| If you are a business owner, there will come a | | | | could have! Half! |
| day when you look at "how to sell my business" | | | | What's also most interesting about accountants is |
| as the main question you ask yourself and | | | | that they tend to favor using the book value of |
| perhaps the first thing to type in the search box | | | | your business as a starting point and not the |
| in Google or your favorite search engine. | | | | market value. Big big mistake. You'll leave a ton on |
| When you type in "how to sell my business" I am | | | | the table this way. Don't do it! |
| sure you will find all kinds of information on just | | | | 3. They take the number off their balance sheet |
| that. I have compiled 7 of the things most | | | | and say that's what their company is worth - You |
| business owners don't know about or don't think | | | | balance sheet tells you the hard value of the |
| about before that day (or the day of) that would | | | | assets you have, that's it! It doesn't take into |
| certainly make the day you do sell your business | | | | consideration what the value of your assets are |
| a more profitable one. | | | | that have already been depreciated or your blue |
| Most companies who visit with us are looking to | | | | sky value, or good name, or customer base..........all |
| find out what their business is worth first. Most | | | | things that can add tremendously to the bottom |
| business owners have no idea what their | | | | line value of your business! |
| company is worth. Wouldn't you like to know | | | | 4. They read a few articles in INC magazine and |
| about what it is worth before you hire a broker | | | | guess a number (even saying something like |
| (we're not brokers, by the way). | | | | "companies in my industry are selling for 3 Times |
| Before I go into all that let's look at the 7 biggest | | | | earnings") They may even refer to their latest |
| mistake business owners make when they get to | | | | tax return for a number - Don't be fooled by this! |
| the point of asking "how to sell my business" | | | | There are so many variables even with similar |
| 1. They assume they "know" what their company | | | | businesses in the same industry. The true value |
| is worth and make up a price - Look the first | | | | of your business is NOT the same as the guy |
| problem with this approach is that your business is | | | | down the street, even if you do the same thing! |
| usually "your baby". If you have owned your | | | | The true value of your business is NOT like real |
| business for a long time you know that you have | | | | estate, where you can compare with the |
| spent more time with it than perhaps even your | | | | property down the street. |
| family, spouse and kids! It's always there, even in | | | | That is like saying the space shuttle is like a |
| the back of your mind.........and sometimes it is hard | | | | bicycle. True they are both forms of |
| to understand why someone can't see your | | | | transportation, but one is a bit more complicated |
| business worth the way you see it. That's okay, | | | | than the other. Again, have it appraised by a |
| but it is better to have a certified 3rd party give | | | | "market appraiser". Best money you will EVER |
| a certified opinion or appraisal of your business. | | | | spend. Ask ANYONE who has EVER sold a |
| Look at it this way, if you and I were going to go | | | | business! |
| downtown and buy the Hilton Hotel, we would find | | | | 5. They trust a FREE tool on the internet to give |
| a qualified appraiser to give us his professional | | | | them the value of their business - While these |
| opinion, wouldn't we? We certainly wouldn't take | | | | free tools are valuable to help obtain a "range of |
| the owner's word for it or even their accountant's | | | | value" (we have one too), they are not the |
| word for it. We would want an independent | | | | complete answer and you can't use them to |
| opinion and official analysis. | | | | justify your asking price. If you have a properly |
| But you say, hey my business isn't worth that | | | | done market appraisal, it will include a "justification |
| much to justify the cost. What? Even if your | | | | of purchase price" section that says, "this is what |
| business is only worth $25,000, at least you would | | | | your business is worth in this market, and here is |
| have an official 3rd party appraisal and a "floor" | | | | why it is worth that" |
| price you could start at. And with the discounts | | | | That is such an important step. Buyers are smart |
| available when you go through someone like | | | | and want to know how you came to the price |
| valuationbroker.com, you could literally add | | | | you did. Now you know what to do so you can |
| thousands if not tens of thousands to your sales | | | | stand behind your price. Plus you will know just |
| price, and only pay a small percentage to have it | | | | what the market is doing. It isn't the accountant |
| done. | | | | or the balance sheet or your uncle attorney that |
| I would not even consider selling any business | | | | dictates the price, it's the market! So knowing |
| without this step, no way, ever. | | | | this, it is important to know just what the market |
| You see, most business buyers are smart, like | | | | price is. I have seen market prices be twice what |
| you, they have done a lot of right things to get | | | | the accountant says the business is worth! |
| where they are and unless they have recently | | | | 6. They haven't made their business run without |
| inherited the money, they are sophisticated to a | | | | them - This is a no-brainer, yet many business |
| degree and will do their homework when looking | | | | owners don't think of it. Your business will be |
| for a company to purchase. The real advantage | | | | worth a lot more if it can run without you there. |
| to having your company appraised first (by an | | | | Otherwise whoever buys it will be buying a "job". |
| independent 3rd party certified appraiser) is that | | | | Nothing wrong with that, but realize, those |
| you are the one driving the appraisal, not the | | | | businesses just are not worth as much when you |
| buyer. | | | | go to sell them. |
| 2. They ask their accountant what their company | | | | 7. They hire the wrong attorney to help them |
| is worth and use that number - You accountant is | | | | with the final paperwork (the wrong attorney |
| probably a very smart individual, however when | | | | could be their best friend) - This is just like the |
| coming to valuing a business or having one in on | | | | accountant, unless the attorney you use has |
| the sales process, I have one rule. I make sure | | | | closed 10 or more deals within the past 12 |
| they have been in on at least 10 business sales in | | | | months, don't use them! So many well meaning |
| the past 12 months, no exceptions. I have seen | | | | attorneys have killed countless deals, |
| more deals killed by well meaning accountants. | | | | UNNECESSARILY! |
| Don't make this mistake. | | | | I wish you well and hope you take these things to |
| I don't care what your accountant thinks your | | | | heart (and action). I have seen so many sellers |
| business is worth. I don't care what MY | | | | walk away with a lot less than they could have, |
| accountant thinks your business is worth. I wanna | | | | had they JUST used these few tips! |
| know what the market tells me. So that's why I | | | | Good Luck, I wish you continued success! (don't |
| want an independent look from a qualified third | | | | forget to get a certified third party, independent |
| party to tell me the current "market value". I | | | | report for your business BEFORE you list it to sell) |
| have seen hundreds of business owners make | | | | You'll be glad you did! |
| this mistake and it can (and has) literally meant | | | | Buying a business? Use the same concepts! |
| the difference of getting only half of what they | | | | Cheers! |