Month: October 2024

According to the recent BizBuySell Insight Report, most small business owners are confident in receiving an acceptable offer if they were to sell. How about you? If you sell your business in the next year, will you receive an acceptable offer or not? If not, you have some work to do. Here are five suggestions:

Have a Realistic Price in Mind

The number one reason a business doesn’t sell is because the owner places an un-realistically high value on her business.

Think of it like you’re selling a house. You have wonderful memories created in the house. It’s served you and your family very well. You’ve taken care of it, and it’s protected you. You love the house and value it tremendously.

A potential buyer doesn’t have memories of the house, isn’t connected to it, and sees the benefits and flaws. As a result, you place a high value on the house while the buyer discounts your asking price by all the flaws she sees and how much it will take to fix it up to her standards. You and the potential buyer may be far apart on the value of the house and therefore the price.

A wise person once told me when it comes to selling your house, you think of it like a castle and the buyer thinks of it like a hovel.

When you put a price on your small business, be realistic. The best way to be realistic is to get a formal valuation from an independent valuation expert. Someone with the ABV or CVA credentials.

Make Sure Your Financial Books Are in Order

This point was driven home by two recent small businesses I’ve helped guide because the owners wanted to sell soon. In both cases, the financial information on the businesses was poor.

Most potential buyers will ask for three years of historical financial statements: P&L and balance sheets. From these documents, a potential buyer will determine how your business will work under her new management. If you can’t provide the information in the standard accounting format, or if the information is incomplete, the potential buyer will likely walk away.

For the two clients I mentioned above, I asked them to work with their bookkeeper and accountant to clean up their financial statements before they try to find a buyer. In one case, the business owner went back three years and in the other case, the business owner is adjusting only this year’s numbers.

The bottom line: if you want an acceptable purchase price, make sure your financial house is in order.

Ensure Your Business Is in an Uptick

The best time to sell your business is when the revenue and profit lines are swinging upwards. I call this the up and to the right syndrome.

Make sure your business results tell a good story to potential buyers. To make it a good story, you need growth for the last two or three years. Growing financial performance reassures buyers the business is well-managed and has the potential for continued success.

Buyers are often willing to pay a premium for businesses that have a proven track record of increasing revenue and profitability because it indicates future earning potential. Buyers who need financing to purchase the business will find it easier to secure loans if the business has shown steady growth. Finally, buyers are often looking for businesses they can scale further, and steady growth indicates that the market demand and internal processes are already favorable for expansion.

If the story your business growth shows is positive, you’re likely to get an acceptable offer. If your story is less than stellar from a financial perspective, you may want to delay offering it for sale until the story improves, that is, your growth trend improves.

Be Flexible (and Creative) in the Terms of Your Deal

My mentor and coach Chris Flett reminded me, “The price is the price; it’s the terms that matter more.”

After you and a buyer agree on a price based on an independent valuation, the real fun begins as you negotiate terms. For example, will the buyer pay in full at closing, or will there be installment payments? Are there any seller-financed options, and if so, at what interest rate?

Is it an asset sale or stock sale? There are tax implications for both the buyer and you as the seller depending on which approach is used. (I wrote about this in an earlier SixtyandMe post). Who will assume the business’s existing debts and liabilities? Buyers may ask for a non-compete agreement to ensure you won’t start a competing business after the sale. What transition support will you provide, such as training the new owner or introducing them to customers and vendors? And so on.

The point is, there are numerous terms of a sale that are just as (or more) important than the price. Make sure you stay flexible and negotiate your interests and not your positions. I suggest you read the book Getting to Yes by Fisher and Ury to prepare for a negotiation.

Have a Plan

Selling a business is complex with many twists and turns. You can’t anticipate all the events, but having a plan helps ensure you stay on track when the inevitable unexpected incident happens.

There are five steps to selling a business:

• Set goals
• Audit the business
• Improve the business
• Market the business
• Sell the business.

Start out with these as the main points and then add the who, what, why, how, and when for each of these steps. For example, who do you want to have involved in the goal setting process? What are your goals in terms of ideal buyer? When do you want the sale to be completed? What do you want to be doing after you exit the business? How will you go about the process of goal setting?

Finally, assuming it takes at least 12-24 months to complete the sale of your business, so when will you create your goals? Set a deadline and get started. After you complete the first step in the process, move on to creating specific action items for auditing your business.

If you want to receive an acceptable offer for your business, start with creating a business sale plan. If you need help with this, ask your CPA, a trusted business consultant or business exit expert for assistance.

Summary – Be Prepared!

Selling your business is one of the biggest decisions you’ll make, so why leave anything to chance? By pricing realistically, keeping your financials in top shape, selling when you’re on an upswing, staying flexible, and having a solid plan, you’ll attract the right buyer and boost your chances of closing a great deal. It’s all about being prepared, smart, and strategic. So, what’s your next move? If you’re ready to make things happen, start today – because a well-prepared seller always has the upper hand.

Let’s Have a Conversation:

Do you know the current value of your small business? Did you come by this number on your own? What do you think about these tips for selling your small business? Do any of them resonate with your current situation, or do you have questions about getting your business ready for sale? I’d love to hear your thoughts! Feel free to share your comments or submit any questions you have. I’m here to help.

Your home will smell like snickerdoodle cookies and pine trees all winter long.

He attended one of Diddy’s parties about a decade ago.

We need a Russo siblings reunion.

You’re sitting there, staring blankly ahead and thinking to yourself… Where do I go from here?

Your so-called retirement years can
either be a true sense of the phrase “golden years” or, sadly, the
stereotypical boring bust.

To steer you toward the more exciting
(and healthy) path, I’ve laid out four simple ideas to help you be more
adventurous.

Immerse Yourself in a New Culture

When you think of “adventure,” travel likely pops into your head, right? Well, traveling is a popular item on bucket lists for a reason – it allows you to deep-dive into an entirely new experience.

Which means, it’s time to get wild and
crazy and tap into your sense of adventure as you plan your globetrotting.
There are several options here.

Hiking, Trailing, and Nature

If you’re an outdoorsy adventure-type,
you can go all out like Art Huseonica, who, at age 68, conquered
the 1,600-mile rugged (and snow-capped) Arizona Trail. Impressive, right?

Tour the World as a Volunteer

I recommend traveling with the purpose
of giving back and looking into voluntourism organizations like Global Volunteers and GlobeAware.

Why? Volunteerism is a hugely important factor
for living a healthy and active lifestyle. Giving back is one of the five core
categories that make up a fulfilling retirement life, which I call the “5 Rings
of Retirement.” So, it’s worth marrying the two.

Cruising Beyond the Ports

And if you’re determined to go the
classic cruise route and hop on a ship that sails the seven seas, be sure to go
beyond the standard tchotchke
shops as you dock at each port and embrace the local lifestyle.

The main takeaway here is to get
creative and immerse yourself in a completely new environment. Which means,
dive into everything new (and non-touristy) as you travel – from the language
and culture to the people and food.

If you do, not only will you learn
profound things about entirely different lifestyles, but you’ll also gift
yourself new experiences that come with amazing memories and relationships.

Learn Something New

If traveling isn’t your speed, lifelong learning is a must-do. Even if you
can’t imagine yourself re-entering a classroom, you can still participate in
continuing education by taking an online course.

These days, you can learn nearly
anything from the convenience of your own home. And online education is only
going to become more accessible. In fact, the e-learning industry is expected
to grow beyond the $300 billion mark by 2025.

Whether it’s learning how to knit,
speak a different language, play a sport, write a book, make digital photos,
sing and dance, or play a musical instrument, all new topics that you take on and learn present their benefits.

Major ones, too.

For instance, playing a musical
instrument is like a full-body brain workout with long-term positive effects.
Music stimulates more parts of your brain than any other human function, which
is why music memory is the last part of your
brain that Alzheimer’s touches.

Take knitting and digital photography, as other examples. According to a University of Texas study, they’re both considered high-challenge activities that enhance your memory.

The moral is: Learning a new skill is
not only stimulating and challenging, but it’s also excellent for your
cognitive health. Online education makes it super convenient, too, so no
excuses.

Start a Side Hustle (aka New
Business)

There’s no time like the present to
create an online business. Plus, you have decades of wisdom to impart on the
world.

Why not turn your years of knowledge
and experience into a passion project that earns money?

You can start a small online business
based on virtually any topic, skillset, or interest. Which means, the online
world is your oyster.

Once you have your chosen topic,
package up your knowledge and consider deploying bits of it in these formats:

• Start
  a blog and monetize it
• Become
  a freelancer or consultant
• Educate
  and book speaking gigs
• Sell
  digital info products

The beauty in starting a side hustle
is that it’s not designed to eat up full-time hours, and you can base it on your expertise or a passion of yours.

Plus, if you do it online, you can run
your business from your home. Doesn’t get better than that, right?

The important thing here is to work
because you want to, not because you
have to.

Expand Your Social Circle

Another adventurous path you can take
is to expand your social network and meet new friends. And I don’t mean
Facebook friends.

Take the effort to get out of your
comfort zone and engage face-to-face in new meaningful relationships.

Which is something not a lot of people do. In fact, research says 45% of people struggle to make new friends and the average American hasn’t made a new friend in five years.

While it may not be the easiest task –
seeing as how we’re creatures of habit – meeting new friends is a worthwhile
one. A number of studies indicate that being social keeps you mentally active as
you age. It also lowers the risk of Alzheimer’s and cognitive decline.

Bonus Tip: Figure out your core values and meet new folks who share them.

For example, if you value health and
fitness, try joining a kayaking club or hiking group to meet new people.

Along the same vein, if you value
creativity, get in touch with your artsy side and take a class where you’ll
likely meet other creatives.

Your Adventure Awaits

The key to all of these ideas is to
get out of your comfort zone. The more you stretch yourself, the more
adventurous your experiences will be.

Extra Bonus Tip: Look within yourself to truly find your sense of adventure.

As silly as it sounds, self-reflection
– and I mean the patient kind where you very carefully consider your deepest
desires – is super powerful.

Yes, it actually works. In fact, a study of UK commuters found that
drivers who practice self-reflection are happier, more productive, and less
burned out than people who don’t. What’s more, people who self-reflect perform 23% better than those who don’t.

Which is why I put together our popular Post-Career PurposeFinder – so you can ask yourself the right self-reflecting questions that will shortcut your way to a truly adventurous lifestyle.

The adventurous experiences and
memories are yours for the making. I’m rooting for you.

Let’s Have a Conversation:

How will you be adventurous in the next month? In the new year? What really makes you tick? Are you willing to travel out of your comfort zone to seek adventure? Please share your thoughts with our community!