Have the Answers to These Questions When Selling Your Business
When a business owner connects with a buyer, there is an information exchange that happens between the parties that give each the confidence to take the next step in the buying process. And keep the deal moving toward closing.
For the seller, they want to have the confidence the buyer can obtain needed financing and has the creditworthiness to spend needed time and experience with them.
For the buyer, they need to get a level of comfort with the financial performance of the company- and sadly, thats when negotiations frequently fall apart.
Respected business broker, Tim Bellon says that many times it’s because of sloppy record-keeping. “The seller may have a healthy business, but co-mingling personal expenses and failing to document can make the company look not as profitable as it should be.” That affects the offer price and in some cases the willingness of banks to finance the deal.
Keeping good financial records is hardly new advice, but Bellon suggests going one step further to quickly earn buyer confidence and show them they are about to make a good decision.
Have a Dashboard
Just like you have a dashboard in your car that displays critical information like speed, warning lights, fuel mileage, and other data, your business dashboard also displays key performance indicators (KPI’s) that indicate business health.
Some examples of data to have at your fingertips are
- Profit and Loss for the year, month and quarter
- Number of new contracts signed per period
- Profit margin
- Leads received
- Accounts receivable
- Hours billed
- Customer retention
- Cost to acquire a customer
If it sounds like a lot of work, it doesn’t have to be. Most out of the box accounting and Customer Relationship Management (CRM) software programs have some level of reporting built into their platforms. You just need to enable them and data is updated automatically with other inputs. Quickbooks, Freshbooks, Xero, Hubspot, Salesforce, and others all have this capability.
Bellon offers his support, “I’m not an expert in software tools, but I do have a network of people that are. If someone needs help setting this up, I can make referrals”
Bellon admits in the real world, it’s rare that a business owner has all this data readily available, but that doesn’t mean you shouldn’t. “At the core of every business deal is trust and credibility. Having quick access and being able to speak about your numbers intelligently instantly makes you stand out and increases the chances of you getting to the closing table.”
It’s a little know fact in the industry that up to 70% of businesses listed are NEVER sold. Why? There are multiple reasons, but poor data is among the most common. It certainly takes hard work to position your company for sale and brokers like Bellon are experts in packaging business so that it looks attractive to buyers.
“My job is to package a company so that we effectively communicate the value proposition. When good data and effective marketing comes together, the result oftentimes creates multiple offers from competing buyers. That’s the dream situation because every seller wants a bidding war to drive their sale price up.” While that doesn’t happen in every deal, having solid numbers to talk about certainly helps reduce friction and invites lots of interest.
About Tim Bellon:
Tim Bellon, Owner VR Business Brokers: Tim was born and raised in North Dakota, and after the culmination of a 21+ year career in the U.S. Army, he and his wife Beth retired in Apollo Beach, FL. He earned his Bachelor’s Degree in History and Political Science from Concordia College, and a Master’s of Science in Defense Analysis from the Naval Postgraduate School.
Tim joined the VR Business Sales Team in 2012 as the owner and managing broker of an office serving the greater Tampa Bay, FL. During this time, he has focused on helping business owners realize their goals through selling, buying, or growing businesses. He also assists individuals, and companies looking to expand, in the identification and acquisition of businesses.
Tim is community-oriented and is a proud member of the following organizations; International Business Brokers Association (IBBA), Business Brokers of Florida (BBF), SouthShore Chamber of Commerce, Commercial Finance Association (CFA), American Legion, Disabled American Veterans (DAV), and the Knights of Columbus. Tim can be reached via email at TBellon@VRSouthShore.com.