Business Owners: History Repeats Itself Again!
Posted by Kipp Krukowski on Thu, Jul 07, 2011 @ 09:47 PM
Buying or selling a business and other major business decisions got delayed during the last election. Business experts say business owners are concerned about who will be in office and wonder if the newly elected politician will be friendly to business. Can you guess what will happen during the next election? You guessed it….small business owners will take a ‘wait and see’ attitude to decisions to expand, buy or sell a business. History will repeat itself again!
Unfortunately, as business brokers there is not much we can do to change this thinking, but my advice to those contemplating buying or selling a business is to do it NOW! Here is a summary of the last three years of small business ownership. In 2008 we had the election and had a ‘wait and see’ attitude. The last two years had the economy in reverse so owners did not want to sell or invest in business. This has created pent up supply and demand. THE TIME IS RIGHT NOW TO SELL YOUR BUSINESS OR BUY A BUSINESS! Next year will be too late because the election will make business buyers shift into the ‘wait and see’ mode.
After dedicating so much time, money, blood sweat and tears into building a business, many owners dream of the day when they will be able to sell for top dollar and enjoy a carefree retirement. For many, their companies are their main source of income and the cornerstone of their wealth. So when it comes to selling the enterprise, the stakes are high.
A recent survey of business activity nationwide shows that many sellers are taking advantage of the window of opportunity offered by today's favorable marketplace. In this recent survey, almost one-third of business owners responded that they are considering the sale of their business. The first question one might ask, given the relatively healthy financial climate, is WHY? Selling when times are good? The answer, for many sellers, can be a resounding YES! Here are some of the reasons why, followed by tips for getting the process started.
There are buyers out there The current economic upturn has depended to a great extent on trimming the corporate fat. Executives and middle managers out of work--and determined not to be "downsized" by big business again--are eyeing the advantages of being in business for themselves. Since 1990, the percentage has steadily grown of those corporate executives who leave jobs in order to become independent business owners. It isn't just the money they are dreaming of--it's the desire for more control over their lives.
How to find qualified buyers? The business broker is the professional to whom sellers turn when looking for serious, "qualified" buyers. The business broker not only helps match the right buyer with the right business, but also educates the buyer in the buy-sell process, alleviating concerns and keeping the transaction in steady forward motion. With plenty of buyers to choose from in today's market, it's more important than ever to identify the time-wasters and those who think they want to buy but really aren't ready to take the big step.
Cash-Out is better than burnout Burnout can come with a business that's successful as well as one that's failing to grow. The right time to sell is before the syndrome becomes a threat to the effective management of a business. What are the warning signs of burnout? Owning a business is hard work, but it should also include an element of enjoyment. The owner who drags himself or herself through every day, with a sense of dread--or boredom--should consider moving on to a fresh challenge elsewhere.
Sell in a positive market Other than burnout and its consequences, there are other factors that can lead to the "forced sale" of a business. Compelling personal problems (a divorce or death in the family, poor health), shortage of capital or outright failure of the business, the lack of heirs to take over--these are the traditional examples. Instead of waiting for unfavorable conditions, potential sellers should keep a eye out for that all-important right time for putting their business on the market. When might that time be?
The Small Business Administration (SBA), in researching selling trends, reports that three to five years is a long enough stretch for many of today's business owners. One in every three business owner plans to sell; many of them right from the outset. The business they've bought is not a legacy for their children--it's a shorter-term investment of their time as well as their money. The ability to present a healthy operation, with an owner in the position to hand over the reins to the next owner is a major advantage in the completion of a successful business sale. One of the surest ways to maximize the value of a business is not waiting too long to sell and selling before the next election season.
Written by Jeff Young, Business Intermediary Confidential Business Sale, Inc.
