Business Books & Records….Who Cares? Your Buyers Do!
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You likely didn't go into business for yourself because you relished the idea of creating, organizing, and maintaining financial documents. Financial records are part of your ongoing operations, but if you're like most business owners, you likely don't focus on them often or think about them regularly; however, if you're thinking about selling your business, your financial records are about to become incredibly important.
You've worked hard over the years to build your business and make it successful. After all of the time and money that you've invested, you're ready to start a new adventure or retire and that means selling your business. If you want to ensure that your business valuation is fair and that you make the most off of the sale, paying careful attention to your financial records is vital. That financial information will matter to buyers, and as a result, it must matter to you as you begin to prepare for a sale.
Why Do Financial Records Matter?
Anyone who is researching how to buy a business will find numerous tips on interpreting financial records. This is because income statements or profit and loss statements allow prospective buyers to analyze a company's past performance and make accurate forecasts of future performance. The financial information is the proof that your business is of value and will play a big role in influencing the decision of individuals who are interested in buying a business like yours.
Getting Your Records in Order
So what specifically do you need to do to ensure that your financial records are ideal for ensuring the highest possible business valuation and attracting buyers? You'll want to ensure that:
- Your financial records are complete. Anyone interested in buying a business will want to see at least three years of profit and loss statements. If your records are not complete, you will hold up the sale and might even shake buyer confidence.
- Your financial records are accurate. There is no room for math errors and accidental omissions in the financial records that you present to prospective buyers. Any errors that are discovered could ruin your chances of completing a sale with a qualified, anxious buyer.
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10 Tips on How to Spread your Wings and Become an Entrepreneur
By JoAnn Lombardi, PresidentVR Business Brokers/Mergers & Acquisitions
Have you thought about starting your own business? Are you ready to be your own boss? The time has come that you have realized that you are ready to spread your wings and go a different route but you’re unsure of which path or direction to take. Being an entrepreneur is not as scary as you may think but it isn’t a piece of cake. Like any job you take, it requires dedication, perseverance, and persistence to get it right and change the world.
Becoming an entrepreneur is more than what people assume and half of what people know. To understand entrepreneurship, it takes like-minded individuals with the right attitude that sets them apart from the crowd.
Below are ten pieces of the puzzle you need to consider when launching your entrepreneurial career:
1. Do What You Love
Don’t simply begin a business as a result of one thing that hip or trendy thinking commercializing it will generate cash. Create a business idea that you are enthusiastic about that is associated with your expertise. From there, develop a product or service that will enhance and simplify people’s lives.
2. Take Advantage Of Available Online Resources
The web is a goldmine exploiting resources at your fingertips. Thanks to the U.S. Small Business Administration, they offer information on how to write business plans, legal advice, and local resources for startups and more. Other sites like SCORE, Entrepreneur.com, and Bplans are excellent online tools to utilize just to name a few.
3. Build a Great Support System
From beginning to end, you will be investing a vast amount of energy and resources in your entrepreneurial career, so be sure to set up a support system that is on board with you. The need for emotional and financial awareness is important to keep in mind too.
4. Share Your Ideas With Friends And Family
For every idea you birth, it’s best to share with those closest to you in your circle that you may consider family, friends, or a mentor. You can count on these individuals to give you honest feedback and their suggestions or advice whether you think it is crazy or not.
5. Find a Mentor
In order to be highly successful, it is imperative that you seek a mentor, whether they are a local entrepreneur or seasoned business leader, they have a wealth of knowledge worth tapping into. Being a part of their network can result in endless opportunities which could help connect you to the right individuals. Don’t be afraid to ask if they will be your mentor, more than likely they will be happy to oblige. Sometimes, it’s not what you know but whom you know.
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What Makes A Good Business Buyer?
Most business brokers have had the chance to work with far more buyers than we have sellers. This is because each business we list has just one selling client, however, each of these listings can see us engaging with perhaps dozens of potential buyers. Of that group, the majority are either unqualified or simply kicking tires for information. A much smaller number of inquiries come from qualified buyers who are ready with the experience and cash on hand. An even smaller number of this group meets the same criteria, while also being a good fit for the particular business for sale.
It is our responsibility to eliminate the “non-buyers” from the “qualified”, so you can continue to operate your business without distraction.
So, with the volume of inquiries, we generally receive on any given listing, how do business brokers find the good buyers needed to get a deal done? They may come in different forms, and some people will surprise you, but a good buyer ticks the key boxes of experience, interest, qualifications, and financial capability to get the deal done. Our process is exclusively designed to find these rarer candidates and has been likened to sifting for gold.
The first step that weeds out the largest group of disinterested and unqualified buyers is simply requesting a signed non-disclosure agreement. In our experience, at least half of inquiring buyers will either not respond to this request or refuse it. It shows us that they don’t understand the importance of confidentiality for this process and we refuse to work with them further. Confidentiality is the center of any business transaction and a good buyer will accept and understand the importance to the seller.
For those who complete and return the NDA, the next step is determining their interest in the business, as well as their overall qualifications through a structured interview. We need to know that this person is a good fit and can step in and take over (albeit with training and assistance from the current owner). We’re looking for buyers who have worked in the same or a related industry, have management or ownership experience, are keen to learn more about the business, and are willing to disclose the level of capital they have available as a down payment and operations. If they can do this then they’ve deemed a good buyer and will get access to confidential information about the business, as well as an opportunity to meet directly with the owners.
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Promoting Growth (and camaraderie) Through an ESOP
As a member of the wrestling and football teams in school, Bob Whalen quickly realized the value of collaboration — and the fact that individual athletes can come together to create a winning entity that rewards everyone involved.
So years later, as the young president and CEO of heating, ventilation, air conditioning (HVAC), plumbing, and electrical servicing contractor, now known as HB Global, LLC, Whalen took that teamwork insight and transformed his Harrisburg, Pa.-based business into an employee stock ownership plan (ESOP). Today, all of his workers accumulate company stock each year and realize monetarily the fruits of their labor.
“We believe we can make all of our employee-owners millionaires if they spend a career with us — and we’re on the right track with where we need to be,” Whalen said in January.
That’s not just public relations fluff. Whalen has taken a determined and assertive path to grow the company rapidly in order to make this happen. Since 2010, the year his ESOP was created, his company has completed 23 acquisitions, most notably of IT Landes and Son, Inc., a mechanical contractor in Harleysville, Pa. (acquired in 2014), and of Florida-based Nash Plumbing & Mechanical, LLC (purchased in 2017). IT Landes brought Whalen’s company into the nearby Philadelphia market, and Nash gave entryway into Florida. Today, HB Global conducts business in 20 states, the Caribbean, and other international locations, and has operating divisions in 10 states and the U.S Virgin Islands.
Smartly, employee-focused HB Global uses the ESOP as a tool to attract certain sellers, mainly those who stress about much more than a healthy exit. “In the real world many business owners care about the price, but they are also focused on other value drivers that matter to them,” noted Edward Renenger, a Reading, Pa.-based attorney with Stevens & Lee, PC, and president and CEO of affiliate SES ESOP Strategies, a firm comprised of attorneys and investment bankers focused solely on ESOPs. “They are worried about their name on the side of the building, or their legacy, their community, and employees,” he continued. “An ESOP is a vehicle that can accomplish all of those goals while still getting them a fair value for their business.” Renninger has worked with HB Global for a decade on numerous deals, primarily in the ESOP arena.
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Auto Dealership & Body Shop for Sale in Miami-Dade County
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Very well-established auto dealership and body shop business. Excellent reputation and loyal client base. The company buys cars from auction platforms, such as Copart, Manheim, IAA, etc., makes the major repairs, and sells them thru eBay. 400 cars available at an additional price. The business has everything to make any repair including painting, mechanic, engine, transmission, and electronic. 2021 numbers are based on January – November.
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VR Located in Hampstead, NC Sold a Landscape Care Provider for $625,000.00
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This established commercial landscape business had been serving the Fayetteville North Carolina area and surrounding counties since 2004. Their excellent reputation has built a loyal client base with recurring annual contracts in place. They provided lawn maintenance as well as a landscaping division specializing in new construction and installation, mulching, pine straw application, irrigation installation, and repairs, as well as plant and tree installation. This business came with all of the necessary equipment to continue to operate the business successfully. This business had excellent books and records and was pre-approved for an SBA loan.
Congratulations to Ken Puryear for your successful closing.
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Thinking of selling your business or looking for an established
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VR is The Only Remaining Founding Firm of The International Business Brokers Association ("IBBA").
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