Do you have an exit strategy?

All too often business owners are all set to sell their businesses, but their business aren't set to sell. It is NEVER too early to plan an exit strategy to sell your business. As a matter of fact, the day you open your business is the best time to plan on selling your business.

Understanding a Buyer

Most Taos Buyers are extremely nervous. They should be. Most Buyers have never purchased a business before. Even if they have, these people are about to invest a lot of money in a new venture. When you buy a house and make a mistake, at least you still own equity. Maybe you lost 20 or 50 grand. That's a big loss, but not as big as buying a business for hundreds of thousands of dollars and believing you're risking all of it. You'd be nervous too. Now increase the fear factor even more because you the Seller are the last person on earth the Buyer trusts. Although these emotions the Buyer is going through are natural, they set the stage for disaster.

Basic actions you can do to ease the fear.

- You must present accurate records (P&Ls, Balance Sheets, backup data). The first time a Buyer thinks you're misleading them you've managed to increase their fear level from 90% to 120%, and killed your deal. ACCURATE INFORMATION IS A MUST!

- Plan early to create a "turnkey" opportunity. Most Buyers are buying a type of business they've never operated before. Most are new business owners. They are looking for a "simple" business. People want to buy a business, get trained in a week or two, and be off and running. This can be accomplished by having a manager on staff capable of running the business. Or, you might have procedures in place that make it easy for someone to step right in. The simpler the better.

- Keep those sales up! People want to buy businesses which are increasing in sales through the years. A couple of slow years may not hurt you. But it's very difficult to sell a business with declining sales. People don't buy "potential." Buyers buy earnings. This is particularly important once you put your business up for sale. Sellers often get lazy at this time knowing they're about to move on in their lives. Don't get lazy or your sales will drop!

-Cash has no value. If you want to increase the value of your business declare all your cash sales as income. If it isn't on your Profit & Loss Statement as income it can't be sold. You can tell the Buyer about all the cash you make, but remember, the Buyer doesn't believe you, they believe what you tell Uncle Sam.

- Do not overprice your business! You might keep a little wiggle room in your price but an overpriced business will not sell. The reason is simple, it goes back to the "fear factor." In today's Internet savvy market Buyers can go on line and check the price on a hundred businesses for sale similar to your own. Once they see you're overpriced (this is interpreted as, "the Seller is trying to screw me") your credibility is down the toilet. You can lower your price down the road but Buyers will remember your business as the Seller who tried to screw them. Don't expect to see these Buyers again!

Clean up the garbage.- You never know when a prospective Buyer walks into your business. When you get ready to sell, do some house cleaning. No one wants to buy old merchandise when they buy a business. If a Buyer sees old merchandise they will start to wonder what other worthless stock you want to sell them. Have a sale and get rid of it.

Those are the basics. Very simply and easily accomplished if you plan ahead.

Give me a call at (575)751-7008 and we can talk about your specific business. It's to your advantage to meet today even if you don't plan on selling your business for some time. It will make your life much easier down the road.