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American Business Brokers & Advisors Founder & President MERGERS & ACQUISITIONS BUSINESS VALUATIONS
OCTOBER 2022
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9 Questions You Must Ask
Before Selling Your Business
The “art” portion of determining the value of a business takes into consideration the quality of the assets. What is the state of the industry the business is in? Where is the business located? Is there deferred maintenance? The list goes on to determine what a business is worth. Chapter 5 of “Hidden Wealth: The Secret to Getting Top Dollar for Your Business” — “Know What You Are Selling: A Seller’s View of Valuation” — will answer this question. HOW DO I KNOW I AM GETTING TOP DOLLAR? One of the biggest mistakes business owners make is not knowing what their business is worth and moving blindly into the selling process. It is remarkable that most people know what their vehicles and real estate is worth but have no idea what their business is worth. It is one of the easiest ways to leave sometimes millions of dollars on the table. In Chapter 5 of my book “Hidden Wealth: The Secret to Getting Top Dollar for Your Business,” I help you avoid leaving money on the table. HOW DO I DEAL WITH FAMILY IN THE BUSINESS? Boy, don’t I wish I had the silver bullet answer to this question. All families are different, but some things do remain the same when transitioning from the patriarch and matriarch to the children. And it can get very dicey. I share stories of how other families have confronted this issue in Chapter 3 and in the conclusion of my book “Hidden Wealth: The Secret to Getting Top Dollar for Your Business.” It helps to be prepared and learn from other people’s mistakes rather than making the mistakes yourself. WHERE DO YOU FIND A BUYER WHO WILL PAY TOP DOLLAR? Finding a buyer is not hard to do. But finding the right buyer who can perform, get the job done, and get the transaction closed is another story because business transactions are based on price and terms. If the price and terms cannot be agreed upon in the beginning of the transaction, chances are things will not turn out well. In my book “Hidden Wealth: The Secret to Getting Top Dollar for Your Business,” Chapter 6 will give you the insight you need to ask the right questions before it is too late. HOW LONG DOES IT TAKE TO SELL A BUSINESS? We like to say between 6–12 months, but a lot of this depends on what kind of condition the business is in. Lots of different situations can create
HOW DO I PREPARE FOR THE SALE? Chapter 1 of my book “Hidden Wealth: The Secret to Getting Top Dollar for Your Business” wastes no time addressing how a business owner prepares themselves for the selling of their business because when selling one’s business, you can’t be “half pregnant.” In the book, I share stories of what to do and what not to do. WHEN IS THE BEST TIME TO SELL? This is a great question and one I get asked quite often. Believe it or not, the best time to sell is when you don’t need to and when the business is most profitable. It is quite simple. If the business is doing well, then it will sell for a higher valuation and bring the most value. If the business is doing poorly, it will be harder to sell and will not command top dollar. However, by preparing the business correctly one can command a higher price. For all the details you will want to read Chapter 4 of “Hidden Wealth: The Secret to Getting Top Dollar for Your Business.” HOW DO I KNOW WHAT MY BUSINESS IS WORTH? We like to say that valuing a business is a combination of both art and science. The “science” part of the equation is the numbers. By that I mean the profit and loss statements of the business and cash flow.
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It’s Never Too Late to Plan Your Retirement
GET STARTED NOW!
The way people retire nowadays is a bit different than what it used to be. On the surface, retirement planning has not changed too much — you work, you save, and then you retire. While the mechanics may be the same, retirement planning now comes with a whole new set of complex factors.
It can be overwhelming for some, but if you focus on what you can control and develop a comprehensive plan, you can be just as successful. KICKSTARTING YOUR PLAN While starting to save early is a great idea, it is okay to set money aside for more immediate needs and focus on saving when you’re older. Some things to keep in mind when starting your plan include the following:
so before you plan to reach retirement can be especially crucial. By then, you may have a good idea of when (or if) you want to retire, and still have time to make adjustments, if needed, or even boost your savings before you retire. You will need to think about how much everything will cost, and though we don’t know what prices will be like in the future, it’s important to plan for higher prices in the years ahead. This can include the following:
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Create a budget.
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Housing costs — rent, mortgage, heating, water, and maintenance
Set automatic transfers between checking and retirement accounts. Create an emergency account that allows you to cover any unexpected expenses, such as a broken water heater, without throwing your retirement plans out the window. Pay down debt so you can be debt-free in your non-earning years.
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Health care costs
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Day-to-day living expenses — food, clothing, transportation Entertainment — restaurants, movies, plays, and personal hobbies
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There are few things that are more nerve- wracking than the thought of outliving your resources, and if your retirement savings are not managed properly, it can be inadequate for your needs. But this is fully within your control, and you can decide what is best for you for a successful retirement.
SAVING FOR RETIREMENT Whether you plan to retire early, late, or never, having an adequate amount of savings can make all the difference. The last decade or
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different timelines. In Chapter 8 of my book “Hidden Wealth: The Secret to Getting Top Dollar for Your Business,” I share stories of different scenarios on how long it took business owners to sell their businesses and how you can benefit from their experiences. WHAT IS THE PROCESS WHEN IT COMES TO SELLING? Believe it or not there is a process. And there is a checklist for this to ensure you don’t miss anything. Even knowledgeable pilots, who fly every day, use a checklist each time they get in a plane so they don’t miss anything before every takeoff and landing. To ensure you don’t miss anything, we have included a comprehensive list of everything you will need in Chapter 7 of “Hidden Wealth: The Secret to Getting Top Dollar for Your Business.” WHAT ARE SOME OF THE PITFALLS I SHOULD BE LOOKING FOR AS A SELLER? To begin with, you may only sell your business once in your lifetime so you don’t have any room for error. Maybe you have sold a business in the past or some real estate or vehicles, but nothing can prepare you for selling your business when you are dealing with a professional buyer. As we like to say, “It isn’t a fair fight.”
Having sold over 853 businesses, I have encountered a lot of crazy
stuff. Below is a list of some common things a seller may
encounter from a buyer, but to get the full list you will need to read Chapter 7 of “Hidden Wealth: The Secret to Getting Top Dollar for Your Business.” Here are just a few things you want to lookout for:
• Claw Backs: the buyer offers one price then changes later • Hold Backs: money held back for issues to be resolved after closing • Holdovers: seller to insure for 12–18 months for liabilities • Noncompetes: restrictive to future earnings • Slicing and Dicing: cherry-picking select assets • Due Diligence: proving what we are selling
–Terry Monroe
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SUDOKU (SOLUTION ON PG. 4) Take a Break!
Past Client Speaks Out
Hi Terry,
It’s been almost three years since you guided me through the process of selling my stores, and I’ve had a chance to think about life after the sale So, I thought I’d touch base and share a few thoughts about it all, which I hope you can pass along to others who may be contemplating selling their convenience stores. When we first talked in 2018, I was caught up in the rat race of the business as I tried to keep the stores staffed with an ever-increasing shortage of workers and struggled to keep up with the large chains. I was also faced with the staggering cost of state and federal regulations relative to the dispensing of fuel and credit card processing that would add hundreds of thousands of dollars of expense and do nothing to enhance sales volumes. But even though I felt like I was doing everything a prudent petroleum marketer should do, as did my dad and his dad did before him, I always had that nagging fear that a big chain store would come in and take my business, negating everything I worked for. You may recall that I talked myself into believing that since I was the local guy, the guy who was a member of the local chamber of commerce who volunteered for the local fund drives and contributed to the schools and churches, that my customers were loyal — and they’d stick with me. Those thoughts made it possible for me to sleep better at night, until the big guys built their first “mega-battleship” store in my hometown. I watched my volumes shrink, along with my customer base. I’d drive by and see MY customers at the big chain store. The loyalties that my dad and grandfather enjoyed were no longer a part of the new demographic of customers. Fortunately, when I finally pulled my head out of the sand, I had you there to market my company, find the best-suited buyer for my stores, and lead me through the process of selling my stores. Terry, since I’ve gone through this process of selling my business, I have experienced all the mental and emotional gymnastics of making the decision as to whether or not I should sell my business. If someone is struggling with the same issue, I would be happy to discuss my situation with them if it would help them decide on their best course of action regarding selling their convenience stores. Please have them email me at John@BaltusOil.com , and I can share with them my story about before I sold and how I sold as well as the process of selling and my life after selling.
WORD SEARCH
Sincerely,
John Baltus Baltus Oil
BATS BROOMSTICK CEMETERY CREEPY
GRAVE HALLOWEEN HARVEST MAZE
MONSTER SCARECROW SKELETON TREATS
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INSIDE 7824 Estero Blvd., 3rd Floor Fort Myers Beach, FL 33931 1 9 Questions To Ask Before Selling
Sudoku Solution
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Retirement Plans Are Evolving
Past Client Speaks Out
Become an Expert on Remote Work
‘The Nowhere Office’ Explores This Idea IS REMOTE WORK THE FUTURE?
back into an office could kill productivity, and writes that remote or hybrid workplaces can be more flexible for employers and employees alike while still allowing work to be completed on time. But if remote work is the future, what will happen to the workplaces owned by businesses? Are they unnecessary? Not exactly, explains Hobsbawm. She believes that businesses still need physical workspaces, but how they are used will change. They will no longer be a place where employees spend their entire days. Instead, they will be designated for networking, training, and development. Hobsbawm also tackles the idea of how much employees should be working. She informs business owners that it’s okay to have employees work less, as it can lead to more productivity. She states that “work can and should be not only a source of raw income but also a purposeful life itself.” While your employees need to earn a livable wage, they should also find passion in their work, or they will quickly burn out and feel resentment toward their job. If your business has switched over to a remote or hybrid environment and you’re still trying to figure out how to successfully manage your team, “The Nowhere Office” will help you develop a plan.
Think about your current work environment for a second. Is it the same as it was three years ago? Likely not, as the traditional workplace was overhauled due to the COVID-19 pandemic, and now, many employees across various industries are working remotely. But can work return to the offices full time? Should it? Julia Hobsbawm answers these questions and more in her book “The Nowhere Office: Reinventing Work and the Workplace of the Future.” Now that pandemic lockdowns have been lifted, many business owners have attempted to push employees to return to the office full time. Hobsbawm believes that’s the wrong approach, as forcing employees
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