Murphy Business &
513 N. Belcher Road
Clearwater, FL 33765
Internet Searches are Key for Business Buyers
Recently, I've noticed several articles in various publications regarding changes in residential real estate marketing strategies. It seems that open houses (except those hosted for other real estate agents) are no longer a preferred way to reach potential home buyers. Today's tech-savvy buyers prefer to research listings on the Internet, taking virtual tours when and where it is most convenient to them. Most buyers, these articles note, make a decision whether or not to contact the listing agent based on these virtual home tours.
This got me thinking about buyers looking for a business to purchase and the similarities of utilizing the Internet for research. The majority of advertising and marketing for business brokers is handled through web sites that feature businesses for sale. While a few of these sites are available to entrepreneurs looking to sell their companies themselves, the majority are available only to business brokers through professional subscriptions.
As we've discussed, maintaining confidentiality of the business is a key factor for a successful business transfer. After all, a small business owner does not want to announce to his customers or competitors that he is thinking of retiring or leaving the industry.
The larger sites available to business brokers offer more space for describing key points about the companies for sale, while still maintaining complete confidentiality. Business brokers are experienced in wording listing descriptions that grab attention and highlight the factors most buyers will find attractive.
You only get one chance to market your business. Most buyers will find your company's listing by searching online. Make sure to maximize your marketing strategy when the time is right for you to sell.
How to Sell Your Business, but Keep it a Secret
March 10, 2011 12:03:28 PM
“Loose lips sink ships.” It’s a familiar phrase to Americans, originally written by the War Advertising Council during World War II as “Loose lips might sink ships.” The British also used variations of the phrase that encouraged citizens and military personnel to avoid careless talk that might serve the enemy.
The phrase is still used today to caution against thoughtless chatter in general.
When selling a company, it is vitally important that confidentiality be maintained throughout the business transfer process. A breach of confidentiality may not only kill the deal, it can cause further repercussions to the seller as employees and customers may leave, creditors may begin to scrutinize more intently and competitors may capitalize on the perceived opportunity.
If a business owner is unable to disclose information, how is he supposed to sell his company?
Business brokers are professionals in this arena and have the experience and tools in place to manage the business transfer process discreetly, helping sellers maintain the utmost confidentiality until the transaction has been completed. This is accomplished by:
• Marketing effectively
• Qualifying buyers
• Using documents that require confidentiality
• Managing the information flow
A business broker should prepare a customized marketing approach for each company he lists for sale. This includes describing the business in a generic fashion -- one that will appeal to prospective buyers without jeopardizing the seller’s identity.
Approximately 90% of prospects who initially reply to advertisements are usually not a fit at all, generally because they lack the necessary experience or cash investment for the transaction. There are also a lot of “lookers” or “tire kickers” who can easily drain a seller’s time and tax his emotional energy. Business brokers have the skills to help qualify buyers immediately, before the seller is ever involved.
Business brokers use confidentiality agreements, with wording prospective buyers must agree to, in writing, before additional information is released.
Business brokers also manage the flow of information, holding the most sensitive records secure until a formal offer to purchase (with escrow deposit) has been accepted by the seller.
The business transfer process is somewhat unique in that the details of the entity being sold are not shared initially, but rather peeled away as the buyer becomes more interested and continues to offer proof of his sincerity and qualifications.
Entrepreneurs: Trim the Fat and Boost your Profits!
February 02, 2011 12:38:57 PM
Now more than ever, individuals are looking for ways to cut costs -- personally and professionally. This is especially true for entrepreneurs preparing to sell their businesses. Higher profit margins naturally make a company much more attractive to potential buyers, and increased seller’s discretionary earnings generally equate to reaching the closing table faster and with a better selling price.
Most business owners today are using tried-and-true cost-cutting methods, as well as employing more creative techniques in order to reach their goals sooner.
Here are some suggestions you may wish to consider in the continuing quest to lower expenses:
Enjoy the electronic age
Try a voice mail system for your office and use email whenever possible. This may help reduce the hours needed for a receptionist or secretarial staff and could allow these employees to contribute in other areas. There is a variety of affordable software for businesses, which can help increase productivity within the office. Don’t forget to take advantage of the sales and marketing opportunities the Internet provides at little or no cost.
Deal directly with the source
Establish relationships with the manufacturer of products you frequently use. This may help avoid surplus charges added by third parties.
Makes vendors competitive
Sometimes business relationships can become too complacent. Check out current pricing by requesting multiple bids – especially on larger projects. Remember that sometimes the lowest-price offer may actually cost more in the long run, so be sure to examine the fine print and associated details.
Be rewarded for loyalty
For those vendors you patronize, ask about any loyalty programs they may offer. Even if none are publicly promoted, you may find a vendor will express thanks with special savings.
Outsource when appropriate
Both in terms of employees and leasing space, this is an attractive option for business owners. Outsourcing continues to grow in popularity on many levels. Temporary employees or contract workers make sense for seasonal jobs and short-term projects. Try renting or subletting space when it is needed only occasionally (such as a conference room or large space for presentations).
These are only a few of the many ways savvy business owners are making a direct, and positive, impact on their bottom lines. We’d love to hear what suggestions you might have for other entrepreneurs!
Selling Your Business? Guidance from a Commercial Lender
December 19, 2010 2:45:18 PM
In our third installment of “tips from the experts,” we discuss a topic of great importance to both buyer and seller: how will this transaction be financed?
When a buyer or seller contacts me to inquire about the business brokerage process, it has been my experience that financing is not always at the top of everyone’s mind – but it should be! Many companies listed for sale never reach the closing table, and lack of financing is almost always the reason these businesses do not sell.
While it would be a much easier process if all buyers brought 100% of the contract price and associated costs in cash to the closing table, this rarely happens.
Typically, seller financing and/or SBA loans are used for financing a sale. SBA loans are guaranteed by the Small Business Administration and are provided to small companies.
Christopher J. Kneer is vice president of commercial lending for Community Bank and specializes in both conventional and SBA loans. He explains, “Banks view business acquisitions as risky transactions for two primary reasons: change of ownership and financing of goodwill. For that reason, we utilize the SBA.”
Kneer provides these tips for potential sellers:
- The time to begin preparing for the sale of your business is three years out. To get the highest price for your business, you need to have multiple and consistent years of earnings. Banks and many buyers are suspicious of one great year and dramatically different results in previous years.
- Accounting quality is very important. An arm’s length CPA should be working with your company. Accounting issues and statements that do not match up from year to year are a major red flag. If there are significant line items or particular issues on your financials, be upfront and point them out. Spend the money on good accounting and it will come back twofold.
- Show earnings. The time to strategically limit profits for income tax purposes is not while you are preparing to sell your business. No bank wants to see a company that loses money every year and bases its sales price on “add-backs.”
- Have buyers pre-qualified. Banks want to see buyers with industry experience, proper equity injections and liquidity. It does no good to show your businesses to those that cannot qualify for financing unless they are cash buyers.
- Plan to have a seller note involved in the transaction. Due to changes in SBA financing, it is often necessary, and it also shows good faith in that you are willing to stand behind the business for sale.
- Plan to stay on for a period of time. This also shows good faith that you are willing to help the new owner be successful.
Solid and sound advice.
Timely Tips from a PR Expert
November 30, 2010 2:57:38 PM
If you're thinking of selling your business in the future, you should be planning right now.
You've heard of homeowners preparing and then "setting the stage" to present their investments in the best possible light; business owners should also be preparing as far as possible in advance of selling their companies.
We spoke with Suzie Boland, president of RFB Communications Group, Inc., who offered these public relations tips for entrepreneurs:
1. If you haven't done so already, be able to define your unique positioning and unique value proposition -- succinctly (and that means in less than one minute). Include what you do, for whom, and how what you do benefits your customers. This is similar to what you may have heard described as an "elevator pitch" -- what would you say to interest someone in your business in the time you rode down the elevator together.
2. Make sure your web site is current and expresses your positioning and value proposition. That's the first thing prospective buyers will look at.
3. Think about which of your clients would give you good recommendations and prepare a list with contact information.
4. If you have any favorable and recent news articles, clip them and put them in a binder.
Great advice: a business owner should never underestimate the value of established, positive public relations!