“We need creativity in order to break free from the temporary structures that have been set up by a particular sequence of experience” Edward De Bono (Inventor of Lateral thinking)
Right now we are living through the worst financial crisis since the 1970’s. This makes you wonder, “What does it take to be successful?” As a business brokerage, we transform a business, your business, into a marketable product based on price, product features, performance and placement in the right market in the right way. All of these factors change with the economy and demographics. One client of mine shifted from selling to real estate developers to selling to building and apartment managers. He noticed the shift in spending, changed his approach and has been very successful.
The key to success during tough economic times is to think differently about the product or service you are selling and how to get the most value for it. For example, consider a business that is 40% down on revenue for the year. Would now be a good time for the business owner to sell?
Well, the answer lies in the deal.
Most importantly, it is not about the price anymore. It’s about buying power. And, there is more buying power for every dollar received in selling a business right now than there has been for 35 years.
Recent stock market and credit changes have only had a small effect on selling privately held businesses. Taxes will change, and you and your business need energy to weather this storm. Eventually the market and economy will recover, and you could make a choice today that will benefit you in the long run.
What that means is:
- Good buyers want to use their finances to get high return on their expertise
- The valuation of your business uses historical performance
- Any realized retirement account losses will offset taxable gain on the business
- After the Stock Market settles it will go up, as a seller, your investments then ride it up
- The tax system has not changed yet – Now you know what you will get
So who is buying?
You can sell to employees, children, or hire new managers. You can even allow new hires to earn an equity interest in the business. The sale price will be low, so there should only be a tradeoff when energy and competence can help enhance the business.
A local business competitor may not value your assets – equipment, contracts, prospects or relationships they could obtain otherwise, making them a poor choice as a buyer. A similar company looking to move into the area may put some value on these, as well as the relationships with key staff. Their reason to buy may be to move out of a worse market to one where there still is opportunity. International buyers are worth considering, too. Often they can buy businesses of significant size and get a visa to live and work in America.
What does the buyer get?
Simply put, the buyer gets the opportunity to put finances, skills, contacts and entrepreneurial energy to work to get a better financial future and a better life.
So, would you sell your business to a capable person to help fulfill his or her American dream?
