5 “Good-to-Know” Points That Can Help You Sell Your Business
If you want to sell business in Dallas, TX you should know that it’s an uphill task: it’s not easy! But you know what they say: “Nothing ventured, nothing gained.” When you sell your business in Dallas, TX the experience can be rewarding and life-altering. You can gain more money to spend on your retirement or invest in a new project or business. You can pay off your loans from the proceeds of the sale and live a considerably debt-free life.
It is important to plan ahead when you sell business in Dallas, TX, because there’s always a chance that it goes south even before you start. A done deal ruined before it has a chance to reach fruition may cause deep regret and means that you’re back to square one. Here are some points that you need to keep in mind in order to prepare you for your sale and maximize the possibilities of success.
1. Focus of Profits, not Revenues
Some sellers looking to sell business in Dallas, TX, as others in the US, have a misconception regarding revenue figures. They feel that if their business has higher revenues, then buyers would be more interested in buying their business. Although revenue figures do spike an interest in buyers, the more seasoned ones are more likely to inquire about the profits.
Let’s take the following as an example (it’s a very simplistic example):
Business XYZ has $80’000 as its monthly revenue compared to $40,000 for Business ABC. The total monthly expenses for XYZ total $65’000 giving a monthly net profit of $15’000. In comparison, the total monthly expenses for ABC come to a total of $10’000 giving a monthly net profit of $30’000. This puts the Yearly Profit figures as follows:
XYZ: $15,000 x 12 = $180,000
ABC: $30,000 x 12 = $360,000
That means that although the monthly revenue for the XYZ is double that of ABC, the profit for ABC is double that of XYZ. That profit translated to a year is a considerable difference. Seasoned buyers would choose company ABC over XYZ (as would any other, given the calculation!).
The net profit is therefore the only underlying figure that is important while taking many variables into account, in order to find the right business to buy. Sellers should therefore strive to be company ABC instead of XYZ if they are to sell business in Dallas, TX.
2. Don’t dwell on the past, focus on going forward
At the time of the sale, the millions in past revenues from great deals become irrelevant and questions start to be raised about the now. It can be a challenge to sell business in Dallas, TX, especially if it hasn’t been performing up to par recently. The cause may be internal problems or market variations. The present performance of the company and its viable and sustainable operations well into the future are matters of grave importance in a sale.
The performance record of the past year, month on month is what usually matters the most to buyers. They will not care much about recovering and reestablishing your business if they’re already paying a premium on the price.
A case for previous years’ performance can be made if the business has been experiencing steady growth in the past. Buyers would be interested to hear about growing revenue and profit streams if it has been happening over a few years, because it signals them that the business is in the growth stage of its lifecycle.
3. Buyers are looking for potential but they won’t pay for it
There are many business owners who want to sell business in Dallas, TX who claim that they are “sitting on potentially the best investment opportunity on the market.” Unfortunately, when it comes to nailing that potential down, buyers are not willing to pay as high a price as these business owners are asking them. Sure, buyers are looking for potential in a company, but they will only work with verifiable and tangible information and numbers.
If there is no established stream of revenue and the business is not a going concern, then there is very little information for buyers to rely on. This means that there is no place for concept businesses just starting out in the buyer’s books. This is especially true for online and IT related businesses which often start out as a concept.
Sellers need to realize that the buyers in the market are looking for a business that is already established and has a corresponding established brand name. A business in its initial stages still has plentiful options to garner resources and build up its equity. Unfortunately, selling it is not one of them.
4. Have Verifiable Proof of Financial Claims
When it comes to claiming revenue sources, sellers who sell business in Dallas, TX need to have (tangible) proof for verification. Take the example of an auto repair shop. They need to be able to show invoices of new parts that they have put into customer’s cars for a repair job.
They need to be able to show that they have done proper procurement of materials that were required for their job. If the revenue stream is through third party alliances and through e commerce, the sellers should even be prepared to show real time transactions happening. An ecommerce firm also earns money through third party advertisements, so they need to be able to show deposit records in addition to the accounts being used for it.
For smaller business claims, it may not be cost effective to hire accountants. Using Skype or Team Viewer to verify claims is a viable option in such a case.
5. Be Honest In your Dealings
When you start to sell your business in Dallas, TX be honest in your dealings from the get go. The truth will come to the buyers sooner or later. If it comes later, you may even have a lawsuit on your hands. Besides, buyers and investors who have spent considerable time in buying and investing in business know that there are ups and downs in the business as well. There are no ideal business conditions in real life.
The buyer will do their due diligence and if something unscrupulous comes up in this “independent” investigation, it may become a deal breaker. Therefore, as in all business transactions, honesty is the best policy when you sell business in Dallas, TX.
In order to sell your business to the best buyers in the market, these few important pointers need to be kept on top of mind. A business broker that has knowledge about your industry and the kind of buyers your company will likely get, can give you that extra boost in your sale. Kirksey Business Brokers are both thorough and knowledgeable in their dealings, and have been in the industry long enough to know it’s ins and outs, so don’t forget to call us at 817-637-1508.