, it's overwhelming.  There is so much new technology invading our world it can be hard to understand and realize it's impact.  Business owners have to figure out what might help their businesses grow.  Whether it be email campaigns, social media, e-commerce, more functional websites, cloud computing or new equipment, business owners need to embrace it.  Businesses that do not keep up with the new technologies may find their companies difficult to sell!

Click here for an excellent article on "Six Rules of Technology."

Tip #33
Minimizing income taxes - short term strategy or long term mistake?

Many business owners and their accountants are absolutely fixated on minimizing taxes by showing no income.  But this can be misguided planning for trying to get top dollar when selling  the company.  Business owners need to realize valuation is usually determined by a multiple of identifiable cash flow and that banks make acquisition loans based on tax returns.  Not paying taxes can be a short term strategy that might not pay off at the end!

Tip #34
Business owners need to understand accounting!

Many business owners aren't familiar with the principles of accounting. They need to understand their profit and loss statements and balance sheets so they can make good management decisions.  They also need to understand their financials when dealing with banks, taxes and negotiating for the sale of their company.  If business owners don't have a background in accounting principles, they should consider taking basic courses at a local community or technical college.  It can make a real difference in creating profits and maximizing the value of their company!

Tip #35
Low Owner Energy, Low Company Performance

If a company is on a downward trend, many business owners think they can bring their companies back from a valuation that doesn’t meet their expectations.  But it takes energy that many business owners no longer have.  Very few companies can make that leap back to new heights without a strong drive, vision and leadership from the owner.  Sometimes it’s best to recognize the reality of the situation and exit the business before it continues to go downhill.

Tip #36
Pricing a business too high can be a risky strategy!

Oftentimes, sellers want to go to market with a very high price, hoping buyers will see what the seller perceives is a great value.  Sellers figure that buyers will at least check it out.  Unfortunately, there are many qualified buyers who won't even look at a company if they think the price is out of line with economic realities. Even sophisticated buyers who are used to negotiating business transactions will walk away without looking. Should a business be listed at a higher price anticipating a lower offer?   Usually the answer is yes.   But if the price is too high, there may be very few looks and possibly no offers.

Tip #37
Business owners need to know what it takes to sell a business!

The hard truth is, many businesses will sell at a low price or not sell at all.  Why?  Because those business owners don’t understand how to create value and minimize risk for a new owner.  Or they don’t understand how a business is sold.  Business owners need to learn how buyers will view their business - their financials, location, key employees, equipment, technology and many other critical items.  And they need to recognize how the market will react to the price of their business.  Contacting a professional and creating a plan will greatly enhance the value and ease of selling a business.

Tip #38
Internet search engines can be a business owner’s best friend!

Business owners must never stop learning how to improve the sales, profitability and value of their businesses.  Smart owners oftentimes find solutions to their problems by using search engines such as Google, Yahoo and Bing.   And the increasingly popular YouTube has thousands of videos with tutorials and webinars on a huge variety of subjects such as “How to Use QuickBooks”.  Just type in "how to ______ " and see what information is available.  Yes, there can be many distractions, but if you stay focused, there is some very valuable content.

Return to Business Broker's Home Page