How many times have we seen professional sports teams lose the final game of the season by trying to protect a narrow lead, thinking they had the victory 'in the bag'?
Whether you're Starting, Growing, or Transitioning your business, don't let that happen to you! Work closely with your team of professionals to help guide you through what may be the most important stages of your business journey!
At Pro-Vision Solutions Inc. we're very pleased to be a part of that "team" of professionals, helping entrepreneurs as they put their plans for business together. In many cases, that's at the start-up stage, but it could also be anywhere along the business life-cycle and even into transitioning to new ownership. Regardless of the stage of the business, planning is important!
Planning is frequently done when launching a business, but it also can play a key role in helping to guide an existing business to higher levels of success. Unfortunately, many people only think of doing a business plan when they're looking for capital at start-up or expansion. In truth, there's an important role for business planning at every stage of business! We'd be happy to explore your reasons with you and how developing a business plan can add value.
We've been enjoying this series of articles and trust that it's been helpful for those looking at buying or selling a business. We appreciate the help provided by our friends at Sunbelt Business Brokers who have also prepared the following article for our audience.
Please feel free to pass this post along to those you feel could benefit from this information. And thanks for keeping us in mind as you consider your requirements for business planning, growth and development, and business funding needs. Now, let's enjoy the following guest blog post.
20 Ways Business Owners Mess Up
When Selling Their Business
by Dale AltonThis is the 3rd and final installment in the series, “What Not to Do When Selling Your Business”. We trust that it has been of value, not only to business sellers, but also to business buyers.
Knowing what to look for when buying a business can help lessen the concern about the process. One area that is often overlooked is the psychology of the buyer. Some buyers are very risk averse, but ‘in love’ with the idea of buying a business. It can take some time for them to get comfortable and move forward. Sunbelt Business Brokers pre-qualifies prospective buyers and acts as an intermediary - helping to set the tone and moving the process forward at a good pace.
16. Push the buyer for action before they are ready
Fundamentally, buyers require a business that provides a living wage, enough income to service debt, and produce a sufficient return on the capital they invest. But, as in other buying decisions, there is an emotional component involved. Buyers are individuals purchasing, not just numbers and profits, but a ‘lifestyle’, with all of these contributing factors.
Before the buyer is ready to move forward to due diligence, the seller has to give the buyer the full picture of their business. This requires ‘a meeting of the minds’ around the rewards the buyer stands to gain with business ownership—so that he or she ‘falls in love’ with the idea of owning the business and its ability to fulfill their personal objectives and lifestyle aspirations.
17. Hold unrealistic expectations
A seller’s expectations need to be in line with the market reality when it comes to the most probable selling price (MPSP) of their business and how long it takes to sell. The MPSP represents what the business would sell for in an open market, as is, in use, in place. The MPSP represents a reasonable price, factoring the true earnings, the state of the business, the risks and what the market is willing to pay. For many sellers, though, it means their business is not worth as much as they thought.
18. Hold out for a better offer
A business is only worth what a buyer will pay, and what a seller will accept. Sometimes an early offer is the best. I’ve seen a seller get a good offer for their business within two weeks of it being on the market, then turn around and put on pricing conditions that end up killing the sale. Nine months later, they are wondering why it hasn’t sold—until they realize it wasn’t underpriced to start with. A good broker knows the market and the thinking of both parties. It’s wise to respect their advice.
19. Make commitments before the deal is closed
Most North Americans are new to the process of selling a business. After negotiations are completed, they think the deal is done when it’s not, and in their excitement, they start making commitments for life after the transition. This is a big mistake as it puts the buyer in a leveraged situation that some will try to take advantage of. A seller who then refuses the buyer’s “new” offer at the last minute is left in a bad position due to commitments they have already made. Don’t make any commitments until the deal is closed.
20. Overlook insurance to mitigate risk
What would happen to your loan and investment in the business if the purchaser were to get ill or die? There are a number of insurance products that can provide the buyer with sufficient benefits to cover the payments on the loan you’re providing. Also you may want to insist on life insurance on the purchaser sufficient to pay off the loan if they die. As the assets of the business usually secure the loan, a prudent seller will insist upon a commercial insurance policy in place to protect these assets against, fire, flood, theft and other losses. Liability coverage is also essential. A prudent business owner should have these protections in place whether they are selling the business or not.
If you have been following this series I commend your commitment to being prepared for the eventual transition of your business. It is possibly your greatest financial asset. Maximizing your after tax proceeds is only one of a number of important considerations. But it is one of the most significant ones to most Business Owners.
Our next installment is a two part series looking at “What Your Business Is Worth”.
Sunbelt Business Brokers Edmonton
Sunbelt’s team of brokers, operating at local and regional levels, have experience selling small to medium sized businesses.
Sunbelt
is the world’s
largest business brokerage firm with approximately 300
licensed offices located throughout the world,
and 33 offices across
Canada alone.
A variety of strategies are required to sell businesses from different industries, of different sizes, and in different economic climates. Many Sunbelt brokers have specific industry experience and cooperate with their counterparts to identify the buyer and create the right framework for the sale.
Your Local Sunbelt Business brokers sell a diverse mix of main street businesses valued under $3 Million. Mergers and Acquisitions of larger and more complex business transactions of up to $30 Million are managed out of the Ottawa Head Office. We would like to help you plan and look forward to retirement, expansion or an exciting new business opportunity.
Have you ever thought about selling your Business?
Sunbelt represents clients who may be interested in buying a business like yours. If you are thinking of selling a business now or in the next 3 years, discover what your next steps should be. Feel free to contact our Sunbelt Business Brokers Edmonton office if you have any questions or would like a free confidential consultation. Give me a call. Dale Alton – 780-878-8787Sunbelt - The Place to Buy or Sell a Business.
*
Thank you Michael and Dale - once again, it's great to have your
input with respect to these very important considerations on
Selling or Buying a business. The 20 point that were provided over the 3-part series has given us all lots to think
about! We'll look forward to future articles that you'll be providing for our readers.
As a part of the TEAM of professionals that you'll be using in your business, we're pleased to assist those working on their business plans. Please let us know if that's something you're thinking about, and let's have a conversation! Together, we can help you Build your Business Dream, starting with your Business PLAN.
NOTE: For a closer look at the services provided by Pro-Vision Solutions Inc. and how we can assist ... visit our Website: www.pvs4u.ca
Feel free to add your comments or additional helpful suggestions for entrepreneurs. Please let us know your thoughts and thank you in advance for sharing this with those in your circle of contacts!
No comments:
Post a Comment