If you are thinking about selling your business sometime in the next few years, it is time to start working on maximizing its value. Maximizing your business value is directly associated with reducing the buyer’s perceived risks. Buyers determine the value they are willing to pay for your business based on their perceived “Risk vs. [...]
If you are thinking about selling your business sometime in the next few years, it is time to start working on maximizing its value. Maximizing your business value is directly associated with reducing the buyer’s perceived risks. Buyers determine the value they are willing to pay for your business based on their perceived “Risk vs. Reward”. They often focus on the risks because they fear losing their investment if something goes wrong. I’ve listed some great ways to reduce buyer fears, and also maximize your business value.
Bookkeeping
The number one way to maximize your business’ value is to get approved for SBA lending. Third-party financing increases your business value by allowing the buyer to put less money down, providing a better cash-flow analysis. It also pays you more money when the business sale closes because the lender will be financing the majority of the purchase price. In today’s economy, banks providing SBA lending require a rigorous evaluation process and solid documentation, including tax returns, income statements, accounts receivable/payable, financial recasts, and other specific documents. Having a bookkeeper accurately maintaining your accounts and finances is a great way to keep your information organized and easily accessible. Clean books and records will also make the due diligence process easy for a buyer.
Inventory Management
Your business relies on turning inventory, and without proper inventory management, a buyer will have a hard time determining if your inventory is making or losing money. In sporting goods, new equipment lines roll out every 3-12 months. Know the product lines you are selling and have a tangible system in place that identifies which items are selling and which are not. This will help you decide when to put last season’s equipment and apparel on the sale racks so you can replace them with the new season’s products. When a buyer looks at your business, they want to see that you are turning inventory quickly and not wasting space with items that aren’t selling.
Transferable Marketing Plan
What is your marketing plan? Finding, servicing, and retaining customers IS the sporting goods retail business. When a buyer feels they can duplicate or even improve on existing marketing strategies, they feel more confident about your business. Be able to present a formal marketing plan and demonstrate how it is transferable to the new owner. It will help your business stay on track and reduce the buyer’s perceived risk of taking over your business.
Customer Loyalty
If your customers come to your store because of your personal expertise, it may mean that they are loyal to you more than your store. Customer loyalty is a large part of your goodwill, and a buyer wants to feel confident that those customers will come back once you are gone. Have a plan to train the buyer and have an exit strategy that considers you staying on part-time until customers feel as confident with the new owner as they are with you.
Lease
For sporting goods retail, location is very important to your success. If you have a great location, buyers will place higher value on longer leases with favorable terms because they want to secure the location. Know the details of your lease, and maintain a good relationship with the landlord. A happy landlord can expedite the process of transferring the lease and prevent the deal from falling apart.
For more information or help with selling or buying your business, contact Health & Fitness Business Broker, Jered Chapman at 310.882.2200 ext. 129 or jchapman@bizex.net
By Jered Chapman | BizEx Business Broker | 310-882-2200 Ext 129As with most businesses, price is a prime factor in selling a restaurant fast. However, restaurants can sell for their asset value alone, such as furniture, fixtures and equipment (FF&E) along with their permits and licenses. Knowing how to value those assets is the key to selling a restaurant quickly. Price is not the only [...]
As with most businesses, price is a prime factor in selling a restaurant fast. However, restaurants can sell for their asset value alone, such as furniture, fixtures and equipment (FF&E) along with their permits and licenses. Knowing how to value those assets is the key to selling a restaurant quickly.
Price is not the only determining factor in procuring a quick sale. You need to get into the “buyer mindset” and make sure a buyer sees the same value in your restaurant as you do. Here are some no nonsense step to getting your restaurant sold fast:
1. Price – Price – Price!!!
Just like anything else… the better the deal, the faster someone will snatch it up. Some factors that go into determining the price are location, FF&E replacement values, permits and licenses.
2. Make it easy to understand -
If you want to sell your restaurant above and beyond the asset value, make sure your books and records are in order. If someone can’t understand your books and records, they generally aren’t going to pay much for your restaurant.
- Put together a list of inventory and other assets such as furniture, fixtures and equipment (FF&E) and list their replacement costs.
- Make sure you have straight forward profit and loss statements for the last three years
- Find a way to prove cash sales (start keeping a handwritten record on the side, if necessary)
- List out your cost of goods sold (COGS)and monthly food waste costs, if possible
- Have any employment contracts organized and ready for review
- List out any debt that will need to be dealt with in the sale
3. Write up your story-
How and why you opened this restaurant, what are the opportunities and the obstacles and why you are selling. Also, list how you advertise to customers. Quote some reviews, etc.
4. Clean it up-
Make sure chairs, tables and décor are in good shape. The kitchen and bathrooms should be spotless and free of clutter and all equipment should be operational. Your staff should be friendly & knowledgeable and the general environment should be pleasant to customers. Also note that messy inventories tend to scare away buyers.
5. Review your lease- (unless you are selling property with the business)
Make note of your expiration date, what extension option you have and any transfer clauses. A buyer will either assume your current lease or negotiate a new one depending on the factors within your lease agreement.
6. Get a restaurant broker-
A good restaurant broker will help you get organized and help you determine the best price to expedite the sale. They will also advertise on the plethora of websites (I, for instance, advertise on at least 100 local, national and international sites dedicated to selling restaurants and businesses). A good restaurant broker will also discreetly market to people within the restaurant industry, help you negotiate the best deal and, most importantly, make sure the deal closes.
There is a lot that goes into selling a restaurant, much more than many other types of business. A restaurant needs be positioned for sale to get it in front of the right buyers. We currently have over 3,000 buyers in our database alone. For a free consultation, please don’t hesitate to call Restaurant Broker, Shelli Margolin-Mayer at (310) 882-2200 ext. 128. http://www.bizex.net/business-broker/shelli-margolin
Price is not the only determining factor in procuring a quick sale. You need to get into the “buyer mindset” and make sure a buyer sees the same value in your business as you do. Here are some no nonsense universal step to getting your business sold fast: 1. Price – Price – Price!!! Just [...]
Price is not the only determining factor in procuring a quick sale. You need to get into the “buyer mindset” and make sure a buyer sees the same value in your business as you do. Here are some no nonsense universal step to getting your business sold fast:
1. Price – Price – Price!!!
Just like anything else… the better the deal, the faster someone will snatch it up.
2. Make it easy to understand -
If someone can’t understand how you do business and how you derive your net profit, they generally aren’t going to buy your business at any price.
- Make sure you have straight forward profit and loss statements for the last three years
- Put together a list of inventory and other assets such as furniture, fixtures and equipment (FF&E) and list their replacement costs.
- Have any employment contracts organized and ready for review
- Organize your customer/client lists
- List out any debt that will need to be dealt with in the sale
3. Write up your story-
How and why you got started in this business, what are the opportunities and the obstacles and why you are selling. Also, tell the story of how your get and service customers/clients, etc.
4. Clean it up-
Make sure the physical business environment will present well. (Unless, of course, you are selling an internet business or a service that won’t prompt someone to visit you.) Serious buyers will generally want to meet with you at your place of business. Also note that messy inventories tend to scare away buyers.
5. Review your lease- (unless you are selling property with the business)
Make note of your expiration date, what extension option you have and any transfer clauses. A buyer will either assume your current lease or negotiate a new one depending on the factors within your lease agreement.
6. Get a business broker-
A good business broker will help you get organized and help you determine the best price to expedite the sale. They will also advertise on the plethora of websites (I, for instance, advertise on at least 100 local, national and international sites dedicated to selling businesses). A good business broker will also discreetly market to people within your industry, help you negotiate the best deal and, most importantly, make sure the deal closes.
There are many factors that determine the length of time it takes for a business to sell, price being the most important. Plus, there is a lot that goes into positioning a business for sale and getting it in front of the right buyers. We currently have over 3,000 buyers in our database alone. For a free consultation, please don’t hesitate to call me, Shelli Margolin-Mayer, at (310) 882-2200 ext. 128. http://www.bizex.net/business-broker/shelli-margolin
Knowing what a business buyer wants is the key to selling your business and getting the best price for it. In this market climate, most buyers are looking for two things, a cash flowing business and a deal. Here are a few things that a business buyer is gong to want to know that will [...]
Knowing what a business buyer wants is the key to selling your business and getting the best price for it. In this market climate, most buyers are looking for two things, a cash flowing business and a deal. Here are a few things that a business buyer is gong to want to know that will allow the buyer to asses the situation and determine if yours is the right business for them.
• Is the business currently producing an income for the owner?
• Is the business seller retiring and fully funded his or her retirement plans? • Does the sale of the business only represent a small part of the retirement portfolio?
• Is the business debt free?
• Do the financials show that the depreciation schedules are completely exhausted?
Affirmative answers to these questions tell the business buyer that the business is making enough money for their needs and you are indeed in a financial position to sell your business and sell it within the constraints of the marketplace.
Another thing that a buyer is going to want to know about is your plan for the future. Nobody wants to get to the closing table only to have the owner decide that he or she wants to keep the business. Equally, nobody wants to buy a business only to find out that you’re going to open a competing business. This is why buyers like sellers that are clearly of retirement age and means. If your business is complex or highly personal in nature, a buyer may require that you stay involved in the business for a period of time to provide a seamless transition. If you have dreams of selling your business and moving to the Caribbean, this might be achievable. You may only have to adjust your time line a bit.
Now that you know some of the keys to attracting a buyer for your business, the next step is to find the right buyer for your business. To do that you’re going to want someone to help you who understands business buyers.
Kendric Foultz is a certified business broker with decades of experience in deal making and working with business buyers and sellers. Feel free to give him a call regarding your business related issues at 310-968-2369.
By Kendric Foultz CBB, BizEx Business Broker Profile 310-882-2200 Ext 102If you are considering selling your restaurant, preparation is essential in order to make the sale easier, faster and more profitable. Buyers will usually estimate the value of a restaurant beyond a wonderful menu and steady clientele. Their assessment will determine what they are willing to pay. Having all aspects of your restaurant in order [...]
If you are considering selling your restaurant, preparation is essential in order to make the sale easier, faster and more profitable. Buyers will usually estimate the value of a restaurant beyond a wonderful menu and steady clientele. Their assessment will determine what they are willing to pay. Having all aspects of your restaurant in order is the key to a successful sale.
Many of the steps below may seem like no brainers. However, often restaurant owners are so engrossed in their day to day operation that they over look simple things that can drastically effect how buyers will perceive their restaurant.
It is crucial to look at your restaurant through the eyes of a buyer and ask yourself some key questions:
- Are your books & records organized?
- Can a buyer clearly understand how much profit you make?
- Is your profit provable on paper?
- Do you have cash sales? Can you easily prove those sales to a buyer?
- Can you show on paper what your costs are (food, labor, waste, etc)?
- Can a buyer clearly understand how much profit you make?
- When the restaurant is closed to the public, what does it look like?
- Is it clean?
- Are the chairs, tables and décor in good shape?
- Is the kitchen spotless and free of clutter?
- Are the bathrooms spotless?
- Is all your equipment operational?
- When the restaurant is open, how well does it function?
- Is your staff friendly & knowledgeable?
- Is the environment pleasant to customers?
- Are all your permits and licenses valid?
- Is the restaurant in compliance with the County of Los Angeles’ new food handler’s regulations?
- Do you have any outstanding violations?
If you answered no or wavered on any of these questions, then you need to take corrective measures before you place your business on the market. In order to sell your restaurant for the best price, all of the aforementioned elements need to be in place.
Coherent financial data is vital. There are ways to mitigate messy books and records. However, if buyers can’t determine your revenue, costs and profit, then selling your restaurant becomes extremely difficult and you most certainly won’t get the price you want.
Buyers will want to tour the restaurant when guests and staff aren’t around in order to ask questions and assess the furniture, fixtures and equipment (FF&E). You’ll want to take whatever steps are feasible to make the restaurant as presentable as possible. Buyers need to have a positive emotional response on first sight. The cleanliness of a restaurant affects the overall desirability and thus the ultimate price.
While you are cleaning, take a second look at your staff and overall operations. Buyers will be scrutinizing how your restaurant runs. If they are sophisticated buyers, they will not only come in to get the costumer experience, they will send others to check out the service and environment too.
During due diligence, the potential buyer will want to see your permits and licenses. You’ll want to make sure they are all valid and any violations are corrected well before the due diligence period. If they aren’t in order, your risk losing the sale.
There is a lot that goes into selling a restaurant, much more than many other types of business. For a free consultation, please don’t hesitate to call Restaurant Broker, Shelli Margolin at (310) 882-2200 ext. 128. I’m happy to help.
By Shelli Margolin | BizEx Business Broker Profile | 310-882-2200 Ext 128
http://www.ehow.com/info_8360777_typical-restaurant-business-worth.html By Shelli Margolin | BizEx Business Broker Profile | 310-882-2200 Ext 128
http://www.ehow.com/info_8360777_typical-restaurant-business-worth.html
By Shelli Margolin | BizEx Business Broker Profile | 310-882-2200 Ext 128Want to know what your business is worth? BizEx Business Brokers has a fun and interesting tool available for small business owners. Just answer some basic questions and our site will show you the estimated value of your company. The valuation process is based on the Multiple of Earnings Method, which is the most common [...]
Want to know what your business is worth?
BizEx Business Brokers has a fun and interesting tool available for small business owners. Just answer some basic questions and our site will show you the estimated value of your company.
The valuation process is based on the Multiple of Earnings Method, which is the most common process used for small business valuation. It’s a fairly simplistic tool, but it’s online and it’s free.
Free Online Business Evaluation Tool
I would appreciate any feedback you might have as we’d like to create a version 2 down the road.
Thanks!
By Michael S. Davidson | BizEx Business Broker Profile | 310-882-2200 Ext 101
