From Biz2Bz NWA, January 2010, “The Business of Education”
By Carl Grimes, CBI + Sunbelt / Lowell
The question used to be, “How much can I sell my business for?”
Now, the question is, “Can I sell my business?”
The times they are a-changing!
The recession combined with other circumstances has produced a difficult scenario for business owners who need to sell their businesses. If you didn’t catch that distinction: “If you NEED to sell your business…”
This is no time to sell a business unless you need to. If your business has cash flow and is providing a living for you and your family, then hang on to it. Continue to operate in a fiscally sound manner and you will continue to add value. When you need to sell, you’ll have a business that brings the best price.
However, if you are among the many business owners who MUST sell your business because of age, health or family issues, you can expect the process to take longer. You can also expect to do more owner financing than in the recent past. Banks are unwilling to take risks on small businesses these days, making third party financing more difficult for the buyer.
There are more buyers than ever seeking to buy businesses because they have lost their jobs, and many have cash for a 20% to 50% down payment. You may need to be creative in selling your business through owner financing and leasing rather than an outright sale.
In the mind of most business owners this may not seem like the best option. However, it’s important to realize that what you really want from the sale is an annuity– a cash-producing asset you don’t have to work day to day to earn. In fact, your business may be the best annuity you can find because it is a secured annuity. Each month it will produce a monthly income for you even though you are no longer operating it. Isn’t that what you want?
What happens if your buyer fails? As the previous owner, you can take it back or re-sell it. However, keep in mind that most buyers invest life savings into the purchase, so they have risk at least equal to that of the seller.
Carl Grimes is the founder of the CBI Team, affiliated with the Sunbelt Business Brokers Network. With over 15 year’s experience, Grimes holds the designation of Certified Business Intermediary from the International Business Brokers Association. CBI-Sunbelt of the Ozarks has offices in Arkansas and Missouri and the only full service business brokerage covering the entire region.
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