The Delayed Gratification of 2009 and 2010

In my talks with business owners and their advisors throughout 2009 and early 2010, I see one common theme – Survive. Business Owners who back in 2007 planned to fund their retirement by selling their business in 2009 were hit with multiple hurdles. “Those doing well enough to sell or want to sell are shying away,” says Mike Handelsman, general manager of BizBuySell in San Francisco. “If they sell, it’ll be based on cash flow and revenues, which are depressed now. In many cases, this is their nest egg, so they’ll put off retirement to wait out these uncertain times.”

A few bright spots are beginning to appear as 2010 comes to the half way point. Borrowing for good deals has slightly freed up and there is a great deal of  money on the sidelines (“dry powder”). Most American’s still see business ownership as the best path to creating personal wealth. What should an owner do in 2010?

Make sure your business stands out among the crowd of mediocre companies. How do you do that? One, make sure your books and records are immaculate. This is still the number one reason a business doesn’t sell or sells for a reduced price. Two, show a potential buyer that there is plenty of business in the pipeline and your have the systems and procedures in place to capture that business. Three, do any delayed maintenance before going to market. You get once chance at a good first impression, don’t blow it. Fourth, have a third party appraisal done of your business with pre-financing in place. This will allow you to move quickly on serious buyers. Don’t wait for them to arrange their own financing which might be inferior or from the wrong bank.

Plan, Plan, Plan… Whether you want to sell in six months or six years that is the key to monetizing the value you have built in your business.

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