Often selling a business comes down to storytelling. The buyer and seller are the main characters of the story that is being told. The seller is the one relaying the story, and the ideal buyer is the one who truly sees the future opportunity.
A Brokerage Professional Can Help Tell Your Story
The simple fact of the matter is that often even sellers don’t know what the true story of their business actually is. They tend to lack the proper perspective as they are too deeply involved. Sellers may be burnt out or have never really thought through the story of their business in the first place.
Business brokers and M&A advisors serve a great function as a third party who can look at the story from a different perspective. These professionals are numbers people, but it goes beyond that, as they can clearly see your business as a story to be told. And they can help you control that storyline for optimal results.
Embracing the Human Element
In order to tell the story of the business and why a buyer should want to buy it, it is necessary for your business broker or M&A advisor to truly understand your business. This is why good communication is so important. After the interview process, these professionals must precisely arrange all the relevant information in such a way that the buyer can digest it and see the potential within the business. Through that means, a prospective buyer can understand that value and envision him or herself as the hero.
It Goes Beyond the Financials
Business brokers and M&A advisors also help sellers determine the price and work as advisors on pricing. The story of the business does start with the financials and the facts. But this is only the beginning of the process. Brokerage professionals will want to interview you to learn how to weave together your story.
In the end, every story has a moral. It is important to pull all of these elements together to make an engaging story that will ultimately inspire and motivate a buyer to buy the business.
Storytelling Leads to Successful Deals
When buyers open their minds to the story being told, they are able to envision the future potential of the business and why it is going to be a valuable opportunity. At the end of the day, selling a business isn’t strictly about numbers, figures, facts, profit and loss margins, and other financial variables. Instead, it is also about the people.
The post Telling the Story of Your Business appeared first on Deal Studio – Automate, accelerate and elevate your deal making.
So, you’ve decided that enough is enough and you want to sell your business. You’re probably thinking of enjoying retirement or pursuing other goals such as starting another venture or becoming a monk. Whatever your motivation is, it’s ultimately your business and your choice.
Regardless, NYC selling a business is no laughing matter, and, before going any further, you should probably consider getting in contact with a competent business broker. Long Island brokers with extensive experience and credibility can point you in the right direction so that you avoid any mistakes in your business selling process. Any blunder in your sale proceedings can potentially plunge you into a downward spiral of financial and emotional havoc.
To help you identify some of these errors, we’ve compiled a list of 4 common mistakes that business owners make when trying to sell their business. Let’s unpack them, one by one:
1. Lack of Preparation
In this context, “preparation” refers to all the actions that must be undertaken prior to a sale.
If you plan to sell your house, you should undergo various preliminary tasks, such as fixing the plumbing, sweeping and scrubbing the floor, dusting, and organizing every corner so that visitors may be left with a good impression and feel enticed to make the purchase.
Likewise, business brokers (Long Island-based or from any other region) would advise their clients to make their businesses attractive to buyers through various means, such as increasing their revenue, expanding their reach, working out their staffing problems, and getting their financial situation and documentation in order. These actions would positively affect the outcome of a business valuation.
2. Reluctance to Getting Business Brokerage
Long Island is a tough place for doing business, and if you managed to jump through all the regulatory hoops and one-up your competition, you definitely know your way around the trade. However, you don’t know absolutely everything (no one does), and you may consequently be unaware of the many facets of a business sale.
Just as you would require a bookkeeper or accountant to keep track of your cash flow or your tax returns, to secure a successful deal you ought to count also on the knowledge and mastery of a good business broker Long Island has a very competitive market for business brokers, and you’re almost guaranteed to find a trustworthy business brokerage firm that you can afford.
3. Too Much Confidence
Confidence in a sale is not unhealthy. Overconfidence, on the other hand, could lead to serious mishaps, such as accepting an offer at a deep discount thinking it’s a fair price.
Just as it’s easy to err on the higher end, there’s also the risk of falling prey to undervaluation. For this reason, it’s crucial to get the assistance of a skilled business broker. Long Island brokers – especially those with a strong financial background – can offer a more level-headed approach to business valuation, keeping you from making an irreversible mistake you could regret for the rest of your life.
4. Confidentiality Breach
Being open about your business sale is almost guaranteed to produce a dent in its productivity and profitability. Staff performance and morale could take a toll, and turnover would also suffer as a result.
Business brokers are trained to prevent information leakage, especially when dealing with prospective buyers. That way, you can rest assured that whatever happens at the negotiating table remains there.Read More
Whenever you wish to sell a business, it’s always a good idea to count on the assistance of a good business agent.
However, you should not expect the business broker to take care of all the problems. Some Long Island business brokers can be overly picky when deciding to list a business for sale, which is highly understandable once we consider the complex regulatory framework that must be complied with, coupled with overload owing to the recent spike in demand for business brokers.
Simply put, you would have to convince, not only a prospective buyer but, at times, even your own Long Island business brokerage firm that your venture is worth dealing with. Good brokers can offer assistance to companies with specific and workable management glitches, but that doesn’t mean that they alone can turn the tides in your favor without your input. In several situations, they could simply decline to list your business to protect their reputation and save time and money.
These are, in a nutshell, the main reasons your business may not pass muster in the eyes of a Long Island business broker:
For one, business brokers sift out clients who are overly intransigent or emotional when it comes to their business’ valuation. We find this point worth elaborating upon:
In terms of business valuations, feelings are not weighed into the market value of an asset, but it’s the market that ultimately determines how much said asset costs. As a business owner, you may think your business is worth a given amount, but, bluntly speaking, the market doesn’t care about your subjective estimation.
It’s the role of a Long Island business broker to give an objective assessment and to inform sellers of how much the market is willing to pay for their business so as to not give false hopes or expectations. By doing that, brokers are behaving in their clients’ best interests, because a fair valuation ensures a quick and successful sale.
Another factor to keep in mind is the willingness on the part of the client to provide pertinent documents and information to the broker in a timely manner.
Brokerage firms require the most accurate data possible about the companies they sell. To that effect, they should be able to ask tough or uncomfortable questions (just as a lawyer would) to satisfy potential buyers who would also likely ask those same questions and, in consequence, secure the best outcome possible for their clients. If brokers are denied this possibility, they’ll reasonably see no point in going forward with listing a company they have no knowledge about.
This goes without saying, but it bears highlighting. Business brokers appreciate transparency in a company’s dealings. In that sense, clients must have clean books and regular access to comprehensible financial statements, and the broker must rest assured that the owner has a good relationship with the IRS and is not prone to engage in tax evasion.
By keeping your business in order, financially speaking, you’ll boost the confidence of not only the broker but also the potential buyer, for they will feel more comfortable entering a deal with a law-abiding citizen.
Poorly-managed businesses are instant deal-breakers for Long Island business brokers and buyers. By poorly managed, we don’t just mean businesses that trade at a loss, but also those that are wholly reliant upon the owner’s permanent engagement and that operate in an improvised fashion.
A prospective buyer should have access to a comprehensive and detailed manual about how the company operates on a daily basis and should verify that the company can survive without the owner for at least a month. Brokers will likewise demand their clients to have these instruments handy and will oversee that these conditions are met.
Owners may know what transpires inside their companies down to the most minute detail, but they shouldn’t expect buyers or brokers to acquire the same knowledge the hard way. Good business brokers could provide guidance as to how processes, systems, and manuals should be laid out, but they’re not required to do all the heavy lifting. If these issues are not fixed, a broker is not bound to list a business that is, for all intents and purposes, unsellable.Read More
Many buyers view a publicly-held company as virtually being an open book with at least a modest level of transparency, whereas privately-held companies reveal much less about their inner workings, financial, and otherwise. Of course, this means that buyers of privately-held companies are left with no choice but to dig through whatever information is available in an effort to determine if a valuation or price indeed reflects reality.
Comparing Publicly and Privately Held Companies
Determining the price on a privately-held company is typically more time-consuming since privately-held companies don’t have to deal with audited financial statements. But why do most privately-held companies typically forgo the process? Audited financial statements are expensive, and it is this expense that often prevents companies from going public. A publicly-held company is expected to reveal significantly more information, including often sensitive financial information.
What Sellers Can Do
If you’re a seller, you can take steps to make the process a bit easier for buyers. One step is to work closely with your accountant in an effort to ensure that the numbers are not just accurate, but are also presented in a concise and easy to understand fashion. This move serves to boost trust between buyers and sellers and, in turn, can increase the chances of selling your business.
Determining value is another area where sellers of privately-held companies can take steps to assist buyers in determining price or value. Sellers should consider opting for an outside appraiser or expert when it comes to determining the value of their business. The opinion of an outside expert clearly carries more weight, and using an outside expert is yet another step that sellers can take to boost overall trust with buyers.
Establish Your Bottom Line
Another key step is for sellers to establish their wish price. The wish price can be thought of as what price the seller would ultimately like to receive. It is also helpful for sellers to know well in advance what their lowest possible price for their business would be.
When establishing a price, there are several areas of the business where sellers can expect buyers to pay special attention. Here are a few areas that buyers are likely to explore:
- Size and scope of customer base
- Needs for capital expenditures
- Overall stability of the market
- Stability of earnings
- The general landscape of competitors
- Businesses relationships with suppliers
As with all transactions, the marketplace will have the final word regarding the sale of any business. Sellers should expect to receive a price somewhere between their asking price and their lowest price. But taking the right steps throughout the process can definitely make the process go more smoothly and boost the chances of success.
The post How Sellers Can Boost Their Levels of Success appeared first on Deal Studio – Automate, accelerate and elevate your deal making.
Just as every person is different, the same invariably holds true for buyers. No two buyers are the same. Further, no two buyers have the same mindset, emotional makeup, or approach to business. The simple fact is that buyers opt to buy businesses for a very wide range of reasons. The bottom line is that it is up to business brokers and M&A advisors to find serious buyers so as not to waste everyone’s time. In this article, we will examine how we zero in on serious buyers.
A serious buyer, one that wants to achieve success and isn’t just window shopping, will want to understand both the business they are considering buying and the industry as a whole. Consider this rough analogy for a moment. Someone serious about winning a game will work to understand the rules before jumping in and playing. You’ll want to look for a buyer who wants to understand the strengths and weaknesses of a business. He or she will also want to comprehend the strengths and weaknesses of competitors as well as potential industry wide problems both now and in the future.
Savvy business people realize that wages and salaries make up a huge percentage of the typical business’s operating cost. A serious buyer will endeavor to understand not just the wages and salaries of employees, but also additional related costs. These can include retirement related costs, the cost of training new employees, the rate of employee turnover and more. Smart buyers are looking for stability throughout the business, and that includes its employees.
The kind of buyers you want to attract are the ones that are not just “thinking about buying” a business. You’ll want to only deal with buyers who have carefully thought through what it means to buy a business. A key aspect of buying a business, as simple as it sounds, is to fully understand what is being sold. For example, serious buyers will dive in and understand capital expenditures. They will also examine and evaluate machinery and equipment so that they understand what kinds of equipment might need to be repaired or replaced. Replacing and repairing equipment can mean substantial costs. That’s why quality buyers can be expected to evaluate all equipment extremely carefully.
Buyers who understand what it means to buy a business will even go beyond evaluating the stability of employees and the state of machinery and equipment. You can expect a serious buyer to want to know if there are any environmental concerns, they will check and evaluate the lease, and they will want to inspect the state of all buildings. They will want to know who the key clients and key suppliers are and determine if those relationships are stable or if they put the business at long term risk.
At the end of the day, the kind of buyer that you’ll want to work with is a buyer who is proactive. Quality buyers will be accessing every aspect of a business to determine its long-term viability. A buyer who goes far beyond “kicking the tires” is exactly the kind of buyer you want.
Grocery stores were generally unaffected by the health crisis that spanned from 2020 to the time of writing. With a market size of over $750 billion and roughly 2,800,000 employees, grocery stores in the US have become very solidified within the current market paradigm and may excel in comparison to other industries in terms of business valuations. Long Island grocery stores are no exception.
With that said, running a grocery store can be a tiring matter due to the nature of the activity. If you are a grocery store owner, you could be thinking that maybe now is a good time to settle for a more “laid-back” venture or simply enjoy retirement.
HOW TO SELL YOUR LONG ISLAND GROCERY STORE
Below, you’ll see a compiled list of actions that you would have to perform in order to ensure a smooth sale:
1. PREPARE THE EXIT
Before you place a price tag and contact potential investors, you need to make sure that your operation won’t get affected by the sale process. For this reason, you would have to evaluate:
* How long you plan to stay in charge.
* Whether the staff will remain after the new owner takes the helm.
* Whether your managers are suited for keeping the store afloat after you leave.
* How the transition of ownership will come about.
* How the partners and distributors will react to this change and whether you’re able to have them acquainted with the new owner.
By assessing these bullet points beforehand, you’ll be equipped to tackle any issues that may arise in the future as you reach the negotiating table.
2. GET YOUR FINANCIAL DOCUMENTS READY
For the purposes of a future “due diligence”, tax report, and business valuation, Long Island grocery store owners ought to gather all the pertinent documentation, including financial statements, business records, previous tax reports, contracts with suppliers, and other similar paperwork.
This will allow all the parties involved in the sale to get an unvarnished picture of the store’s profitability, pricing policies, and gross margins.
3. TACKLE ALL POSSIBLE ISSUES
Clean up, get rid of all perishable merchandise in your existing inventory beyond the “best by” date, and be mindful of customer satisfaction. By doing this, you’ll be revamping the results of an eventual business valuation. Long Island customers are very picky when it comes to grocery shopping, and this should be prioritized even further as you put your store for sale.
There are other actions you may additionally take to improve your position, such as getting more active on social media, adding new features (delivery options or new payment methods), including new products, and many more.
4. GET A PROFESSIONAL BUSINESS VALUATION
Long Island business brokerage firms should be of assistance in this regard. Business owners are prone to get their emotional attachment factored into their price evaluation, which is why it’s important to rely on a trustworthy third party that is wholly trained to perform an accurate and meticulous business valuation.
Long Island grocery stores struggle in a very competitive market. A learned professional can do a thorough market analysis and dissect all the metrics so that the final price of your grocery store can arouse the interest of qualified investors.
5. LIST THE BUSINESS
After everything is said and done, you may proceed to list your business for sale. Usually, you should be able to do an online listing (in exchange for a fee, nonetheless).
Alternatively, you could have a business broker take all the burden of finding suitable buyers and doing all the marketing while you keep an eye on the store’s day-to-day operations.
Apart from their ability to do business valuations, Long Island business brokers can grant your business a lot more exposure through their broad network of qualified clients and contacts. They may also screen out any “window shopper” that could potentially drive your precious attention away from real prospective buyers.Read More