How To Sell A Grocery Store
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 MoreShould A Business Be Sold After Its Most Profitable Year?
What goes up eventually goes down, even if just momentarily. In the stock market, the saying goes “buy low, sell high”. This could likewise apply to business selling but in a more concrete way.
Unless you’re planning to keep your Long Island venture for the long term, you may want to sell your business whenever you’re able to get the highest business valuation. Long Island business brokers would point to your most profitable year as possibly _THE__BEST _moment to sell.
WHAT ATTRACTS BUYERS TO A BUSINESS?
It’s very important to understand the psychology of a potential buyer. Most investors aim to have money work for them and not vice versa. They would most likely opt for a company that has an already established brand with a loyal customer base and a stable recurring income. The mere idea of having to start a marketing plan from scratch or organize entire departments will probably scare most of them off from the start.
A thriving business, a leader in its respective industry with a renowned and verifiable trajectory, will undoubtedly turn more heads than an underdog that can hardly make a sale or that is past its prime. which is, ironically, the stage in which most business owners would look to sell because of disenchantment and other emotional factors.
It should also be stressed that investors would want a business that has the potential to keep flourishing and growing, and not just one that is “doing well” at the present moment. For this reason, growth projections must be done in the most accurate manner. Moreover, the owner should not completely detach him/herself from the company’s operations during the sale process and, in many instances, investors would want the former owner to stick around even sometime _after _the deal is done.
All of these profits and projections would come at a price, of course, which is ascertained through a meticulous business valuation. Long Island brokers would make sure that all of these factors are included and reflected in the final analysis.
To avoid any discrepancy in this regard and to ensure a buyer’s trust, the “due diligence”, which is the review performed by the prospective buyer to make an informed decision, would have to take into account nearly the same information that is usually provided for business valuations.
Long Island has a very competitive business selling market that is, admittedly, a tough nut to crack, which is why finding the best opportunity to sell your business can get complicated, since you don’t know whether your business could get “dethroned” the next year, so to speak. This gives us the cue to formulate the following question:
WHY WOULD YOU WANT TO SELL A PROFITABLE BUSINESS?
A lot of personal reasons may be involved in this decision (retirement, enrollment in other ventures, etc.) but selling after the most profitable year will ultimately have you reaping a higher number of rewards from your hard labor. In the hopes of having the best business valuation, Long Island business owners should not wait until success has already knocked on their door.
A sizable number of business owners would feel tempted to remain in charge after a very profitable season, which is not the “wrong” decision, either. However, they should assume the risks associated with this choice if they plan to sell in the future.
If you don’t know how to proceed in order to sell your Long Island business, a good business broker would point you in the right direction and get most tasks done for you, including marketing, paperwork, negotiations, and a fair business valuation. Long Island has a wide array of business brokerage firms that may be willing to assist you, in exchange for affordable rates.
Read MoreHow To Increase Your Business Value
Many household owners would revamp their homes prior to their sale in order to increase the value and generate much higher returns, Businesses are no different in principle, though the methods are a bit more complex and you need to be able to simultaneously tackle many fronts.
How To Increase Your Company’s Value Before Business Valuation New York City
Business valuation is one of the first milestones in the process of selling a business. The results of this valuation, though, hinges upon your ability to boost your venture’s worth before the business agent can move forward to analyzing spreadsheets and financial statements.
You may find these recommendations useful before getting started:
1. CONSULT AN AGENT
A good business broker should be able to assist you in this regard. Business brokers who excel at business valuations NYC and elsewhere ought to be able to provide tips to heighten your profit beforehand so that the fair value of your company increases without having to make up numbers, hence giving you a better return on investment as you seal the deal with the buyer.
2. RECORD ALL YOUR PROFITS
It’s very tempting for many business owners to slide cash into their pockets and elude the taxable event. When you get paid in cash, you may want to record that sale and pay the respective tax, as that will undoubtedly improve your business valuation. NYC is known for being a “fiscal hell”, but we can assure you that you’ll fare better registering all your sales in the long run, as the broker is able to come up with much higher price tags with verifiable data to back it up.
3. Create an improvement plan
It doesn’t work to simply abandon your business operations as you plan on selling. It’s always crucial that you show interest in the outcomes of your company, even at this stage, so that the prospective buyer can envision a smooth operational transition and be more enticed to carry on with the negotiation.
For this purpose, you’d still want to make investments and improvements in the operational side of things to showcase your company’s worth more tangibly.
4. CUT DOWN UNNECESSARY EXPENSES
Buyers do not care about convenience expenses. In fact, they would love to have expenses cut down to only the essentials. You could probably do away with those subscriptions that ultimately don’t add that much value and could become a hindrance down the road.
5. Boast
It’s not a bad thing to boast about your company’s unique perks and features that separates it from the competition. Your broker can take advantage of these perks to boost the business valuation. New York City has a very competitive market and it’s important to be able to stand out from the crowd.
For example, if you own a guitar shop, you could highlight how you may offer some unique sets of strings or a free tutorial/installation job included in every purchase. Even the most trivial difference (such as opening on weekends) can make or break a business valuation (NYC business valuations especially).
Read MoreLegal Mistakes That Business Sellers Need To Avoid
In the process of selling a business, sellers will encounter a variety of hurdles. Most of these relate to paperwork, proper business valuation, New York City‘s taxation system (which is far more burdensome than that of most US cities), among others.
The amount of work that needs to be done can understandably intimidate any business owner with no prior experience in selling a business.
The worst part is that skipping any of these tasks will potentially have the owner immersed in serious difficulties and his/her credibility will also get harmed along the way. For this reason, it’s very important to get acquainted with all the stages of the process.
MISTAKES THAT BUSINESS SELLERS NEED TO AVOID
Among some of the most common mistakes that sellers make and must be avoided, we include the following:
1. NOT HIRING PROFESSIONAL HELP:
In the process of selling a business, you would need to rely on the work of qualified professionals that can handle things such as paperwork, taxes, banking, and business valuation. NYC is packed with lots of options in terms of brokers, attorneys, real estate agents, accountants, and bankers to get your sale fast-tracked.
The amount of competition in all these fields should also ensure that you get affordable rates to have these tasks done for you, within certain parameters. Nonetheless, make sure that you don’t just hire the cheapest professionals, for they may cause more trouble than they solve.
2. PERFORMING INCORRECT BUSINESS VALUATIONS (NYC BUSINESS BROKERS SHOULD PERFORM THESE TASKS)
Getting professional help is key to getting a more accurate business valuation. NYC business brokers ought to have the necessary pedigree and resources to calculate your business’s worth, but you’d have to play your role as an owner by providing the required financial documentation.
In order to perform correct business valuations, New York City brokers will make a series of calculations based on various metrics obtained from the company’s financial statements and spreadsheets, as well as the local market conditions. This is usually done with the aid of an accountant or accounting partner.
3. LACK OF PRIVACY CONCERNS
Privacy is one of the most overlooked aspects of business selling on the part of business owners. Making your sale publicly known could affect your venture in a variety of ways. You wouldn’t want your competition or your employees to know that you’re planning to sell.
Business brokers are versed in many strategies devised to protect the privacy of the sale. One of them consists of drafting non-disclosure agreements that potential buyers would have to sign before the details of the company are revealed to them.
4. SKIPPING LETTER OF INTENT
Out of fear of losing a potential buyer, business owners neglect to get a letter of intent signed by the interested parties. This may make you lose a bit more time in the selling process, but you’ll possibly waste much more from dealing with prospective investors who don’t take the sale seriously and who feel they can simply back down from the deal with no repercussions.
Read MoreBusiness Valuation NYC
One of the main questions or concerns coming from business owners planning to sell is _”how much should I ask for my business?”_ A trustworthy business broker may be qualified to perform an accurate and competent business valuation for ascertaining a fair price that can attract investors while securing profit for the client.
Moreover, there are other reasons you may want to perform a business valuation. NYC business valuation experts can be useful for shareholder disputes, divorces, or tax procedures that require this information. Choosing the correct professionals for these types of jobs is crucial for avoiding further problems down the road with the tax authorities or with a potential buyer.
How Difficult Is It To Perform a Business Valuation? (NYC Businesses)
Defining the value of a business is not as easy as entering a building and making vague assumptions. Running a business is already a highly complex endeavor just in its most basic operations. Evaluating a business’s fair price requires a profuse amount of technical knowledge about financial indicators, accounting, and market trends in general, a knowledge that many business owners simply do not have.
Of course, if you own a fairly small business, a DIY valuation is a possibility. Nevertheless, a business valuation done by a certified expert adds lots of credibility to the process in the context of most juridical acts.
Business Valuation NYC. How it’s Done?
Determining the value of a business requires looking at a myriad of different indicators and variables. There are usually three main approaches to business valuation:
- COMPARABLE COMPANY ANALYSIS is a relative valuation method that, as the name might suggest, compares the current value of other businesses of a similar trade and size by glancing at several trading multiples or metrics such as earnings, sales, market capitalization, and stock value per share.
- PRECEDENT TRANSACTIONS ANALYSIS takes a similar approach to the comparable company analysis but mostly focuses on recent business sales in the same area. To achieve this, the broker looks at a recent local business valuation (NYC businesses sell at different prices from those of other regions) and uses it as a reference. However, this technique requires that the professional is readily aware of current market dynamics, as his/her calculations could turn outdated very quickly.
- DCF (DISCOUNTED CASH FLOW) ANALYSIS is a detailed assessment of the business’s intrinsic value based on future cash flow expectations, which is basically a projection of future earnings. This is the most extensive business valuation model, but also usually the most accurate.
As you may see from the onset, a valuation can be a pretty challenging procedure that requires expertise, time, and patience.
Get Your Business Valuation From Experts
Do you have an NYC-based trade that needs a business valuation? NYC business brokers should be able to help you in this regard. By hiring valuation services from a reputed brokerage firm, you’ll be able to provide the most accurate information regarding the fair price of your business to a potential investor or interested parties in an administrative procedure or legal dispute. Our brokers will use the most adequate methods according to the nature and needs of your enterprise.
Read More
How Does Your Business Compare?
When considering the value of your company, there are basic value drivers. While it is difficult to place a specific value on them, one can take a look and make a “ballpark” judgment on each. How does your company look?
Value Driver | Low | Medium | High |
---|---|---|---|
Business Type | Little Demand | Some Demand | High Demand |
Business Growth | Low | Steady | High & Steady |
Market Share | Small | Steady Growth | Large & Growing |
Profits | Unsteady | Consistent | Good & Steady |
Management | Under Staffed | Okay | Above Average |
Financials | Compiled | Reviewed | Audited |
Customer Base | Not Steady | Fairly Steady | Wide & Growing |
Litigation | Some | Occasionally | None in Years |
Sales | No Growth | Some Growth | Good Growth |
Industry Trend | Okay | Some Growth | Good Growth |
The possible value drivers are almost endless, but a close look at the ones above should give you some idea of where your business stands. Don’t just compare against businesses in general, but specifically consider the competition.
As part of your overall exit strategy, what can you do to improve your company?
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Photo Credit: kconnors via morgueFile
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