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Telling the Story of Your Business

A Brokerage Professional Can Help Tell Your Story

It’s extremely common that sellers don’t usually know the true story of what their business actually is because they tend to lack the proper perspective as they are too deeply involved. Business brokers and M&A advisors serve a great function as a third party who can look at the story from a different perspective because in reality, sellers may be burnt out or haven’t taken time to really think about what the story of their business truly is. Now it goes beyond these professionals just being numbers people, as they can see your business as a story to be told. And they can help you control that storyline for optimal results.

Embracing the Human Element

When it comes to telling the story of your business, it’s necessary that your M&A advisor completely understands your business from the ground up. Communication is key here and this will play into why a buyer is going to want to buy your business. After the interview process, these professionals will go to the lengths to properly arrange all relevant information to support the story in such a way that the buyer can digest it and see the potential within the business. This is so a prospective buyer can understand that value and envision him or herself as the hero.

It Goes Beyond the Financials

Brokerage professionals will want to interview you to learn how to weave together your story. A part of this process will involve business brokers and M&A advisors in order to help sellers determine the price and work as advisors on pricing. Because the financials and the facts are going to be the front page of each business story. In the end, every story has a moral and pulling all of these elements together to make an engaging story that will ultimately inspire and motivate a buyer to buy the business.

Storytelling Leads to Successful Deals

Selling a business isn’t just about all of the financial variables. Of course it’s important to consider the numbers, figures and facts, but it is also about the people. When buyers open their minds to the story being told, they are able to envision the future potential of the business and why it is going to be a valuable opportunity.

Please feel free to contact American Business Acquisitions for a free consultation on selling a business in Illinois or Indiana.

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Is it Possible to Buy a Business Without Collateral?

When it comes to being approved for both business and personal loans, you can be certain that a bank will want collateral. With said collateral, your bank becomes less concerned that they’ll be left high and dry when the loan remains unpaid. With a lack of collateral, many budding business owners are held back by the fact that they lack the collateral needed to buy a business. Though luckily, there are ways that one can buy a business without having any type of collateral or very little.

The Small Business Administration (SBA) is the first stop for those wanting to buy a business with a low level of collateral. The SBA’s 7 (a) program provides banks with incentives to make loans to buyers. These buyers can buy a business in any state such as Illinois or Indiana, etc. By utilizing this program, the SBA will provide a guarantee for a whopping 75% of the loan amount, but the borrower still has to have the remaining 25% in some cases, but perhaps as low as 10%. To put it into perspective, this would mean that on a $1 million dollar business, the borrower just has to come up with $250,000 max in most cases, but often times much less.

Through the SBA’s 7 (a) program it opens up the possibility for prospective business owners to consider businesses that may have been out of reach otherwise. Anyone looking to become a first-time business owner will want to fully explore all that the SBA’s 7 (a) program has to offer as they even hold a second aspect to the program which allows the cash that is fronted for 10-25% of the loan to be from an investor or provided to the borrower as a gift.

Another option one could look into would be seller financing and it’s certainly not as rare as many suspect. This method of financing is actually quite common. If sellers are motivated, they are much more willing to consider seller financing. Those motivations could come from a variety of reasons such as retirement, unexpected personal problems, or just burnout. There is also the possibility that seller financing and the SBA’s 7 (a) program could be used together. Which in turn could greatly increase your chances of buying a business. Now of course there are still potential obstacles or limitations to consider with the SBA’s 7 (a) program. For example, the program requires that sellers cannot receive any form of payment for a full two-year time period in most cases.

But all that to say that a lack of collateral doesn’t have to mean the end of the dream of owning a business. If you are interested in owning your own business and lack collateral, meet with a consultant at S.C.O.R.E. and other experienced professionals, such as a business broker or M&A advisor. An experienced brokerage professional will have a wide array of ideas for how to buy a business with little or limited collateral.

Copyright © 2022 American Business Acquisitions, Inc. 

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Important Factors to Consider in Your Lease

When owning and operating a business, the day to day can be rather demanding. Which means that sometimes, important details slip through the cracks. An extremely common issue amongst business owners is when they don’t take the time to fully understand or comprehend their leases. And as you could guess, could lead to a variety of problems. Being aware of each of the essential points within your business location’s lease is a key part of your success. Some businesses such as restaurants and services, fully rely on being location sensitive.

Don’t Let Key Details Slip by You

Regardless of what kind of business you own, it is vital that you understand every aspect of your lease. Oftentimes business owners will hire an attorney to help understand the implications of the minor points. Avoiding the time it takes to comprehend these points could result in the failure of your business.

The Length of Your Lease

This tops the list of factors that you will need to completely understand. While there are many variables that will affect you, in general, the longer your lease the better. The longer the lease, the higher the increase in your business stability.

Exit and Exclusivity Clauses

If you are negotiating a lease, it is prudent to include an option for getting out of the lease. Just as mentioned above, longer leases provide greater flexibility. The same holds true for being able to exit your lease if the need arises. Leases are not one-dimensional documents, just like your location isn’t either and where your business is located actually matters. If you are signing a lease to locate your business in a strip mall or shopping mall, you should try to have written into your lease agreement that you are the only business of your type that will be located in the mall. After all, the last thing you want is to see a similar business opening up nearby.

Transferring Your Lease

Although lease longevity and being able to terminate your lease at any time are critically important, so is being able to transfer your lease. You may need to up and sell your business in the future, unexpectedly or otherwise. Having a clear and concise understanding of how to transfer and under what circumstances you can transfer your lease to a new owner will be imperative.

You should have a discussion with your landlord about the potential of selling your business in the future before you go to market, so that you both are on the same page about what your lease is able to convey. While the landlord cannot restrict the sale of your business, you could get left holding a personal guarantee in order for the lease to remain in place for the remainder of the existing lease term. Then the new owner would be left to negotiate the lease renewal on their own.

Assignment of Responsibilities

Determining what you are responsible for and what your landlord is responsible for is another key factor in rounding out your lease agreement. Sometimes as a business owner, you are required to handle specificities related to the property itself. If so, those responsibilities should be clearly outlined in the lease.

Of course, there are many variables to consider when choosing to own and operate a business. Location consideration should be amongst your top priorities, and you should do everything possible to understand your lease down to the very last detail. And remember, when in the process of signing a new lease, try to negotiate factors that are as helpful to you as possible.

Copyright © 2022 American Business Acquisitions, Inc. 

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When It Comes to Selling Your Business, Let Others Do the Heavy Lifting

While brokerage professionals are working to sell your business, it’s important for you to keep your daily operations running as smoothly as possible. Sellers often make the common mistake of becoming distracted during the selling process and allow things to fall by the waist side. You’ll want to make sure everything remains the same, as prospective buyers will otherwise start to become nervous. Operating hours, inventory levels, and tasks such as keeping the premises in prime condition should remain unchanged. If any changes like revenue or sales decrease, that will raise a red flag for buyers.

Business brokers , M&A advisors, Attorneys and CPAs – anyone professional who may be involved during the sales process – will help tremendously with various details and events. This way, you can focus your energy on running your business, and they will continue to assist with the process from beginning to end.

Get Professional Advice on Pricing

You may have a ballpark figure of what your business is worth and an estimated amount you expect it to sell for. However, the truth is that you will only receive what the market will allow. Always obtain a professional valuation before providing a listing price. Over pricing the value of your business will certainly derail the process and potentially halt it all together. You want to strive towards successful results, not set backs.

Keep Things Confidential

Confidentiality will be an extremely important piece of the puzzle during this process, especially until your sales transaction has fully concluded. If your vendors and employees know that you are selling, it could lead to circumstances that are detrimental to the value of your business. Employees may begin to pick up on what is going on behind the scenes and opt to seek employment elsewhere. Similarly, vendors may catch wind of what is happening and choose to terminate their contracts if word were to get out.

Decide On Your Strategies

Think about how willing are you to stay for a designated period of time after your business sells. Weighing this decision tends to help increase the amount you receive for your business, as many buyers will hold you as a valuable asset as a reduction in their risk and often increase their offer. Another thing to consider is offering seller financing. Similar to sticking around, buyers will view financing as a sign that you believe in the future success of the business.

Prepare in Advance

It’s always best to prepare when you are not experiencing external pressures. Unfortunately life is unpredictable and any event could cause you to sell at an unexpected time. Factors to consider are making sure, years in advance, that your bookkeeping and paperwork is kept up with. This would include organizing documents or handling any litigations and environmental issues. As mentioned above, selling a business can be highly distracting for business owners.

A prime reason for business owners is to start talking to an M&A advisor or a business broker a few years in advance. That way they can make sure everything is optimized for positive results.

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How to Get Ready to Sell Your Business

You may have heard the advice, “the best time to prepare to sell is when you start your business.” While this statement is far from realistic for most business owners and may even sound humorous, it does contain a certain amount of wis-dom. When it comes to getting the best outcomes selling your business, prepa-ration cannot be undervalued.

No matter where you are in the journey of running your business, we encourage you to prepare as much as you can. With that in mind, let us take a look at some considerations and decisions that you’ll need to make when you do get ready to sell. It is never too early to begin pondering the answers to these ques-tions.

Consideration #1

If you are involved in the day-to-day running of your business, logic would dic-tate that you are quite busy and do not have time to dedicate a lot of time to-wards the process of selling your business. The good news is that is one area where a Business Broker or Mergers and Acquisitions Advisors will make all the difference.

Brokerage professionals will perform a variety of tasks from start to finish, in-cluding negotiating and interacting with prospective buyers on your behalf. These professionals will be able to work on many things independently and, if it is your preference, they can notify you only about the most relevant details of the transaction. On the other hand, you may want to be very involved in the pro-cess of selling. If that is the case, let your brokerage professional know.

Regardless of how involved you are with the business and the sales process; you will want to ensure that things stay as consistent as possible when you are in the sales phase. The reason for this is that buyers will want to see consisten-cy. Any change in operations or revenue earned could turn out to be a red flag for a buyer.

Consideration #2

Another item that is worth thinking about ahead of time is confidentiality. Profes-sional Business Brokers and Mergers and Acquisitions Advisors will put utmost importance on confidentiality. When confidentiality isn’t taken seriously, leaks are very common. These could quickly interfere with the sale, whether it is due to a client/staff looking elsewhere or competitors taking advantage of the situa-tion. Your brokerage professional will advise you of the policies and precautions that work best when it comes to preventing leaks and only revealing details about your business to prospective buyers who have been carefully vetted.

If you have partners in your business, it makes sense to bring up the discussion of a future sale well in advance. This will allow you to get on the same page about your plans for how things will be handled when the time comes. In the case that the date of the sale ends up being before you expect it to be, it will be very helpful to have already addressed these issues.

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What Do Buyers Really Want?

When sellers get ready to put their businesses on the market, they often wonder what buyers are really looking for in an effort to make their businesses as attractive as possible.

The answer to this question can seem mysterious when you are on the other side of the bargaining table. So, what are buyers typically thinking about when they make the decision about whether or not to purchase a business for sale in Illinois? It should come as no surprise that much of this is tied into earnings and stability.

Guarantees of No Surprises

Earnings that are sustainable are very attractive to buyers. After all, it allows them to know what to expect. Buyers can then factor in if they can advance the business in a way in which it would grow faster than the current pace.

If not, they at least would have the confidence to know that the business will proceed at the same rate. Of course, no buyer would want to acquire a business only to find that it only had high earnings temporarily due to a one-time contract.

Accuracy of Information

Along the same line of avoiding surprises, buyers will want to verify the information they receive about a business. Anything involving past, present, or future legal issues will be scrutinized along with other issues, such as pending product returns. The due diligence process is when you can expect the buyer to really dig into the details of your business. You can expect that he or she will often do so with the assistance of an attorney and accountant.

Oftentimes, accountants or appraisers add back one-time expenses or non-recurring expenses. Buyers will want to look at the earnings and have proof of expenses that are non-recurring, such as fees for a lawsuit or heavy repairs to a building. Since this process inflates earnings, it can make it difficult for buyers to understand the actual earning potential of a business. Otherwise, those expenses would obviously throw off the true earning potential of the business.

In Closing

These are just a few of the critical considerations made by business buyers when looking at a potential acquisition. There are numerous other considerations that a buyer will make, and it is important to be prepared to address those questions and potential concerns a buyer may have up front, or they will quickly lose interest and move on to other potential acquisition opportunities. Put yourself in the shoes of a potential buyer and think about the kinds of assurances you would want before buying a business.

Working with Business Brokers in Chicago or Mergers and Acquisitions Advisors can be tremendously beneficial in this regard. These professionals have worked with many buyers in the past, and therefore easily see things from a buyer’s point of view. They will not only be able to help you get prepared up front when buyers begin looking at your business, but easily identify and point out areas of concern that a potential buyer may have in order to keep the journey to closing on track.

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Seeking Professional Help When Selling Your Chicago Business

When it comes time to sign on the dotted line while buying or selling a business in Chicago, you only have one opportunity to get it right. Many owners misvalue the worth of their business or don’t take the time to fully understand the process and preparation that goes into it. You may know a friend or even a relative who is able to help you navigate the waters, but it’s always to your benefit to seek professional help and advice. Here are some common mistakes.

Not Prioritizing Confidentiality & Financial Information

There are hundreds of Chicago businesses for sale, and at the top of the list are competitors wanting to gain access to valuable information, so keeping your confidentiality intact is detrimental to the successful sale of your business. Trying to endure the process on your own may make you susceptible to sharing your personal information with the wrong parties. Or in a worst case scenario, accidentally alerting employees, suppliers and customers that the business is up for sale. It’s critical these errors do not occur as to retain employees and not have the scoping out new job opportunities because the sale is taking place or to a rumor thereof, especially if it will not be affecting them. Should these occur, it could jeopardize the sale of the business and deface reputation. It’s equally as important to ensure you trust the parties that are assisting you in selling your business. If any of said parties lack experience, someone may accidentally omit preparing critical paper work or neglect to have financial records properly audited, which could negatively impact your numbers. This could lead to lower offers and less interest from prospective buyers.

Failing to Involve Key Parties

Owners have spent countless hours and tons of energy building their business into a thriving, salable entity. Successful business owners never cut corners on their way to this point, and it’s not time for them to start doing so now. In order to ensure that their sale goes smoothly and that they reap the benefits of their hard work, it’s essential to hire sell-side advisory services. Business Brokers in the Chicago area could likely tell you horror stories of the damage inexperience in the industry has done. Understanding the importance of bringing in key parties should again, not be overlooked by any means. When a business owner is guided by those who are not trusted professionals, there can be many miscommunications in involving key parties. While an error like this one might not necessarily kill the deal, it could lead to delays and complications.

The bottom line is that when it comes to a large transaction like selling your business, it is time to rely upon trustworthy professionals. There are countless protocols that go into ensuring a deal moves along and satisfies smoothly. Experienced business brokers and M&A advisors will make sure that all the best practices are followed and that you come out ahead in the end.

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The Importance of Employee Happiness

Creating a Better Workplace Culture

There’s no question that employees are an integral part of operating a thriving business. Which is why keeping employees happy plays such a huge role in improving workplace culture, retention, and overall productivity. According to a study by the University of Warwick, happy employees are 12% more productive, which allows them to put forth better work quality and even increase their creativity. When your employees are feeling not only satisfied, but also valued, they will be more likely to keep your clients satisfied too. For each happy employee you have, the focus and engagement will continually increase, projecting onto your customer base. Of course, there is also an opposing side to this. If some of your team members feel frustrated and angry, their actions can drive away your customers and clients. If you are looking to sell or operate your business for maximum revenues, it is a good idea to also maximize employee satisfaction levels as well.

Employee Benefits & Retention

It goes without saying that employees will be more likely to feel satisfied when they feel that their salary and benefits are fair for the work they do. If they are resentful about the compensation they are receiving for their work, this will ultimately impact their performance. Employees who report higher levels of stress are more likely to be absent from work, take longer breaks during their shifts, or even quit their jobs altogether. Listening to employee concerns and consistently conducting one on one meetings to check in with them is extremely important in keeping the lines of communication open. This way your people will be more likely to come to you when they’re stressed or facing a problem. When you think about some of the most successful companies, you realize that many of them invest substantially in supporting their employees to cultivate higher levels of employee satisfaction. For example, Google is well-known for offering a wide range of perks from parental leave and paid time off to free lunches and fitness facilities. Putting forth this extra effort will really go a long way when it comes to retraining not only employees in general, but especially the most talented ones.

The Customer Experience and Company Longevity

Happy Employees = Happy Customers. Those who feel valued are more likely to exhibit happiness and deliver great customer service. When you exhibit good leadership and act as a positive role model, your employees will likely follow suit. When you know your team members are struggling, provide them with resources such as training in resiliency, mindfulness, and cognitive-behavioral techniques and don’t forget to recognize a job well done! Employees should be acknowledged and rewarded on a regular basis. In some cases this may be a financial bonus, but even sending them a personalized note or acknowledging their work within a team meeting will go a long way in cultivating a positive company culture while boosting morale. This will ultimately contribute to your company’s overall ongoing growth and development for the future.

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The Advantage of Buying an Existing Business

When most people think of starting a business, they usually think they will start from scratch, develop an idea, and build the company from the ground up. There are some major disadvantages with starting from scratch, including developing a customer base, hiring employees, marketing the new business, and creating cash flow… all of this is done without a well-built reputation or long-standing history in place. To avoid challenges, buying a business that is already in existence usually proves to be a better solution. Buying existing can have its advantages – including, but not limited to:

The Business Is Established.

An existing business already has structure in place. There is an established track record, a customer base, and a relationship already built. There is a physical location with furniture, fixtures, and equipment in place. The term “turn-key” may be overused, but an existing business is just that, and more. A franchise might describe their business as “turn-key”, but it ends there. Start-ups are just that, starting from scratch with all of the disadvantages as stated above and others.

The Business Has Existing Relationships.

There is a lot to be said for having an established relationship in place with customers, vendors, and suppliers. Most businesses also have experience employees, and that alone can be a valuable asset to a company. A new buyer might already have a relationship with various vendors, such as banks, advertising agencies, advisors, insurance companies, banks, etc., but if not ­– the existing business does and that can be transferred to the new buyer as part of the acquisition. Working with a professional Chicago area Business Broker or M&A Advisor at American Business Acquisitions will help ensure that all of these details are accounted for.

The New Business Risk.

When starting a new business, it doesn’t matter how much time, money, and research you invest, there is still risk involved when starting a business from scratch. You won’t have the financial track record, along with established policies and procedures that an existing business has in place. A prospective buyer can see the financial history of a business, like when sales or high or low, what the expenses entail, how much money an owner can make, and more. Also, in almost all cases, a seller is more than willing to stay on board to help teach and work alongside the new owner – sometimes free of charge for a reasonable period of time, and for compensation longer-term in some cases.

The “Unwritten” Guarantee.

When a seller finances a small portion of the purchase price, he or she is essentially saying that they are confident that the business will be able to pay its bills, and provide support for the new owner, in addition to making any required payments to the seller.

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Important Points for Selling to a Family Member

Every business owner will eventually have to turn over control of their business to someone else. There are many avenues for how this can happen. They range from selling to a prospective buyer, selling to a competitor, or turning the business over to a family member. The key is to start thinking about all of these options for several years before you end up in a situation where you are actually forced to sell.

Working with a Business Broker at American Business Acquisitions in the greater Chicago area can help you determine what sales options are optimal for your specific situation. To help shed some light on the options above, here are some variables to explore when you decide to transfer your business to a family member.

Tax Advantages 

There can be significant advantages when transferring a business to a family member. Without a doubt, the top advantage is the fact that the transfer can be considered a gift. This approach will help reduce your real estate taxes. You might also be able to maintain some control over the business as well, depending on how the agreement is written. For many business owners, this factor can be a big advantage.

Seller Financing 

When transferring a business to a family member, one item you’ll want to explore is seller financing. This is a common practice in general, although it is even more common when transfers to relatives are concerned.

Seller financing is a versatile option of implementing a private annuity. A private annuity can spread payments out across a long period of time. This option can be a win-win situation for both you and your relative. This would ensure a long-term stream of income as a result of ongoing payments. In turn, this decision might make ownership more financially realistic for your relative.

Legal Agreements  

It Is important to keep in mind that selling to a relative no way negates the need for a buy-sell agreement. Even when you’re dealing with your most trusted family members, having a legal agreement in firmly in place is a must. This is an invaluable tool that protects everyone involved.

A buy-sell contract will clearly outline all aspects of the arrangement. This agreement should include the value of the business, amount being paid, information on which employees will be retained, the current business owner’s level of future involvement, parameters of financing, and much more.

Working with Professionals 

Ultimately, there is a spectrum of potentially powerful benefits that are associated with transferring ownership of a business to a relative. While you can expect the IRS to closely evaluate the sale, this should not dissuade you from considering this option. The Business Brokers at American Business Acquisitions are experts at buying and selling businesses, and they understand the specifics of transferring a business to relatives. Early on in the selling process, you’ll want to work with a professional to help you gain tremendous insight into the best way to proceed.

Copyright © 2022 American Business Acquisitions, Inc. 

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