• 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.

Related posts:

1. Why isn’t my business selling? Almost nothing is as upsetting to a business owner than...
2. Selling a Small Business as a Short Sale Drowning in business debt!?! Even when a company’s sales start...
3. Jered Chapman joins BizEx Business Brokers in Marina Del Rey MARINA DEL REY, CALIFORNIA (June 21, 2011) – BizEx is...

Related posts brought to you by Yet Another Related Posts Plugin.

Restaurants, coffee shops or bars are valuable even if they are not showing a profit. These kinds of businesses are valued through the replacement value technique which assumes a buyer pays the seller a price that is not dependent on the income value to benefit from the existing investment in the restaurant facility, the lease and the location. In other words, the buyer is starting a restaurant business at a discount and will pay for the right to avoid spending hundreds of thousands or even millions and avoid all the delays and city regulations in building a new restaurant

Here is what a restaurant –seller has to say when he received an offer on his business.
“…they see that the only valuable asset of a restaurant is the equipment such as freezer, refrigerator, oven, ice maker and the espresso machine. Sure this equipment can easily be bought at discounted price from restaurant equipment liquidators. I bought some of them myself.
But to open this restaurant, I spent more than the cost of these machines. I paid an architect to draw the layout so this will pass the permit requirement. I had to present these plans to the city’s planning committee for their approval and that was not a stroll in the park. And then the contractor, oh boy… Our target was 3 months. It took us 9 months to finish building this 1000sf restaurant! My landlord gave me 2 months TI (tenant improvement) period but after that I had to pay rent month after month until the construction was completed. I had a great location in Santa Monica but it sure was not cheap, $250,000. I won’t get into the details but it is hard to put a value on the time, sweat, and near-breakdowns I put into this business… And then I get an offer for $10,000 because the buyer thinks my used equipment is only worth that much. I know I won’t get back the money I invested but come on.”
****
When valuing a Restaurant using the replacement value technique, you  need to take into consideration the costs of the following Assets:
- Tenant Improvements (electrical rewiring, plumbing, heating and air conditioning. cosmetic changes, build outs)
- Fixtures (hood system/ventilation, grease trap, walk-ins, shelving units, lighting)
- Permits and licenses (health permit, ABC license, entertainment permit, extended hours to operate)
- Location, location, location (Is this even replaceable?)
- Lease
- Goodwill
- Equipments
- Furniture
- Clientele/Database
- **Alcohol license (ABC License Type 41, Type 47 or Type 48)

Mina Singson is an experienced Restaurant/Bar Broker.  She has listed and sold different types of restaurant businesses. For  a free consultation, please contact Mina Singson at 310-882-2200 ext. 125 or email: msingson@bizex.net

Related posts:

1. How to Appraise a Restaurant Business As written for ehow.com… There are several reasons for appraising...
2. What Is a Typical Restaurant Business Worth? As written for ehow.com… What Is a Typical Restaurant Business...
3. Preparing a Restaurant for Sale If you are considering selling your restaurant, preparation is essential...

Related posts brought to you by Yet Another Related Posts Plugin.

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)?
• 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.

Related posts:

1. What Is a Typical Restaurant Business Worth? As written for ehow.com… What Is a Typical Restaurant Business...
2. How to Appraise a Restaurant Business As written for ehow.com… There are several reasons for appraising...
3. What Is a Typical Restaurant Business Worth? http://www.ehow.com/info_8360777_typical-restaurant-business-worth.html...

Related posts brought to you by Yet Another Related Posts Plugin.

http://www.ehow.com/info_8360777_typical-restaurant-business-worth.html

No related posts.

Related posts brought to you by Yet Another Related Posts Plugin.

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!

No related posts.

Related posts brought to you by Yet Another Related Posts Plugin.