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Increase the Value of your Business

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Long before you get to a decision about selling you business, you should be thinking about ways to make it more valuable.  In this video, we go over “7 Tips to Increase the Value of your Business”.  Once you decide that it may be time to sell your business, give us a call or fill out the contact form below.  We are Business Brokers.  1-800-Biz-Broker

 

A Good Exit Strategy Is Worth A Fortune: Selling your business for maximum profit

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You pay for insurance to protect your assets, why not implement an
Exit Strategy now for the same protection of your greatest asset?

Selling your business can be an organized process where each step maximizes profit and your advance preparation expedites the sale, or it can be a dismal failure full of gut wrenching interactions and tremendous amounts of your money left on the table at the close.  Fortunately the choice is yours.  A good Exit Strategy starts with simple awareness of the process of selling and can be implemented in advance in your day to day activities with little additional effort.  Thinking of the sale of your business in health terms, consider the sale with no preparation as last minute surgery with no anesthesia, and a properly done Exit Strategy as preventative medicine that will keep you out of the pain and cost of surgery.

Your Exit Strategy begins with awareness that one day you will sell your business. Reasons vary with each business owner and can be as simple as boredom with your own company that you have built, to complex issues such as health or divorce.   Only you know when it is time for you to sell. However having implemented a written Exit Strategy will assure maximum profit at the sale and great peace of mind should you be selling under less favorable circumstances such as the mental duress of a downturn in business or poor health.  You pay for insurance to protect your assets, why not implement an Exit Strategy now for the same protection of your greatest asset?

Once the decision to sell is made, the contacting of a business broker to discuss the market conditions and the various options you have to sell your business is imperative.  Most businesses are sold to other individuals through a broker who facilitates the transaction, working in your best interest.  Buyers can be entrepreneurs that have the same zeal you had when you started your business or industry players that will purchase your business to expand or enhance theirs.  A qualified business broker can be instrumental in helping you write a good Exit Strategy that encompasses the sale scenario viewed from every angle.

You will want to discuss a Buy/Sell Agreement with your business broker and other professionals like your attorney and CPA.  Existing agreements with partners, stockholders, landlords, and others will be examined to ensure your goals, expectations, and terms and conditions of sale are not remedied void and as few as possible conflicts arise during the due diligence process.  Due Diligence is the process of verifying the accuracy of the assertions made regarding your business.

View your Exit Strategy from the viewpoint of a buyer.  What would you be looking at and for if you were to buy your business?  Do your P&L’s match your Balance Sheets and Tax Returns?  Imagine the lack of confidence you would have to move forward as a buyer of your business if discrepancies arose in your financial documents at the due diligence stage of the sale.  What about the physical state of your facility ? If you were the buyer would you want to walk in to a facility that needed immediate attention or a facility that was clearly neat, clean, and organized, allowing you to transition easily into the pertinent matters at hand and not worry about disorganization and safety issues?  How is the attitude of employees and what would clients of yours say about you if they were randomly called?   Are your sales and profits on the increase and expenses on the decrease?  The purpose of the Exit Strategy is to apply a tiny amount of effort in the right direction each day to achieve maximum profit for minimum effort when you do sell.  Working on these issues a little bit each day brings huge profit and joy tomorrow.

Tax consequences and what you will do with both money and time after the sale is finalized need to be considered.  Many times to close a deal you will be asked to help in some capacity with the transition.  You want to decide in advance with the help of your tax attorney or CPA how the proceeds of the sale will be best distributed and conserved.  The financing arrangements and or cash at closing will greatly affect your tax position and all options should be considered.  Can you get more for your business by offering terms on a carry-back note and still protect your interests and save on taxes?  Being proactive at this stage will greatly enhance profits at the sale.

With your plan laid out and preliminary players like a CPA and a business broker identified, you can now break it down into bite-sized pieces that can be a part of your everyday business routine.  This process of implementing little daily routines produces maximum profits at the sale of your business.   If your business sells for 10% more due to this organization and planning, you may have just put $10,000, $100,000, $1,000,000 or more in your pocket by simply being prepared.

It is my job to orchestrate this process and help you achieve your goal.  When the time is right for you to start, I’ll be there to help.  Please feel free to call me with questions and or assistance.

Pablo Fonseca, MBA

Spectrum Business Advisors

1-800-Biz-Broker

Business Valuation – Asset Based Approach

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asset-based-business-valuationAsset Based Business Valuation:  How to Identify Business Assets.

There are several types of business assets you need to consider when you determine your business valuation before a sale. Assets are grouped by usage, convertibility or physical existence, although some accountants may use other classifications.

Current and Fixed Assets (Convertibility)

Current assets can be converted into cash within one year. They include cash, accounts receivable, cash equivalents, marketable securities (treasury bills, bonds, preferred shares, etc.), inventory and prepaid expenses. Current assets are liquid and can be used to pay debt in a timely manner and cover daily business operations.

Fixed assets are tangible assets used to produce goods. They include machinery, computer equipment, furniture and real estate. They aren’t expected to be sold or converted to cash within a year, so they also fall into the non-current/long-term asset category. Machinery and other fixed assets lose value as they age, and the amount of depreciation is indicated on a company’s balance sheet.

Tangible and Intangible Assets (Physical Existence)

Tangible assets are physical assets, including furniture, computers, stock, cash, accounts receivable and buildings. All fixed and current assets are tangible. When tangible assets have a projected life of more than a year, a business can appoint some of the asset’s expense to every useful year instead of expensing the entire asset during the purchase year. This process is called depreciation, and it accounts for wear and tear to an asset as it gets older. The value of furniture, real estate and similar tangible assets is easy to determine by using an appraiser or most recent value from another trusted source.

Intangible assets can’t be seen, touched or felt. Goodwill, patents, trade secrets, copyrights and trademarks are examples of intangible (non-physical) assets. These assets create profit for a company on a continuing basis. Royalties from original music, books, trademarks and patents create a revenue stream for their owners. Copyrights, patents and trademarks exist independently of the company and you can sell or exchange them. Goodwill is part of any business and contributes to its value, but it doesn’t exist separately from the business; therefore, it can’t be sold separately.

It’s difficult to pinpoint an exact value of an intangible asset. A few intangible assets considered of value by the IRS include trademarks, goodwill and human capital (the value of an employee’s skills and knowledge). Certain intangible assets may be amortized as expenses for during their useful lifetimes.

Operating and Non-Operating Assets (Usage)

 Operating assets are necessary to conduct business on a daily basis. They aren’t sold to customers and may be fixed or intangible. Property, equipment, land, a manufacturing plant, driveways, furniture and vehicles are examples of fixed operating assets. Intangible operating assets include trademarks, trade secrets, patents and copyrights.

Non-operating (or redundant) assets aren’t necessary to operate a business, but they may provide income. They are listed on a company’s balance sheet along with operating assets. Redundant assets are sometimes used as a backup in case a business needs to diversify or add new income sources.

 

The Asset-Based Approach to Business Valuation

An asset-based approach to business valuation is the total value of tangible and intangible assets, and considers the assets’ resale value during calculation.  Total liabilities are subtracted from the total asset value to arrive at the end result. When using this method, the business owner has some discretion as to what assets to add to the total and what to ignore. The asset-based approach may be problematic for some companies due to difficulty determining the worth of patents, intellectual property and other intangible assets.

Correct evaluation of assets is essential to calculate your business’s selling price. Once your accountant has compiled all financial reports, hire an experienced  business broker can help you set an accurate business valuation.  Contact on today calling 1-800-Biz-Broker.  They can help get your business sold fast!

10 Reasons you should use a Business Broker to Sell your Business

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business-broker-1-800-biz-brokerA qualified business broker is a professional intermediary who helps small business owners sell their companies. The broker provides a buffer between buyer and seller, using his or her expertise to help owners obtain the best price for their business. A broker protects your interests, files paperwork, and acts as a liaison between insurance agents, bankers and other professionals involved in the sale. Here are some other reasons you can benefit from hiring a business broker.

 1.  Confidentiality

 You can’t sell your business unless you present pertinent information to prospective buyers. At the same time, you don’t want to reveal too much, or have that information get into the wrong hands. A business broker knows how to effectively advertise your business for sale without revealing your identity. They can pre-qualify buyers before you reveal specific information about your business, and create a confidential response system for ad inquiries and sales initial meetings.

A business broker will draft a confidentiality agreement (also called a non-disclosure agreement) to protect your interests. This is a legal contract designed to keep sensitive information you share with prospective buyers secret. If the prospect violates the confidentiality agreement, you can take legal action.

 2.  Better Preparation for a Trouble-Free Sale

 Your broker analyzes company finances to give you an accurate portrayal of your cash flow. Buyers are interested in profitability. If you can’t demonstrate the true worth of your business, the buyer may go elsewhere. A broker will let you know if your company could use financial improvement before putting it on the market, and suggest ways to achieve it.

 3.  Locating and Screening Buyers

 Brokers with years of experience have dealt with many types of buyers and situations. They can spot qualified buyers, poor prospects and frauds without much effort.

Without experience contacting and working with buyers, it’s hard to know where to find the right ones for your business-and what to ask them. A broker knows where to list your business and the best questions to ask to qualify prospects.

 4.  Coordinating the Due Diligence Process

 The last stage of the selling process, due diligence occurs after buyer and seller have signed a purchase contract. As the seller, you’ll need to prove your description of your company’s finances is complete and accurate. A business broker checks all your supporting financial documents for errors. These documents include, but are not limited to, balance sheets, income statements, tax returns, bank statements and inventory reports. When all financial and supporting documents are in order, due diligence – and closing – run smoothly for everyone involved.

 5.  Negotiation Support

 Business owners attempting to sell a company without a broker’s help may grow impatient and accept a weak offer when the business has been on the market for awhile. A business broker helps you avoid this through the preparation and screening process, and assists in negotiations to get your asking price or more.

 6.  Marketing

 Highlighting business strengths during the sales process is important to attract the best buyer – and the best price. A broker knows how to showcase your business with a distinctive presentation and answer the prospect’s questions without revealing company secrets.

 7.  Experience

This is what we do!  Business brokers sell businesses.  A seasoned broker will lead you through each step of the sales process, from placing an ad to sell your business to closing the deal. Their accumulated knowledge help you avoid pitfalls that may cause complications after the fact.

 8.  Business Valuation

Setting the appropriate sales price will attract an ideal buyer. Under-price it and you’ll cheat yourself; overprice it and may not receive any inquires. A business broker has experience determining the best price for your company by using business transaction listings and interpreting current market trends.

 9.  Handles the Deal-Making Process While You Run Your Business

 You still need to run your business during the sales process, and hiring a broker allows you to spend most of your time doing this. The broker handles the marketing and screening process, and assists you during prospect interviews, negotiations, sale agreement and closing. This takes the pressure off you and lets you concentrate on keeping business performance and employee morale high. Buyers will be more apt to pay your advertised price if they have proof your business is productive and profitable during negotiations.

 10.  Helps Buyers Obtain Financing

The easier it is for a qualified buyer to obtain financing, the easier it will be for you to get top dollar for your business. Brokers often work with lenders to approve loans for buyers. They can also guide buyers to other sources of cash, including retirement accounts and peer-to-peer lending networks.

 

Learn more about what a business broker http://sellyourbusinessfast.info/ can do for you by calling 1-800-BIZ-BROKER. We’ll help you find experienced business brokers in your city or county. Visit us on the web at www.1800bizbroker.com . Our brokers recently sold a local magazine, bail bond office and club/restaurant, and they can help you sell your business! Call 1-800-BIZ-BROKER today!

 

Sell your Business without a Business Broker

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“Sell Your Business Fast, without a Business Broker”

New webinar teaches business owners how to sell their business.

Pablo Fonseca, a Business Broker in Riverside CA launched a webinar detailing the steps a business owner should cover to sell their business for top dollar, fast.  “Selling your Business Fast…without a Business Broker” is very comprehensive and covers valuable information.   You will also get the opportunity to ask questions.

Why would a Business Broker teach business owners how to sell their own businesses?

“Yes, we make our living selling businesses.  So why would I teach business owners how to sell their business?”  Mr. Fonseca continued, “Well, for a variety of reasons, we can’t always help every business owner sell their business.  However, the information I provide will help every business owner understand how involved the business sale process is.  I hope, actually, I know that once the business sale process is laid out, most business owners will realize that they will benefit from the services of a capable Business Broker.”

Webinars are a natural extension of delivering information over the internet.  Fonseca believes in the webinar format so much, he is already planning more.

“I think webinars are a great way to engage many people at once, get our business exposure, and deliver quality information.”  Fonseca explained.  He already has more webinars in the works, including: “How to Much is Your Business Worth” and is partnering with a CPA to produce, “How to Structure your Sale to Minimize Taxes”.

 

Pablo Fonseca, MBA has been a Business Broker since 2006.  He is based out of Riverside, CA and is the founder of 1-800-Biz-Broker, a national network of Business Brokers.

Selling a business? Beware of Window Shoppers

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Couple Window Shopping

When you are a business owner, you learn to tolerate the window shoppers. They come in, look around for a while, ask a few questions, and then leave empty handed. Sometimes you have repeat window shoppers that come often, but may never purchase anything from you. However, you learn to appreciate them because they may provide positive feedback to another potential customer, or give a good referral. It comes with the territory, and there is usually no harm in accommodating a window shopper. However, when it comes to selling a business, these types of so-called buyers are not ones you want to accommodate. You want to avoid them at all costs, because in the end it will cost you valuable time and potential money.

Surprisingly, some people make it a hobby to look at businesses for sale, with no intention of buying. They ask intelligent questions, maybe even show a financial statement that suggests they have the resources needed to purchase the business. Sometimes they will even go as far as stating an interest in making an offer. But once bored with learning about one kind of business, the so-called buyer will move on to something else. The seller, who spent time and opened his books to a pretend buyer, will get nothing but a sense of confusion as to why the buyer disappeared, and disappointment that no sale resulted from their time and effort.

More dangerous than phony buyers are those who want to purchase a business, but not the way the owner wants to sell it. These leverage artists go out of their way to impress and charm a seller- perhaps with dinner meetings, and repeatedly complimenting an owner on the state of the business. However, the only deal they are interested in making is one that enables them to “try out” or “lease” a business, or purchase it with no money down. People like this may claim to be financially qualified, and in fact may be, but their objective is to buy a business with the owner’s money.

It is important that a seller avoid accommodating an unqualified buyer, simply because it will never lead to a sale. However it may be very difficult for a business owner to identify the window shoppers and unqualified buyers from the serious and qualified buyers. A professional business broker has expertise in not only identifying qualified buyers, but also access to a pool of potential buyers that are right for you and your business. Consulting with a broker can save you not only a considerable amount of time and aggravation, but also get you the best possible price for your business. For more information on how a business broker in Riverside can help you, contact one of the professional business brokers by calling 1-800-BIZ-BROKER or by visiting www.1800bizbroker.com.

Special Valentines Post: How a first date can be like … thinking about selling your business

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regretI remember the first time I set eyes on her, it was like time stood still. We exchanged casual greetings at an office meeting and then went our separate ways. This would continue be our pattern in the years to follow; crossing paths in the halls, engaging in polite conversation for a few moments, then going about our business. One day, while sharing an elevator with her, I invited her out to a casual gathering with some of our co-workers. To my surprise she accepted and gave me her number. Now, to be completely honest, there was no co-workers’ happy-hour planned for that weekend, but I really wanted to get to know her better and I was afraid of being too obvious in my intent. Now that I had her number, I started to make excuses as why I shouldn’t call her (one being that I would have to admit my lie). After much debate, I didn’t call her that weekend, or the following weekend. As a matter of fact, I made every excuse to not call her at all. For months I kept her number on my phone, but never made the actual call. Then finally, one day, I decided to stop making excuses, I counted to three, and hit the send button.

I am sure you can relate with my feelings of wanting to do something, but making excuses as to why you shouldn’t actually follow through with it. Where the the act of actually making the “call” is so terrifying that all you find yourself doing is stalling. I hear this all the time when speaking with business owners who want to sell their business. Listed are three common excuses that I hear more often than not.

  1. “The business isn’t ready to sell”… Sure you need to prepare a business for sale and get things in order, but a business will never be absolutely perfect. Consulting with a professional business broker can help you get your business prepared for sale, and moving in the right direction.
  1. “But business has never been better”…The best time to sell your business is when it is doing well. While it may be hard to walk away during a time of increased profit, you will greatly benefit financially from it. You want to show your business during a time when it is most attractive and most profitable, not when sales are declining.
  1. “I wouldn’t know how to sell a business”… A business broker has both the knowledge and experience in selling businesses. From the early stages of offers and follow-ups, through the process of controlling the contract to ensure a smooth transition, a broker takes on the role a business owner cannot efficiently do alone.

The reality is, selling a business and putting your vision and hard work up for sale can be terrifying. You can stall and make excuses about preparations, profits, expertise, (or not wanting to admit a lie), but at the end of the day, if you really want it, you’ve got to just count to three, and make the call! Oh, and my office romance? Fast forward 8 years, she is now my wife and we have two beautiful children, and I cannot begin to tell you how that was the best call I ever made.

For more information on how a business broker can help you sell your business, contact one of the professional business brokers by calling 1-800-BIZ-BROKER or by visiting www.1800bizbroker.com

Prepare your business for sale

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preparing-your-business-for-sale-800-biz-brokerYou may have heard the time old expression “you never get a second chance to make a good first impression”. It’s a true statement in regards to many areas in life… dating, interviews, meeting your future in-laws (talk about making a first impression count), and most especially in business. But what many business owners fail to see is that first impressions are also a major area of marketing when it comes to selling their business.

When it comes to business sales, the psychology behind selling a car or a home is very similar. Buyers are strongly attracted to businesses that look good. If it shows well, it will sell and sell at a higher price. A buyers is not going to pay top dollar for a business that appears dirty, cluttered, disorganized, and has either no books and records, or records that make no sense. Contrary to what most business owners believe, most businesses are not show ready right from the start. This is where consulting with a business broker to work with you in preparing your business for sale will greatly benefit you. Listed are two important areas that a broker can assist you getting your business prepared for making a great first impression.

Visually Attract Buyers- your business must look exceptionally clean, bright and well organized. Having looked at your business every day, you may not see the areas where improvement can be made. However, these areas will stand out like a sore thumb to a potential buyer. A business broker can give you an honest and independent evaluation of the visual appearance of your business. The goal is to greatly improve the success of a sale, and a good broker will provide you with a list of the things that you should be doing to maximize your chances of success. Things like preparing recent tax returns, customer and vendor lists, and important improvements to the physical elements of the business (cleaning, painting, repairing equipment and replacing worn items) that will help attract qualified buyers.

Mentally Attract Buyers- you want everything in your business to look successful and you want to remove any potential hurdles that may diminish this image of success. Every potential buyer will picture himself in your business, being the next you. If it fits the image they have for themselves, they will proceed toward buying the business. If the image does not fit, they will walk away even from an excellent business. Of course this is partly a facade, but it works and most buyers will judge a business to be very successful, when in fact it may not be substantially better than the next, simply because it fits their ideal future image. A business broker can walk you through a systematic preparation process aimed to diminish any hurtles that would devalue your business, even if it means delaying the listing to improve your look of success.

Bottom line, you do not want to rush your business through the preparation process, and you should never settle for a business broker who isn’t concerned about preparing your business for the very best first impression possible. Your business’ first impression is what will attract your buyers and increase your chances of getting top dollar for your sale. A business broker can not only help you make a good first impression, they can help you make a lasting impression. For more information on how a business broker can help you, contact one of the professional business brokers by calling 1-800-BIZ-BROKER or by visiting www.1800bizbroker.com

Should you sell your business now? Take a cue from Hue

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playboy mansionThis past week, Playboy enterprises announced that the ultimate bachelor pad had been placed on the market, with a list price of $200 million. As a business owner yourself, you may be asking why? Hasn’t operating the mansion been successful for Hugh Heffner? Hasn’t the image and reputation of the mansion turned a profit for him over the years? The answers would be yes, but as any business owner knows, times change. The once notorious mansion, known in past decades for its lavish parties and risqué guests, has lost its allure in popular culture in more recent years. The mansion’s naughty reputation that made it unique and marketable has faded over time, along with the magazine. As technology has increasingly advanced through internet, streaming television, and smart phones, Hefner’s techniques have only become dated. CEO Scott Flanders said in a statement that the proposed sale is a tactical decision that will allow Playboy “to continue to reinvest in the transformation of our business”.

Changes occur in all business, large and small, and unfortunately some of these changes can negatively impact the success of a business if they cannot keep up with the evolving times. In the past few decades a technological boom has taken over the business world. With the birth of social media, television streaming, websites, online advertising, YouTube, and smart phones and apps, it changed the way business conduct business. It takes a substantial amount of time and effort to be able to keep up, not to mention funds if you are employing someone to do this for you. As an established business owner, you have either evolved and adapted, or you are struggling to keep up and stay relevant.

If your business has been impacted over the years and you find yourself considering placing your business on the market, you should take a cue from Hugh. Are you willing to continue to be the tortoise in the race, or are you willing to be the hare (or bunny in this case), and see if you can fast forward your potential profit and sell? Are you willing to reinvest in the transformation of your business by allowing the next person to take it to the next level and make it relevant?

The decision to sell should not be taken lightly. Many factors should be taken into consideration prior making the commitment to place your business on the market. A business broker can assist you in making the right decision for you, and your business. For more information, call us today at, 1-800-BIZ-BROKER.

Business Broker vs For Sale by Owner

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Business Broker or For sale by owner

For Sale by Owner vs For Sale by Broker
You’re a business owner, and you’ve made the decision that you are ready to sell. You’ve successfully managed and marketed your business for years. You know your customers, products, suppliers and employees. You feel confident in your abilities, but does that qualify you to sell your business yourself? Should you consider hiring someone to sell it for you? And if you do, who? These questions, along with many others, can be answered when you consult with a professional business broker.
A professional business broker can be a vital asset to you and your business during a sale. Listed are the key areas that a broker can assist you in when selling your business.
As a business owner, you want the best possible price for your business. You have invested so much of your time, money and efforts into your business, and in return you would like to make a profit. However, priced too high and serious buyers won’t even consider making an offer. A business broker understands the market, and has access to recent sales statistics. With their valuation expertise, a brokers can assist you in pricing your business properly, and advise you on how to make it more attractive to potential buyers.

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