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Put Your Strengths First When Selling Your Business

No one understands better than you do, the finer points and potential of your business; however, that doesn’t mean that prospective buyers will have instant awareness of your business’s various strengths. When you are looking to sell a business in Chicago or elsewhere, you now have two very important jobs. First, you need to prepare your business to be fit for sale. Your second essential job is to showcase your business’s greatest strengths. At the end of the day, articulation as to why your business is worth buying, must come from you. At American Business Acquisitions, this effort, of course, will be supported by our highly qualified Chicago Business Brokers and M&A Advisors.

Understand Who Will Buy Your Business 

Most people are vastly inexperienced when it comes to selling a business or have never sold a business. They don’t fully comprehend what is involved in positioning one’s business for sale. The bottom line is that not every business is a good fit for every buyer. Intuitively analyzing candidates to locate the right buyer for your business will efficiently expedite the process. Yet another compelling reason working with experienced business acquisition professionals is critical. A skilled business broker or M&A Advisor will not only know what buyers are looking for, but also what sellers need to do to get their business ready to sell.

How to Navigate Roadblocks 

Selling a business, especially if you attempt to do so without the guidance of professionals experienced in Business Acquisitions, can be an energy draining, and certainly, time consuming process. Successfully running a business requires attention to detail and razor focus. Unfortunately, these can both be compromised when owners attempt to put on yet another hat and handle the sale of their business on their own.

While you are attempting to sell your business, it is critically important that you maintain the current standard of operations. The last thing you want is to risk weakening the finances of your business while you are waiting to find a buyer. Keep in mind it takes months, a year, or even longer to find a buyer for the typical business. While at ABA we have a much more efficient process in most cases, during he sale prices it is key not to allow for deterioration of your business in the interim.

Think Like a Buyer

Preparing your business to be sold isn’t as simple as making a few cosmetic changes and calling it day. Instead, you’ll want to think like a buyer.

What would you want to see if you were buying a business? Wouldn’t you be a great deal interested in knowing all about that business and how it operates? Who its key employees are? How likely those key employees are to stay, who the main customers and suppliers are, and the strength of the business location and competitors? Of course. You would also want a very detailed picture of the business’s financial situation.

In short, your interest would be to clearly understand what the business does and what it’s really worth. How financially healthy it has been in the past, what the business’ prospects are moving forward and, in general, how much effort the business will take to operate. These are exactly the kind of key facts that any seriously motivated and positioned buyer will want to know. It’s natural that a buyer would expect to learn this information before making a decision.

At the end of the day, working with a Business Broker or M&A Advisor is one of the easiest ways to streamline the sales process. Thanks to years of experience, they already understand Business Valuation in the Chicago market and beyond, the pitfalls that you may experience as well as what is needed to position your business so that you can find the right buyer quickly and receive the best price possible.

If you’re interested in hiring a business broker who services Chicago and the entire State of Illinois to help you sell your business or consult on an exit strategy, contact us here or schedule a free consultation by selecting a date and time that work best for you.

Copyright © 2021 American Business Acquisitions, Inc. 

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10 Mistakes that Sellers Make

If you’re selling a business, it’s important to understand the common pitfalls and mistakes sellers make so you can ensure a smooth and successful process. In this post, we outline the top 10 mistakes that sellers make:

1. Not knowing where to price the business

Not knowing the proper pricing for your business is one of the most common mistakes. Pricing the business too high or even too low can raise red flags that turn buyers away. Before making the decision to sell and placing on the market, it can be beneficial for sellers to work with a qualified business broker to price their company appropriately. An experienced business broker has both the technical ability and the market experience to produce the most realistic pricing.

Fair Market Value

Asking Price is what the seller wants

Selling Price is what the seller gets

Fair Market Value is the highest price the buyer is willing to pay and the lowest price the seller is willing to accept.

2. Not preparing the business for sale

Determining the price point is only the first step. Before selling a business, you should be as prepared as possible with current financial, legal and operational information for potential buyers to review. You can expect buyers to want to see this information and having it ready will make the business appear more organized. Demonstrating preparedness places the business in a favorable light, while being unprepared can delay the selling process and turn buyers away.

3. Not being able to see the business from a buyer’s perspective

As the owner of a business, it can often be difficult to step outside and see the business from the buyer’s perspective. It’s natural to view your own business in a favorable light and overlook problems and issues, however your ability to do this could help you sell your business faster. You have to approach selling your business realistically, knowing that a potential buyer will be looking for the negatives as well as the positives and weighing those circumstances. The ability to not only recognize flaws in the business, but actually present them as areas of potential growth will make your business very attractive to a buyer.

4. Not knowing the buyer

By knowing the buyers, their motives, their interests and their backgrounds, the better equipped a seller is to make informed decisions about whether they are the right people to operate the business. Selling a business is bound to have challenges, however the better you know the buyer, the better you can anticipate their needs and concerns and have the necessary information available. The more you can understand the buyers motives, the better position you’re in.

5. Trying to sell to uninterested buyers

There are plenty of “potential buyers”, but the questions is, are they serious buyers? A potential buyer may display interest, but when it comes down to it, they may back out because they weren’t serious, have unrealistic expectations or only want to buy on their terms. Don’t waste your time on those who aren’t serious about purchasing a business, and save the energy for those who are.

6. Thinking you know it all

Many business owners think they know it all, that nobody knows their business like they do and will get caught up in trying to do everything themselves. They try to handle every aspect of the sale when in reality, it should be left to the lawyers, accountants and business brokers to work together to make a sale happen. When the seller doesn’t ask for help and the deal doesn’t go through, they will often blame others, but really they were their own worst enemy by trying to do it all themselves. Not using outside advisors, such as a professional business broker or intermediary, can be a serious mistake in achieving the highest value, etc.

7. Not understanding the structure of the deal

The price is only one piece of the deal – however many sellers will see the price on an offer and say “no” without understanding how the deal is structured. The structure of the deal is arguably more important than the price alone. The terms and conditions of the deal are where the negotiations can happen that allow for flex on the price.

8. Not being able to walk away from the deal

It can be easy to get so wrapped up in a deal that you lose sight of the big picture. You may not recognize when a deal is a “bad deal”, and when to walk away and move on in order to save your time, resources and sanity. Sellers don’t want a deal to get away, but in some cases this is what needs to happen in order to move on and find the right deal and the right buyer.

9. Waiting too long to sell

Too many owners wait until the last minute to decide to sell their business. They wait until business is down, or they are completely burned-out, or their business partnership has soured completely. The time to sell is before the emergency happens. The time to sell is when business is good. The time to sell is prior to when exasperation hits. The old adage is that a business owner should think about and plan the eventual sale of the business the day after it is started or purchased.

10. Changing your mind

One of the worst things you can do while in the process of trying to sell your business is change your mind. It happens more often than you think – just before closing, the seller realizes they don’t really want to let go of their business and backs out. This not only wastes time, energy and resources, but could also deter buyers away from your business in the future if you decide to sell again. Allowing the potential buyers to have full trust in you is a key to selling your business. Wait until you are absolutely sure you want to sell, that way you and everyone involved can feel confident in the process.

This is what business brokers and M & A professionals here at ABA deal with every day, equipping them to help you prepare honest and valuable answers. So if you’re interested in hiring a business broker in Chicago, the Chicago Suburbs, or the State of Illinois to help you sell your business or consult on an exit strategy, contact us here or schedule a free consultation by selecting a date and time that works best for you.

Copyright © 2021 American Business Acquisitions

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Top Questions Business Buyers Want Answers To

If you’re thinking about selling your business in Chicago or greater Illinois, it’s essential to know the questions business buyers will want answers to. For example, one of the more obvious questions is: “If this is such a good business, why is it for sale?”

Answering this question appropriately could be the key to making a sale (or losing one). If you give a vague answer, buyers may assume the worst and stop showing interest in your business. If you have owned your business for 10-15 years and are just ready for something new, buyers will likely understand. However, if you have only owned the business for a few years or less, that may raise some red flags to buyers of why you want to sell, so be careful how you approach this question.

A common reason for selling is because of health issues, and if that’s the case, it’s fine to be open about that with potential buyers, so they have a complete understanding of your reasoning. The worst thing you can do as a seller is giving vague answers or no answers, as buyers will tend to see that as a red flag and potentially walk away. Honesty is always the best policy.

Navigating selling your business or company can be challenging if you’re trying to do it alone, which is why retaining a business broker or intermediary may be extremely useful. Business transaction professionals have experience with all types of business opportunities, dealing with buyers and sellers, what information needs to be provided and have a handle on the entire business sale preparation and process from analysis to closing on the sale.

One of the most valuable insights a business broker can offer is how to address buyer questions, such as:

Why should I buy a business rather than starting my own?

How are businesses priced?

What does it take to be successful?

How long has the business been in business?

How long has the present owner owned the business?

How much money is the business making?

Are the books and records readily available?

Will the new owner help me learn the business?

These and many other questions are ones that business brokers and M & A professionals here at ABA deal with every day, equipping them to help you prepare honest and valuable answers. So if you’re interested in hiring a business broker in Chicago, the Chicago Suburbs, or the State of Illinois to help you sell your business or consult on an exit strategy, contact us here or schedule a free consultation by selecting a date and time that work best for you.

Copyright © 2021 American Business Acquisitions

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What You Should Know About Selling Your Chicago Business

It goes without saying that selling your business is one of the most important decisions you will ever make. Your business represents years, decades or perhaps a lifetime of hard work, dedication and passion. When it comes time to sell, there are a few key steps you don’t want to miss, which is what we will outline in this article.

Plan Ahead. One of the most important steps you can take as a seller is to actually begin the sales process and planning far in advance of the date you plan to put your business on the market. Working with an experienced business broker in Chicago, even before you’re ready to sell, is a great way to ensure that you have everything ready and know what to expect when the time comes. Doing this can also help you avoid the abundance of pitfalls that can come with selling a business.

A business broker can also help identify weaknesses in your business and help you address those issues. Your broker can help you with everything from strategy and negotiations, maintaining confidentiality and establishing the market value of your business, to connecting you with other seasoned professionals, such as accountants and lawyers.

Be Flexible. Another important thing to remember when selling your business is to remain flexible and open-minded. Selling your business may not go as planned, and you will need to remain respectful to your potential buyers and be able to anticipate that they will need a multitude of information to make an empowered decision.

The right “seller psychology” is essential. You should not attempt to rush or force a sale or overprice your business. In short, you need to keep “your head in the game” and as much as possible, keep your emotions out of the process. 

Be Realistic. It’s important to understand the statistics so you can be realistic in your approach and expectations. About 75% of sellers will end up receiving their asking price, and businesses listed as “all cash” generally do not sell. Seller financing will be highly likely, so the more realistic you can be about the terms of your sale, the better chances you have of selling the business. Another way to increase your odds is a reasonable down payment. Being will to offer financing will make  statement to prospective buyers that you believe in the business and its ability to generate revenue.

In summary, keeping an open mind and keeping your emotions out of the process will increase your chances of selling. It’s understandable that you may be ready to sell and move on, but the reality is that you won’t be able to just walk away, there is a process to be respected. Transitioning the business to a new owner is usually an ongoing process, and working with a business broker can help you navigate this process with ease and increase the chances of selling.

For a free consultation on selling a business or hiring a business broker in Chicago or across the State of Illinois, please schedule a virtual meeting http://calendly.com/abameeting or contact us to find out how we can help you achieve the highest value and close on the sale of your business or company.

Copyright © 2021 American Business Acquisitions

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10 Ways To Avoid Wrecking A Deal When Selling A Business

Selling a business is a complex process, especially when it comes to finalizing the deal. There’s a lot of room for error, misunderstandings and unexpected occurrences that can throw the process for a loop. It’s imperative to carefully think through the entire process well in advance and try to be as organized as possible while keeping all parties informed.

We’re going to take a look at the top 10 ways to avoid wrecking a good business deal.

  1. Confidentiality – At the top of the list for a reason, the number one way to avoid wrecking a good deal is honoring confidentiality. This is vital to not only avoid a breach, but to maintain a level of professionalism and respect. Hiring an experienced business broker in Chicago can help you with the art of maintaining confidentiality.
  2. Be Flexible – No deal has ever gone “exactly” as it was planned, so be flexible and open-minded as you navigate the process. Never go into a deal expecting all your terms to be met. If you’re too rigid, this can also be a turn off to the other party involved and ruin the deal.
  3. Be Open to Negotiations – Negotiations are extremely important, and this goes hand-in-hand with being flexible. You may not be able to have all of your terms met, but you can always work something out as a compromise to keep everyone happy and the deal moving forward. Sellers are used to being their own bosses, but when it comes to successfully selling a business, no factor is quite as important as a willingness to negotiate.
  4. Prepare Ahead – If you want to lessen the risk of losing out on a good deal, make sure you’re well prepared ahead of time. Sellers will want to make sure they have several years of records as well as legal and accounting documentation ready and well-prepared. Serious buyers will want to see these records as well as the financial information for your business. It’s always better to be overprepared in these situations.
  5. A Realistic Selling Price – An If you inflate your price too high, it will decrease the number of serious buyers that show interest, and could also make the seller seem uninformed. If you’re not sure where to price your business, hiring a business broker can be extremely valuable.  If you’re in the Chicago area, visit our home page and contact us to hand over the valuation expertise.  One of the best ways to increase your chances of finalizing a sale is to establish a fair price for your business.
  6. Maintain Operations – Once the business hits the market, it can be easy for the seller to lose sight of the day-to-day operations and “check out” before the business is sold. You’ll want to continue to operate your business as though it’s not for sale in order to maintain the reputation and value of the business. The reality is, it make take months or even years to sell and close a deal, so you don’t want to lose customers, operational flow or value in the process.
  7. Keep up the Momentum – A sure way to kill a deal is by losing momentum, initiative and letting communication go dormant. The process can be long and tedious, but working with a business broker to help sell your business can help you make sure you take the necessary action, have someone to look to for guidance and who can help you maintain momentum.
  8. Consider Your Buyer’s Needs – If you plan ahead and have your documentation ready, this will be attractive to any serious buyer. You can expect your buyer will need a variety of information from sellers such as appraisals of assets, information on environmental regulations, and more.  Sellers should have this kind of key information ready and waiting.
  9. Leverage Competition – Encouraging and knowing how to leverage competition can give you a leg up when it comes to closing a great deal. Having a competitive situation on your hands is a good problem to have given that the buyers will know there is more than one interested party. Brokerage industry professionals understand the delicacies of presenting this information.
  10. Seller Participation – Finally, sellers must stay involved in the entire process. Even after the business is sold on paper, offering to help with the transition goes a long way and creates a lot of trust and respect in the process. This can also help ease buyer concerns and make them more likely to close the deal knowing you will be there to help.

There are many potential reasons why a deal could fall apart.  You won’t be able to control every single variable, but by following the ten tips outlined in this article, you will be well on your way to increasing your chances of successfully completing a deal.

For a free consultation on selling a business or hiring a business broker in Chicago or across the State of Illinois, please schedule a virtual meeting http://calendly.com/abameeting or contact us to find out how we can help you achieve the highest value and close on the sale of your business or company.

 

Copyright © 2021 American Business Acquisitions

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Selling A Business In Chicago? Here Are 3 Warning Signs To Look For In A Potential Buyer

When buyers are looking to purchase a business in Chicago, the most important step is to perform their due diligence when it comes to researching the business and the seller. A large percentage of sellers, however, fail to do the same by investigating the buyers.

The process of working with a prospective buyer can have challenges and disruptions. Deals fall through all the time, costing both parties a tremendous amount of time, effort and resources. Sellers often lose money during this process, but if you know what “red flags” to look for ahead of time, you can avoid potential disruptions and make sure the process of selling your business in Chicago is easy and smooth.

Selling your Chicago business? Here are a few key questions you will want to ask a potential buyer:

-What other businesses have you considered, if any?

-How much equity will you be committing? 

-Do you have any experience in this specific business, niche or market? 

Warning signs you should look for when dealing with a buyer

It’s imperative to look for these red flags early on in order to avoid wasting time and money. Here’s what to look for:

Lack of communication

Poor communication from a potential buyer could mean lack of commitment and seriousness about purchasing your business. An interested buyer will make sure you know they’re interested! If there is little communication, “flakiness” or lack of interest, it could indicate the buyer changed their mind or was never serious to begin with. It’s best to move on and explore other options in this case. 

The buyer delegates the process to someone else

Another potential red flag is when the process becomes turned over by the buyer to a junior member of their team. A serious buyer will likely want to be involved and invested in the process. Make sure you’re clear on the buyer’s intention with the business and that those intentions align with yours.

Failing to provide details (especially financial)

If the prospect fails to provide key information, especially information regarding their financial capabilities to complete the deal, this is definitely a red flag. You want to make sure you have a buyer who is invested fully in the process, willing and able to provide the necessary information to ensure a smooth process. 

If any of these red flags pop up, reach out to the prospective buyer and ask to meet in person to discuss the situation.

Trust your intuition during the process – if you feel that a potential buyer isn’t fully committed, is simply window shopping or has unrealistic expectations of the type of deal to be made, simply move on. It’s better to cut your losses earlier and free your time and energy for buyers that are a better fit.

It’s not done until it’s done!

Warning signs can present themselves during the entire buying and selling process, especially just prior to closing the deal. Pay extra attention if:

  • the attorney representing the buyer is inexperienced or overly aggressive
  • there are multiple requests for last minute changes
  • communication falls out the as closing the deal approaches

A potential remedy for these situations is to get your own attorney involved to come to a resolution that works for anyone.

The process of selling your business is bound to have some challenges, but being able to spot warning signs early on can help keep everything on track and working as smoothly as possible. Working with a business broker in the Chicago area is an excellent way to not only spot the red flags, but be able to respond appropriately.

If you’re ready to sell or buy a business in Chicago, click here to contact us. We’re here to help make the process easy and make sure all of your questions are answered.

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Copyright © 2021 American Business Acquisitions, Inc.

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You Want to Buy a Business in Chicago? Here are 3 Factors to Consider

Do you think you have what it takes to be a business owner, but don’t want to start from scratch? Then you may be a great candidate to buy an existing business in Chicago!

While it can initially cost more to buy an existing company, there’s also way less risk.

  • The product or service has already been market tested
  • The brand is established
  • You can secure financing more easily
  • There isn’t any lost startup time

There are many elements that go into buying a business in Chicago or elsewhere, including environmental and social factors. Let’s take a closer look at some of these and how they might influence your decision to purchase.

Health and Safety Policies

A health and safety policy is a general approach to a company’s commitment to health and safety. A good policy details how the business will minimize the risk of injury and illness from workplace operations. While some industries are naturally higher risk than others, all businesses must have policies and procedures in place to protect employees.

Here’s some things to think about when you’re considering your options.

  • Do you want to choose a business that has well-established health and safety policies in place?
  • Do you want to create your own policy?
  • Do you want to delegate and possibly even hire a specific person to create and implement your health and safety policies?

Health and safety policies might sound like a boring aspect of owning a business, but it’s crucial to have strong ones in place in order to protect your employees and your business. If the business you intend to purchase already has policies in place, then it’s one less key operational responsibility to worry about.

Employee Well-Being

If you’re hoping for a smooth transition, buying a business with existing employees can be a smart decision. For example, consider keeping employees that hold certain licenses the business needs to operate. This saves you the time and hassle of having to interview and hire someone new and qualified.

However, if you choose a business with disgruntled employees, they aren’t likely to stay on board during the transition. Employees are the heart of the company, so if you’re buying a business with happy employees, then you’re generally in good shape.

Here are some tips to maintain employee happiness and well-being.

  • Pay a fair wage
  • Encourage open communication and ask for feedback
  • Keep morale up with a healthy work/life balance
  • Protect employee’s health and safety
  • Provide clear communication about employee expectations as well as company policies, manuals, and benefits

When looking for a Chicago-based business, keep employees’ well-being and performance in mind. Depending on the type of business, finding and keeping valuable employees can be difficult. Employees who are fulfilled and treated well are more likely to stay at a company and continue to perform exceptional work.

Don’t get off to the wrong start at the beginning. Build positive rapports by including existing employees on the new employment terms and respect the systems and relationships already in place.

Corporate and Social Responsibility

Consumers feel it’s important for businesses to demonstrate responsibility and take stances on current social movements. From our experience, we agree.

Chicago businesses that practice social responsibility tend to make more ethical decisions that protect their communities, leading to increased consumer trust.

Consumers like to support companies that share their values.

  • Consumers are willing to pay more if a company has a strong ethical footprint or mission
  • Consumers feel a shared connection with the business due to mutual values
  • Companies with strong social responsibility are more likely to be referred to friends and families, as well as promoted on social media platforms by loyal consumers

Rather than starting from scratch, you can purchase a business whose social and ethical values align with yours and carry on their reputation. Bonus – you’ll also have a solid customer base already established.

In Conclusion

As the major metropolitan city of the Midwest, Chicago is an excellent choice to start your business ownership adventure. It’s a city that thrives on innovation and holds American values and reputation to a high standard. When buying a business in Chicago (or anywhere, for that matter), it’s important to keep these factors in mind. They can help you make a more informed purchase decision that allows you to start working and growing your business right away. To learn more about buying a business in Chicago, contact American Business Acquisitions today.