Q: Thank you for joining us this afternoon. Selling a business is a huge decision, and many Nashville business owners are fearful of the process. Our readers will appreciate your insight.
Beacon Exit Advisors: Being apprehensive is understandable. After all, this is likely the largest transaction most people will go through, and it will affect a person’s finances and family life. It is absolutely worth pondering over for weeks – or even months – before going through with it.
Q: Let’s start by talking about money. How do you know what a business is worth?
Beacon Exit Advisors: That is entirely determined by the market and the quality of the business. Two businesses that may look the same on the outside, but have different internal processes and management, can have vastly different values. Ultimately, it is worth what a Nashville buyer will pay for it, but a business owner can tip the scale in their favor by making some changes to make the business more attractive. Just like selling a piece of real estate, you cannot just slap a price on it if you are truly serious about getting out.
Q: So, you have to be realistic?
Beacon Exit Advisors: Absolutely. Something else to consider is that, if you are doing it just for the cash, you probably aren’t really ready to let go.
Q: Does a seller need to provide a balance sheet?
Beacon Exit Advisors: Not always. Some businesses do not have what you would typically look for on a balance sheet. However, all buyers want to see financial information, including expenses and income. When you go to sell your business in Nashville, buyers want to know the bottom line, which lets them know if they can make a living wage or not.
Q: What information do I need to provide outside of income and expenses?
Beacon Exit Advisors: For starters, if you own a franchise, you’ll need a copy of that agreement. Along with the last three years’ profit and loss statements, your buyers will also request income tax returns. If you have any equipment, including machinery or vehicles, have an inventory of those written out as well. You will need to note what, if anything, is a lease. Make sure to give your potential buyers a list of any outside advisors you might have.
Q: How can you spot someone who is really ready and willing to buy when the time is right to sell?
Beacon Exit Advisors: People looking to buy a business have to have more than just the desire. A real candidate will have financial resources and spend plenty of time looking at your books before making a choice. Keep in mind, though, that, when you want to sell your business, many Nashville buyers will not have sufficient cash on hand. It might take time for the right buyer to come along.
Q: What should I do in the “limbo” between listing and closing the deal?
Beacon Exit Advisors: Continue to operate the business as usual, just as if you are not selling. While doing so, create an operations manual. Even if you own a franchise and have this formal documentation, there are subtle nuances that a cookie-cutter instruction sheet will not contain. Include menus, copies of ads, special recipes, key codes… anything that your buyer might need when you sell your business. Remember, the most important time frame a buyer wants to see good results is right before the sale.
Q: What happens if the deal falls through?
Beacon Exit Advisors: Unfortunately, that happens. Do not let it thwart your efforts or change your goal. Roll up your sleeves and get ready for the next buyer. Something you can do to make the business more attractive is the do a little handy work to the premises. Clean things up and repair any annoying defect, such as squeaky doors or broken floor tiles. Further, if you have a storefront, make the exterior shine. Remember, curb appeal is key whether you are listing real estate or trying to sell your business. And because Nashville weather goes from one extreme to the next, look for things like storm damage and sun fading that might need attention.
Q: Overall, it sounds like keeping the books straight and making sure everything looks well taken care of is a seller’s priority…
Beacon Exit Advisors: That and making certain you are really ready to sell your business. Nashville is a fast-moving market and you might find that you do not have time to change your mind once the proverbial ball gets rolling. We always suggest that people sleep on it before moving forward with the selling process. It always goes better when the business owner is ready.
Q: That is great advice, and our readers will certainly appreciate it. We look forward to speaking with you again in the future. Before we close, do you have any final words of wisdom?
Beacon Exit Advisors: We would like to invite your readership to visit our website (BeaconExit.com) for more information and for free access to our articles and white papers.
Beacon Exit Advisors is Middle Tennessee’s premier source for buying and selling businesses. If you are ready to sell your business, contact Beacon Exit today or visit www.beaconexit.com.