SOLD!
| Asking Price: |
$650,000 |
| Annual Sales: |
$958,000 |
| SDE: |
$285,000 |
| Inventory: | $90,000 |
| FF&E: | $30,000 |
| Real Estate: | N/A |
| Employees: | 2 PT Owner 3 FT |
| Location: | Colorado |
| Reason For Sale: | Retirement |
For […]
| Asking Price: |
$199,999 |
| Annual Sales: |
$750,000 |
| Cash Flow: |
$80,000 |
| Inventory: | $2,100 |
| FF&E: | $400,000 |
| Real Estate: | N/A |
| Employees: | 2 PT Owners 3 FT, 17 PT |
| Location: | North Denver-Boulder Metro |
| Reason For Sale: | Other Business Interests |
With few exceptions, buyers are looking for businesses that make money.
Sure, there are other factors that can make a difference such as equipment, client list, location, key employees, etc., but it is still all about the cash flow of the company.
Business owners have to constantly look at the company financials and make the tough decisions to increase margins, cut expenses, or even head in a different direction. Showing good, solid cash flow will ultimately determine the value of the company.
“Due Diligence” or the “Right of Inspection” gives the buyer the full rights to inspect all items in a business — financials, equipment, inventory, premises and anything else.
And if the buyer finds any material discrepancies, he or she usually has the legal option of backing out.
Some transactions fall apart during due diligence, only because the sellers have ignored fixing the problems of their business and just hope for the best.
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Many business owners try to determine the price of their business based on how hard they have worked over the years. But the market will tell them that the business value is really what it is worth to a new owner in the future.
As a result, there are many factors to examine – equipment, employees, market position, technology – the list goes on and on.
Business owners should get a business valuation performed by a professional to get a real sense of market value.
Successful business owners are always learning and finding new ways to improve their operations.
But business owners who “draw a line in the sand” and close the door to new methods, new technology and updated equipment can see a drop in market position, revenues and profitability.
As a result, buyers for these businesses will only offer a discounted price, and oftentimes a heavily discounted price.
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The hard truth is, many businesses will sell at a low price or not sell at all. Why? Because those business owners don’t understand how to create value and minimize risk for a new owner. Or they don’t understand how a business is sold.
Business owners need to learn how buyers will view their business – their financials, location, key employees, equipment, technology and many other critical items. And they need to recognize how the market will react to the price of their business.
Contacting a professional and […]