Questions about selling a business answered
To determine the worth of a business, one must consider a few factors. For one, a business is only as valuable as its ability to provide an income in the future for a buyer. Other factors like what equipment does the business own; what is its inventory; profitability trends matter as well? Market comparables will also be important in understanding what your business may ultimately sell for.
Next, a good set of books not only helps determine where the value lies but makes a business more valuable, in general. A valuable business is one that can accurately inform a potential buyer how profitable it is and has been at any given time and how it will perform into the future.
Additionally, revenue is a good lead measure of a business’s worth but not the most black and white. If a business has gross revenues of $500,000 per year, however if it expenses are $495,000 to keep a business afloat, then $5,000 net profit it is not a highly valuable business. This is why any broker would seek to adjust your profit and loss statement in order to understand true earnings and other factors to determine valuation.
Once each of these elements is estimated, then intangible assets may either have an upward or downward pressure on the market value. For instance: location, economic conditions, competition, goodwill, lease terms, and customer loyalty and diversification can add or subtract from value.
In essence, a business’s worth is a combination of its earnings and its good standing in the community. Although there is no simple answer to valuing a business, a Transworld Business Advisor can help you understand your business’s potential market value.
Want an instant estimate of your businesses worth? Find out now using our Business Valuation Calculator
There are five simple, yet important, steps to consider when selling your business:
Organizing Financial Documents: Well organized books, balance sheet, and a clear outline of all assets will not only streamline the valuation process but will also make your business more appealing to potential buyers. Therefore, before listing, make sure all of your financial documents are in order.
Understanding Market Value: In order to list your business, you must first understand business valuation. What sets your business apart? What makes it profitable? What have other businesses like yours sold for with similar revenues and profits? Not only are these details important for determining what your business is worth, but essential to the success of your sales process.
Exit Strategy: It is important to plan an exit strategy even before you believe you might want to sell. The unexpected can occur and having a solid plan can ease the process of listing and selling. For instance, a business owner may become ill, lose interest, or maybe the hopes of passing the business along are unlikely as your children have passions in different careers. Therefore, a well-planned exit strategy can make the process of selling down the road much less stressful.
Boosting Revenue and Sales: The best time to sell your business is when your sales are at their best. You would be hard pressed to find a buyer willing to take a shaky business off your hands. If sales are declining, you should avoid listing your business. If you are hoping to sell soon but have had trouble boosting sales, consider speaking with your broker about marketing methods to help increase attraction and customer retention.
Business Broker: Transworld Business Advisors are not only equipped in both the buying and selling process but have specific expertise in most industries. Therefore, they are not only interested in helping you sell your business quickly and at the best price, but they have the tools to do so. Not only will they help ease the process with professionalism and experience, but Transworld also has a network of interested buyers ready to make an offer on your business.
Finding out the worth of your business is the first step toward preparing it for a sale. Transworld Business Advisors offers a free business valuation, which can shine a light on where your business stands. Your business broker will assess the following to find the value:
There are two commonly used benchmarks to calculate a business’s worth: Compare the sale price of similar business to 1) your company’s annual sales resulting in a percentage of sold price vs sales or 2) annual recasted profits resulting in a multiple of earnings. Our business value calculator program can then generate a report that can be reviewed.
It is impossible to do a thorough and accurate business valuation without keeping in mind the current market, its trends, and all other assets owned by the business. For instance, trademarks, furniture, commercial real estate, patented technology, computers, and other equipment. In fact, even intangible assets like public perception and public brand awareness come into play when ultimately determining the value of your business. To properly give a value to these intangible assets, you should speak to your business broker, who has experience in this area.
A business broker, on top of helping you find the value of your business, can help you maximize its worth. For one, business brokers know what buyers are willing to pay, what they are looking for, and how they like the information presented to them. Transworld brokers can help you determine what your company is worth, and then they can help you sell it to the best possible buyer.
If you would like to sell your business quickly and intelligently, there are a few important things to note. A wise seller 1) will understand their business’s competitive market position, 2) can choose a competitive asking price, and 3) is able to identify a competitive offer. An efficient sale is one that has been carefully planned which means preparing long before the business has even gone up for sale.
The first and most important step is determining your business’s value. This is mainly because not only will it help you choose a competitive listing price, but it will force you to do the research that is helpful in a number of different ways during the selling process. For one, understanding your position in the market, and how that affects your profits.
In the process of determining business value, you will find out how organized your financials are. It is crucial to have your financials organized for yourself, but also potential buyers. Being able to clearly identify your profits, equipment depreciation, property values, etc. will allow you to stand apart from other, not so organized, competitors.
Whether it is retirement or the desire to switch industries, having a prepared exit strategy is important. A forced, last-minute sale can mean you list your business for less than what it is worth or sell to the wrong buyer. Preparation not only avoids this but also makes the process run more smoothly when the time does come – sudden or not.
Before a sale, try to boost revenue as much as possible for six months to a year prior. Potential buyers want to see that your company is growing and is likely to continue to grow even without your ownership. However, what does that look like? Depending on the type of business, this could be a new coat of paint on the walls, new signage or even diversifying the inventory. The key is to attract new customers and instill greater loyalty.
A business broker is skilled in both the process of selling and buying, which makes their guidance invaluable when you find yourself on either side of that transaction. If you want to sell your business quickly and efficiently, take advantage of the vetted network of potential buyers offered through Transworld Business Advisors.
A business will likely sell for two to four times seller’s discretionary earnings (SDE)range –the majority selling within the 2 to 3 range. In essence, if the annual cash flow is $200,000, the selling price will likely be between $400,000 and $600,000. The first step to finding out what your business will sell for is determining its market value.
There are several methods for determining the market value of your business. For one, you can calculate the value of all of your assets, i.e., equipment, inventory, etc. In addition, you can base it on a comparison of current revenue and profits compared to like sales that have occurred in the past. In other cases, there is a formula that multiplies earnings. Whatever the case may be, one or a number of these can help you find your business worth, and then you can determine the listing price from there.
The most important thing to remember is that your price should be competitive, but also reasonable. A listing that is far below market value looks fishy and most buyers may question its validity because it can be “too good to be true”. At the same time, price it too high and most buyers will think you are unreasonable and will not even make an offer. There is a definite goldilocks-happy-medium that will help your business sell quickly and profitably.
When in doubt, ask for help. Transworld Business Advisors are not only well-versed in all things regarding your business’s sales, but they also have tangible experience from numerous transactions. Their main goal, much like yours, is to sell your business at the best value for all parties involved.
The thought of selling your business to a competitor can seem daunting. However, it is not uncommon and certainly not impossible. There are 6 major tips for successfully doing so.
A nondisclosure agreement (NDA) is critical during any sale but especially when selling to a competitor. A potential buyer should never have access to trade secrets and other confidential information until the right time. When a competitor shows interest, request an NDA be signed, in addition to having them work through an intermediary.
An experienced broker, such as Transworld Business Advisors, to help navigate a very tricky sale fraught with danger to a competitor. You will need an attorney as well to make sure the business sale has the proper structure and protections throughout the process.
The first step to selling your business to anyone is determining your business’s worth. Once you have done so, you can choose a listing price that is both competitive and within market standards. When selling to a competitor, they will likely know what fair and competitive pricing is, therefore they may not be the best buyer in the end as they may not need all of your assets you have to sell.
Essentially, do not let instinctive distrust interfere with a potentially successful business deal. If the sale goes through, someone who was once your competitor could become your best friend in business.
There is no harm or unprofessionalism in asking all of your questions. For one, it is completely reasonable to wonder where their true interest lies. Are they hoping to expand their existing business? What are their plans for your business? Before you sign on the dotted line, it is still your company and what happens to it is your business.
Any deal and its corresponding negotiations can take much of your time, do not lose sight of what is critically important - your business and employees. A company is only as valuable as its latest earnings, which means it requires your attention to continue driving up revenue.
To sell your restaurant, you must follow many of the similar steps as selling all other small businesses. For example, getting your financials in order, determining the value of your restaurant, hiring a business broker, and pre-qualifying your buyers. That being said, a restaurant can be a little different because of the additional documentation you will need to accumulate and get in order. When preparing your restaurant for a sale, collect the following documents for potential buyers:
These documents will need to be available during the process, or at least, once the last contract has been signed. Not to mention, all of these documents are crucial for determining the value, how competitive your business is today and in the past, and what are the potential gaps that need to be addressed. For example:
Once you are organized, your business broker will help you market the sale properly. For instance, what does your restaurant have to offer that is unique to its competitors? Location, proximity to public transportation, views, outdoor space, etc. – all of these are factors that potentially set it apart and may the variable that attracts a potential buyer.
To sell your restaurant, your broker will introduce you to a network of vetted buyers who are not only willing to make an offer but are also qualified to make a purchase. After that, you will follow the same steps as other small business to negotiate and finally, sign on the dotted line.
There are seven easy-to-follow steps to help you get organized and ready to sell your small business.
The first step is determining the value of your business to find a competitive but accurate listing price. To do this, you will need to “clean up” your financials. In other words, balancing your balance sheets, calculating your profits versus cash flow, and the depreciation of any relevant equipment. There will come a time (after an NDA is signed) that a potential buyer will request to see your financials. You will not only want to be prepared, but also have the correct financials. A business broker and financial advisor can help you during this process.
Before you list your business for sale, you should prepare an exit strategy and boost your sales. The value comes from today and tomorrow’s sales, not yesterdays. An exit strategy means you will be prepared, regardless of whether the sale is inspired by retirement or sudden illness. If it is intentional, then you need to increase your sales in a way that makes the most sense for your business. This can be done through a new marketing strategy, like holiday discounts or social media contests, etc. Showing strong profit growth in the last two or more years of the business will make it that much more profitable and attractive to potential buyers.
Finally, a business broker will assist you in not only finding great potential buyers but also in pre-qualifying them. It is unfortunate to get excited about a buyer and then find out they cannot afford to meet the offer or secure financing. When a buyer is pre-qualified, your advisor will get contracts in order and secure a neutral meeting location to sign the paperwork and finalize the deal.
No matter what kind of small business you own, these seven steps are relevant across the board. From organizing your financials to hiring professionals who can guide you, you are one step closer to your next business venture once you have followed these steps and prepared your small business for sale!
There are a number of reasons why you might want to sell your small business. Whether the decision comes easily or not, it is still a significant one to make. The reasons may range from either the desire for new entrepreneurial opportunities or retirement being around the corner – whatever it is, there is no right or wrong reason to sell your business. In fact, sometimes the best thing you can do for yourself and your business is to let it go. New management just might be able to take it to new heights, freeing up your time to rest or seek new investments.
There are five main reasons why you should sell your business, consider these.
Your business is successful and it might be time for you to finally rest and enjoy the fruits of your labor. The thing is, even though you are done building doesn’t mean your business is done growing. By selling your business, it can continue to prosper and thrive even after you are gone.
Much like retirement, burnout may hit you suddenly. Unlike retirement, however, burnout is not an indication to take it easy or slow things down. This symptom can be directly linked to the business itself. If you are no longer passionate about your business, here is the opportunity to embark on new endeavors to reignite your inner entrepreneurial fire.
If new opportunities are knocking on your door, you likely need the financial means to pursue them. The quickest, easiest, and the savviest way to pursue these opportunities might be to sell your current business. This is an excellent reason to hand your business over to new management and get a fresh start elsewhere.
When the economy is doing well – much like it is now – and consumers have expendable cash to spend, investors are more interested in buying new businesses. If it appears to be a seller’s market, it just might be time to finally list your business for sale.
A really common, but difficult to identify sign that it is time to sell, is when you become more risk-averse. This essentially means that you are less willing to make risky decisions, which can be detrimental to your business’s growth and profit. Your business may begin to decline for no reason besides your managerial decisions. When this occurs, the wisest (although hardest) thing to do for your business is to sell.
Still not sure if it’s time to sell your business? An expert from Transworld Business Advisors can help you reach the best decision by listening objectively as you discuss the reasons why you might be ready to sell.
The idea of selling your business online may sound like a hoax from the youngest millennial in your extended family. However, using online resources can actually help you sell your business more quickly and effectively than using only print media and advertisements.
Online platforms may, on the surface, seem difficult to trust. However, Transworld Business Advisors has a trusted online network of vetted buyers and sellers, making the selling process run smoothly. Filtered by type of business, size, location, employee count and listing price, businesses can be easily located. This guarantees that no buyers will attempt to make an offer far below your carefully crafted listing price. In addition, because these buyers are already vetted, this saves you time and money.
A business broker is the most secure method of ensuring all offers are valid and worth sifting through. Otherwise, you run the risk of wasting valuable time needed to continue running daily operations in your business. The key to selling your business quickly online is sharing as much pertinent information as you can without revealing the identity of your business. Studies have shown that being honest leads to more offers than dishonesty, as it leads to less skepticism from potential buyers.
Once the offers have come in, you will need to sift through them and make a decision. With the help of your business advisor, you can begin to ask the important questions, including:
Selling your business online is a legitimate method for selling your business as it broadens the audience of potential buyers. When you do this working alongside Transworld Business Advisors, the buyers have been previously vetted to bring you peace of mind.
A general partnership means that there is more than one owner of a business. Essentially, partners share in the profits and the debts of the daily workings of the business. Because of that, when one partner wants to sell, they cannot sell the entire business. They can only sell their assets – i.e., their share of the partnership. If you are hoping to sell your share of a partnership, consider these 6 important steps.
Step 1: Review the partnership agreement which outlines how partners would address certain business situations, such as selling. The key to a seamless selling process is to not deviate from what was already agreed upon.
Step 2: Meet with your partner(s) in order to take a vote on how to dissolve the partnership and sell your assets. In moments of confusion or doubt, always consult state law on dissolving a business or partnership.
Step 3: Because assets can be both tangible and intangible, the next step is to determine which ones are to be sold. In a case where only a part of the partnership will be dissolved and the business intends to remain intact, the remaining partner may not wish to sell their mailing list or machinery.
Step 4: Pay off all debts. If that is not possible, reduce the value of the selling partner’s shares to reflect the percentage of debt the selling partner should assume.
Step 5: Consult a business advisor and perform a business valuation. Before you can sell any kind of business, you need to determine what it is worth.
Step 6: Find the right buyer! Once you have a business advisor and a valuation, you can sift through potential buyers to find the right one. Transworld Business Advisors has a network of pre-vetted buyers which makes the process that much more seamless.
If you are hoping to sell your share of a business, contact your local Transworld Business Advisors to ensure you have everything in order.
Finding the value of your franchise is not too different from a normal small business valuation. The first step is to begin with the assets, move into the revenue model, and then evaluate the cash flow. At the end of the day, in order to sell any business, including franchises, you must determine it’s worth before putting it on the market.
The first step is always going to be to organize your financials. The balance sheet, for instance, is crucial because it lists the assets, liabilities, and equity. Since assets have a definitive value, they are an excellent starting point for a business valuation. Assets can be anything owned such as office equipment, land, buildings, furniture, fixtures, etc. Determining their cost, in addition to their depreciation or increased value is important. For instance, equipment depreciates (decreases in value) with every passing month. Meanwhile, land typically increases in value. These factors matter when determining the worth of your franchise.
Next, the revenue model comes into question. Essentially, this means sales. Although sales are not easily transferable to net income, it is still a great indicator of performance. This is important because a buyer will find it valuable that your business is growing –– and this model can show the trend of growth.
Finally, the cash flow will come into question. This is important because sales do not translate to cash, and a potential buyer will want to know your cash flow. For example, a business that has little cash flow can be in debt – unable to pay employees or vendors. Strong cash flow makes the business much more valuable to a potential buyer.
These factors, together, will help you determine what your franchise business is worth. Thankfully, you do not need to be an expert. A business broker can help you organize your financials and put the puzzle pieces together to find that number. From there, they can help you find the right buyer for your franchise business.
Selling your business share to a partner is actually one of the most common ownership transfers among small businesses. This is mainly due to the fact that your business partner is already invested in the business, knows the books, and has a clear understanding of the business’s potential for success.
A business partner is someone who, like you, would want the legal transaction to be as smooth and seamless as possible. It is a negotiation without disagreements or concerns, and can actually be painless for both of you. The best thing to do is sign a “Buy-Sell Agreement” (also known as a Buyout Agreement) when the partnership begins. Why? Well, the primary purpose of this legal agreement is to outline the procedure for transferring ownership, the price, and the purchasing terms between partners. This way, both of you are protected from an emotional selling process at some point in the future.
In the Buy-Sell Agreement process, both parties agree on the basis for measuring the value of the business. This guarantees that no seller feels that the partner is increasing the cost in order to make a greater profit from the one attempting to leave. This arrangement benefits both parties and prevents any nasty disagreements or issues down the line. In addition, there is a security clause requirement for the departing partner to sign a confidentiality, non-compete and/or anti-solicitation agreement. This protects the remaining business partner from releasing someone with trade secrets into the hands of the competition.
To sell your share of the business, be sure to have a Buy-Sell Agreement ready and the good counsel of a business broker such as the knowledgeable team at Transworld Business Advisors. With this combination in place, the process can be quick and seamless.
Finding a buyer can be easy, but finding the RIGHT buyer can be a little more difficult. There are three simple steps you can follow to ensure you find a buyer that is perfect for your business. No matter what, however, the best way to sell your business is to follow the advice and guidance of an expert business broker.
Transworld Business Advisors has a full network of vetted buyers, who can be filtered by what your specific needs are. But first, get a formal valuation. A good potential buyer is going to ask for one. They want to know what your business is worth. A cautious buyer is not going to simply take your word for it, they want to know your asking price is not too low or too high – because either extreme is a red flag.
Secondly, it is important to spread the word. Although you do not want to alert employees or competitive businesses, you want to let your close acquaintances and business contacts know. These are the individuals who are familiar with your industry and can steer you in the right direction. Not to mention, your business partner might be willing to buy you out or a business contact may have someone in mind who is looking to invest. The possibilities are endless.
Finally, it is time to advertise. This is where the Transworld network comes in handy. By listing your business in this network, your listing is going out to our list of vetted investors. You will be listed by industry and cost – revealing just enough information to peak the interest of a worthy potential buyer.
During the entire process, take the guidance of the professionals who undergo these business deals every day. Hire a business broker to ensure a smooth selling process.
Finding the value of a business can often follow the same pattern regardless of the industry. However, because of the nature of the restaurant industry, it also has some additional elements. Here is how to find out what your restaurant is worth.
First things first, ask yourself these three questions:
There are a lot of appliances, equipment, and gadgets that go into running a restaurant smoothly. When you are listing your business, are you including everything inside the building or are you taking that with you to your next restaurant investment? This will, understandably, influence the overall worth of your business. The skeleton of a restaurant will be worth a little less than one that can be up and running soon after a deal is struck.
Secondly, eating at restaurants is often seen as a luxury because it can be costly. If the economy is strong, unemployment is down and salaries are going up, people might be more likely to enjoy a meal or two out a week - or possibly more. This detail will affect how much your restaurant is worth to buyers and investors. However, that is not the final deciding factor.
In fact, if you have strong customer loyalty, your restaurant will be worth much more to a potential buyer. Knowing that a transition in management will not affect sales is very appealing. If you have guests who come back, no matter the state of the economy or the changes in your restaurant, you can sell your business at a higher cost. Customer loyalty is a very valuable intangible asset. Check out your own reviews to see how they compare with the competition.
To determine what your restaurant is worth, you can use one of three methods: market valuation, asset valuation, or income valuation. In essence, while one factors in the current state of the market, the other factors in its assets minus liabilities. Finally, and likely the most common is the income valuation which factors in how much money new owners are likely to make once they take over. If you need help determining what your restaurant is worth, Transworld Business Advisors is experienced and ready to assist.
The decision to sell your business may have taken months or years to solidify. However, there is a sense of urgency or at least impatience that comes when the listing has gone live. That is completely understandable. Your business is out for the world to peruse and, hopefully, be purchased. When you are unsure of what to do once your business has been listed for sale, consider these eight steps for selling the business fast.
The process of selling your business fast is actually quite logical. Hiring a business broker who is skilled in the buying and selling of businesses and having them assist you with a comprehensive business summary means you are well on your way to selling your business. A business broker is incredibly helpful with the following steps. For instance, they can help you structure a detailed and effective marketing plan and will help determine the type of buyers you need to attract, where these buyers often search for new investments, etc. These are questions experts can answer. Not to mention, Transworld Business Advisors has a network of vetted buyers categorized by industry which serves to further streamline the process.
Finally, when you have found the right buyer, your business broker can help you understand the offer, make a counteroffer, if necessary, and prepare the paperwork for the sale. In fact, they are well-equipped to help you with the due diligence process, a necessary investigation that takes place before an agreement is reached and a contract is signed.
No matter what size business or industry, Transworld’s team of experienced brokers can help you sell your business fast.
When in doubt, contact Transworld Business Advisors of Minnesota. Transworld offers a free business valuation before you begin the process of listing your business for sale.
A business broker is well-versed in business valuations for a multitude of small businesses in every industry. At Transworld Business Advisors, you can schedule a free consultation to begin the valuation process – bringing you one step closer to selling your business. Use our free business valuation calculator to get an instant valuation range here.
A Transworld Business Advisor can help you build your Executive Summary once your report has been finalized. If you are summarizing your business for a potential buyer – including profit margins, depreciating land ownership, product launches, etc. should be included. Contact your local Transworld today to get started.
To buy a business, you often have to put a certain percentage down – like buying a house. It is not common but under the right circumstances, it is possible to buy a business with no (or very little) money down.
There might be several reasons why you cannot put money down, some common reasons include bad credit, your money is tied to investments, you are low on cash flow or you do not want to risk your own money. In these cases, you might want to look into alternative financing options.
These options will vary for each buyer but some possibilities for 100% financing when buying a business include:
Although uncommon and albeit, a little difficult, 100% financing for a business is a possibility. If you are looking to buy a business with little cash for a down payment, contact your local Transworld Business Advisors team. Our business brokers can help determine the best route for your specific situation.
In this day and age, almost anything is possible – including buying a business with little to no capital. That said, there are not many options to do so and you have to be negotiating with a complying seller. However, you can purchase a business and make monthly payments, much like paying back a loan. Let’s explore what this might look like.
In this scenario, the seller stays indirectly involved in the business while you gain the necessary knowledge to run their business once it has been fully bought out. The arrangement can look one of two ways:
Both the buyer and the seller are incentivized to advocate for the business’s success. For one, if the business begins to fail, the seller will no longer receive their payments. This means that you need to have a plan to convince a seller to enter this type of agreement with you. Not to mention, they have to be comfortable with a transition of management, as staff and vendors must know who the new owner is. The notion of keeping the seller indirectly involved means you have their guidance, but not their rulebook.
If you are hoping to buy a business, but find yourself in a situation with little to no capital, contact your local Transworld Business Advisors today. Our business advisors can help you find a seller open to negotiating this type of arrangement. Whether you establish a timeframe, a salary, or a payment plan dependent on profits, there may be an option that will work for your specific situation.
Selling your online business is not so different from selling any other small business. You can do so one of two ways – sell it yourself or sell it with the help of a third-party advisor. In both cases, you can successfully find a buyer and go through the negotiation process as you would when selling any business. However, it is important to consider the reasons why hiring a broker to help you sell your online business could be beneficial.
When selling an online business yourself, you will need to have the right tools for calculating the business value, organizing the financials, and determining where to best list it without revealing too much information. These are tasks that experienced business advisors or brokers can do for you as they have the access to the tools and know your market. To sell a business yourself, you still need to list it for sale alongside hundreds of other businesses doing the same with the support of a broker and you will also need to carve out the time to handle calls from interested parties to answer questions and vet them to determine if they would be qualified buyers. You have to ask yourself if you would know where to list the business and how to promote it if you were selling it yourself and determine if you have the time to handle this. You are already busy running a business and need to keep it successful as interested buyers would prefer to buy a successful business.
Wanting to sell an online business yourself is not an uncommon desire for business owners as they know their business well and feel they can be its best advocate but there is no doubt that a business broker who is fully dedicated to the sale of your business can help you secure a better offer and handle all the paperwork along the way. Having someone looking out for your best interests will bring great peace of mind. Transworld Business Advisors, for example, has its own network of buyers and sellers and all are pre-vetted and categorized depending on location, size, business type, and employee count.
If you wish to sell your online business, contact your local Transworld team today!
Businesses can often be sold quickly but it is important to remember that you don’t want to sell so quickly that you accept an unfair price or sacrifice due diligence. Selling a business that is not profitable can bring additional challenges, but that does not mean it’s impossible.
All things considered, in order to sell a business quickly, you will likely want to consider working with a business advisor that has experience in your industry as well as your location. The assistance of an experienced business broker can bring you peace of mind as you navigate unfamiliar territory and their expertise will be particularly helpful when positioning a business that is not profitable. With the help of a business broker and access to their network of interested buyers, you can be well on your way to your next business venture. Regardless of how quickly you want (or need) to sell your business, the first step when selling a business will always be to organize financial records and determine the business’s value.
Transworld Business Advisors has a full network of potential buyers who have been carefully vetted to ensure they can and are willing to make real offers. These buyers are identified by their interest in specific industries, budgets, and accessibility. With this access, you do not have to list your business for sale out in the open or do any major outreach – which can take months. Not to mention, all confidential information is protected and potential buyers will be required to sign a non-disclosure agreement (NDA) to proceed.
The value of a business is determined by several factors, therefore, there is no one exact science for increasing it. Of course, that also means that each individual business can find methods of increasing its worth that may look different from the competition.
That being said, to increase the value of your business, consider what you like best about your favorite brands. What comes to mind? Great customer service? Top-quality products? Convenience? This is true across the board. The best way to increase the value of your business is to put the customer first – regardless of your industry. When making decisions on services/products, store or online experiences, and the associates you hire to manage the day-to-day, consider the customer above all else.
A happy customer is one who is treated well, can easily find what they need, and keeps coming back for more because the product or service is that good. Yes, it is that simple – and this will increase the value of your business. Never compromise on quality to save on overhead costs. You must invest in what matters, to profit greater in the long run. Quality products and services, a pristine storefront or office, and happy staff that are like family will all make your business more valuable.
When calculating the value of a business, yes, profits and cash flow are major components. However, what many may not realize is that “goodwill” is just as important as bottom lines. A buyer is going to be interested in investing in a business that will have a quick return – one that already has a strong customer base and loyalty.
If you need guidance from an experienced business advisor as to how you can increase the value of your business, do not hesitate to contact Transworld Business Advisors.
The value of a business is determined by many factors including tangible and intangible assets. For example, profits and intellectual property matter as much as good reviews and customer loyalty. In the same way that having strong financials and returning customers can help your business, disorganized financials and displeased customers can decrease your business’s worth.
In other words, what can help your business can also hurt your business, depending on how it is managed. Prioritizing employee morale and customer satisfaction can make a significant difference in how your business is literally valued, and “valued” by potential buyers.
To start, make sure your books are clean. Do not wait until you are ready to sell to focus on your financial statements, balance sheets, and other documentation. Not only will this make selling easier when the time comes, but it will also help you while you are still in management. Understanding your books can help you make your business more profitable; consider the following questions, for example.
The answers to all of these questions (and more) can both increase the value of your business value or decrease it. In essence, it is important to manage your business well if you hope to have a business that is worth what you hope to sell it for. If you are unsure of where to start as it is understandably a potentially daunting process, contact a business advisor who can simplify it and guide you through it. Transworld Business Advisors has a team of experienced business advisors available to assist at any time. Contact us today!
A business valuation is a tool usually used to get certified reports that are valid for IRS or litigation purposes. A simplier Broker Opinion of Value (BOV) can be performed to determine the listing price for a business ready for a sale. However, it can also be done to simply determine the business’s value as you are looking to improve and/or grow your business. That said, did you perform a BOV (or business valuation) a few months (or even years) ago and wonder if it is still valid? That is a great question. The answer is: it depends.
To determine this, consider the following questions.
Once you answer these questions, you can determine if it is time for a new business valuation. Essentially, if you find your business has changed substantially since the last business valuation, it is in your best interest to have a new business valuation done. It is best to make informed decisions and you want that information to be accurate and up to date.
If you need an answer that offers a tangible timeline, many experts say six months. During this period, you have been able to see two quarters of profits and depreciation, which could serve as significant components for a re-calculation of your business’s value. Of course, if in doubt, call your business advisor, and they can pick up from your last BOV or business valuation. The truth is that it does not hurt to see where your business currently stands, especially if you are considering selling your business.
Need an experienced business advisor to perform your BOV? Contact Transworld Business Advisors today. With locations around the country and expertise in countless industries, our team is ready to help.
The overall economic impact of COVID-19 is still unknown but the immediate effects on the economy and our daily lives are truly detrimental. The economy has certainly seen its up and downs; these constant fluctuations have made running a business that much more difficult. You may ask yourself; how do you value a business during coronavirus?
To begin with, you need to understand the fundamentals of a basic business valuation. As you may know, it has everything to do with income, markets, and assets. This still rings true in the COVID-era, even if it looks a little different.
Rather than showing past success, since much of the economic fluctuations that have been brought on was completely out of your control, business valuations have become more forward-thinking. What is the future economic benefit to an investor? What were some creative ways you kept your business afloat during lockdowns and limited capacity openings? The mere fact that you survived an unprecedented hit, and perhaps even thrived, adds incredible value to your business.
During coronavirus, business valuations will ask the following questions:
Overall, the future is uncertain but it can still be bright. Your ability to evolve with society’s needs and meet expectations is invaluable. This is why, during the coronavirus era, a business valuation is not as black and white. An experienced broker from Transworld Business Advisors can walk you through the process and help you determine the value of your business despite coronavirus.
Yes, you can! A business is made up of so much more than open doors to a brick-and-mortar or its profit margins. A closed business does not mean the end of its value or sale potential. If your business has unfortunately closed recently, there is still value that will interest a prospective buyer.
Whether your business closed as a result of the impact of COVID-19 or as a result of something completely unrelated, you CAN sell your closed business. Although an incredibly unfortunate circumstance, it is not the end of the rope for your business.
As a business owner, you know more than anyone that a business is made up of its inventory, customer base, and marketing strategies. Perhaps you can no longer afford the rent and are forced to close your doors but where is your merchandise going? What happened to the equipment used for the services you offered? A competitor or similar business might be interested in purchasing your physical assets. With additional inventory, they can grow their business without perhaps having to manage an entirely new company.
Did you have a loyal customer base? If so, that can have a lot of value. Whether it looks like an actual customer list, email list or followers on a social media profile, exposure is worth something to a prospective buyer. A competitor – perhaps in the same industry – might be interested in getting their hands on your contacts. With the help of a business broker, there are privacy-protecting and data-security-friendly ways to monetize this information on your behalf.
There is also the possibility that a competitor might be interested in purchasing your business in the hopes that they can expand their own existing business’ footprint with a new location.
Having the guidance of an experienced business broker from Transworld Business Advisors can make all the difference. Our team can help you explore your options. Your closed doors don’t have to be the end of your business.
When a company is dissolved (or closes), the assets must be liquidated (i.e., sold). The process often involves an auction of the company’s non-cash assets, liquidation sale over time or an complete sale to a buyer. In many cases, the funds acquired from these sales are then used to repay loans or may be pocketed by the owner.
What are non-cash assets? Assets can include:
This means there is going to be a very specific group of interested buyers – often, competitors are the most interested in your assets. Thankfully, because they are in the same industry (more often than not, running a very similar business), your assets are very beneficial to them. The price for these assets is decided by market value, which can be established by an intermediary to keep things fair.
Selling the assets is often necessary to recoup as much money as possible for the company’s creditors. This will ensure the owner is not left owing significant amounts of money, on top of everything else that goes into closing the business.
Since no two business closures are alike, one cannot predict the outcome with accuracy. This is why we need professionals. Transworld Business Advisors has a team of experts in all things business. If you are on the brink of a business closure or are currently dealing with the aftermath of one, our local advisors can guide you through the important and extremely necessary next steps.
COVID-19 has affected everything. Before March 2020, we used to wake up, get dressed and drop the kids off at school on the way to work without much thought about anything else. We would open up our stores, turn on the lights, and greet customers with a smile and a wave. Now that all looks very different., our businesses may have been shut down for some time And our revenues may have dropped considerably during that period.
It goes without saying that COVID-19 Crisis affected most businesses. To stay afloat, business owners in every industry had to get creative fast. With an inability to leave homes or reducing their exposure to other people, customers preferred items delivered or had the option for curbside pick-up. For many businesses, those options were foreign concepts a mere 10 months ago before coronavirus. The same goes for business valuations – there is no doubt how one values their business has completely shifted after 2020.
So, how does COVID-19 impact business valuations moving into the future? To put it simply, determining the value of a business now has much less to do with the past, and much more to do with the future. Investors and prospective buyers understand profit margins are going to be lower in 2020 than in previous years. The interest now is in how the business survived COVID-19. What did it look like before the crisis in 2019? What did you change to help the business stay afloat? How has this helped your profits in the last 4-6 months? And, most of all, what is your plan to continue to grow in the next 4-6 months? The answers to these questions will help potential buyers see the value in your business.
If you have questions about determining your business’s value as a result of COVID-19, do not hesitate to contact your local business experts at Transworld Business Advisors.
Questions about buying a business answered
Buying or selling a business can be a complicated venture. While some businesses are sold without the help of accountants and attorneys, we strongly recommend that both the buyer and seller engage professionals.
While the e-2 process is quite complex and we certainly recommend a consultant that specializes in obtaining visas, several of Transworld’s agents have done numerous E-2 transactions and can provide enough help to move you along the process.
Our website, www.tworld.com, has a search page where you can look at thousands of businesses. There are a lot of other websites that have businesses for sale. If you find any business for sale, please call your Transworld representative and we can contact the seller or other broker on your behalf.
Transworld is generally paid by the seller not the buyer. However, other costs do come into play. Legal and accounting fees are generally required and additional startup costs may also come into play.
Depending on the complexities of the business, the former owner will offer varying levels of training. On most small businesses, the owner will offer training for two to four weeks at no cost to the new owner.
As part of the acquisition process, you will have to go through “due diligence.” During this period the seller is required to present documents to verify his profit numbers.
No, while 100% of the purchase price is sometimes required, sellers will frequently provide owner financing to some extent. Additionally, a bank may be able to loan up to 80% of the purchase price through a loan sponsored by the Small Business Administration.
Businesses vary in price a great deal, however, it would be unlikely that one could buy a business with much less of a down payment than $20,000.
Yes! As an entrepreneur, you may romanticize the idea of being your own boss. The question is, how do you get there? The first thought is often starting your own business. Although that has numerous advantages, starting from scratch understandably comes with challenges. It is important to note that being an entrepreneur is not limited to starting a business from the floor up, in fact, there are several advantages to buying an existing business.
For the most part, buying a business is considered less risky merely because it is already established. An established business has a vendor and supplier list, a customer base, and an entire trained staff already in place. There benefits of acquiring a company with a good financial history and immediate cash flow. With customer loyalty, there is goodwill –and is likely one of the most important and incredibly valuable intangible assets when you buy an existing business. Meanwhile, a new start-up business must build the market for its goods and services, create a following, develop a financial history, etc., all while trying to create some cash flow.
An existing business may not only have a storefront but probably also comes with equipment and inventory – which can be a major upfront investment. Although you may think this is reflected in the listing price, it is important to note that the previous owner already had seasons of trial and error to establish which equipment worked best and which inventory is most popular among its customers. This information is priceless as it will save you time and money.
Although every investment comes with ups and downs, purchasing a business is a good idea. This is especially true for someone who wants to invest and see a return quickly, rather than someone with the time, patience, and energy to dream up something new.
If you are thinking about buying a business, Transworld Business Advisors has an experienced team of business brokers in offices across the country ready to help you find the right business to buy. If you have not settled on a specific industry, our brokers can discuss the details of each with you as you narrow down your options.
Now that you have decided you would like to buy an existing small business, you are likely wondering what is next. Well, finding the right business to buy can be simple but you will need to be prepared, understand what is expected of you, and ensure you have the right kind of support on your team.
Step 1: Ask yourself: What kind of business would I like to buy?
You need to decide what industry you might like to enter. Does this industry align with not only your interests but also your skills? What kind of products or services do you feel confident you can market and sell successfully? All these questions are important before you make an offer on an existing business.
Step 2: Hire a business broker.
Now, before you begin your search, hire a business broker. Not only are they a great help for negotiations and contract drafting and signing, but they are also experts in both the selling and buying process. With a unique perspective from both sides of a sale, they provide invaluable advice during the process. Not to mention, they will come in handy with checklists, strategies, and a network of sellers with businesses for you to choose from.
Step 3: Establish your goals.
Before your search, you will need to establish what your goals are. For instance, what is your budget? What is the maximum amount you can spend? Not to mention other factors that need to be considered such as what industry, company size, location, sales, and staff you are interested in for investment. Without these goals, the search will be overwhelming and fruitless.
Step 4: Research! Search for businesses on sale
Your Transworld business broker has access to an extensive network of businesses for sale. With their guidance, you can punch in your preferred parameters (the goals you have established) and then begin your search!
Step: Make an offer!
Meet with business owners and tour the businesses. Getting to visit business you have interest in and meeting with the owners is crucial. Once you have reviewed the offering and met with the owner, at this point, you you will want to make a contingent offer on the business. If it is accepted then you can start the next step.
Step 6: Do your due diligence!
Have a signed purchase and sale agreement or LOI? It is time to do your due diligence. For due diligence, you will need to have a team of lawyers, accountants, and brokers in your corner. At this point, the experts need to do a deep dive into the business’s financials to ensure everything they have said about their numbers is true. To help, use this checklist As a start.
Step 7: Go to the closing
Once all the supporting documents, leases and contingencies are handled. You can move to get the deal closed and start the transition period! Congratulations!
To buy a small business, you will need money on hand to make the purchase but arguably, the most important thing you need is a trusted and experienced business broker. Your broker will walk with you through the entire process and serve as your eyes and ears to help ensure you purchase a business you love and that the process is smooth from beginning to end. With knowledgeable brokers across the country, you can count on Transworld Business Advisors – contact us today.
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From business brokerage to mergers and acquisitions, we are the business sale specialists.