 | Steve Fischer is the president of Advantage Business Group in Wichita, an owner in the VR Business Brokers network of offices. With national and global reach, VR is one of the nation’s premier networks of professional business intermediaries. A life-long Kansan and previous business owner, Steve’s office exemplifies the service and professionalism that a business brokerage provides to the buyer and seller in today’s market. To learn more, visit www.VRplains.com or www.VRBB.com. Steve can be reached by phone at 316-262-8722. |
Business
2010-05-01 14:25:00
Selling or buying a business?
Answer: With the uncertainty in the local, regional and national economies, this question is asked frequently. Here are some of the things taking place.
Sellers – Uncertainty has caused many people wanting to sell their business to be very tentative in moving forward. They want to sell, but an uncertain future and the perception that the negativity of the past year will hurt their sale price have caused them to delay. In some cases, this perception can lessen enthusiasm and has lead to burn-out. When this happens, a business can suffer and the damage that may be done cannot be recovered.
Other sellers are concerned that by selling now, their business will be viewed as troubled and not receive a fair price for their business. This is not necessarily true. The best time to sell your business is when you don’t have to. The average business is on the market for over 6 months. Being in a position to wait for the right terms and offer can lead to maximum benefits for the seller.
Buyers – The ability of a business to maintain and increase its present sales and earnings are a paramount concern for any buyer. Some buyers are looking for stability and the opportunity to grow. Others are looking for a good bargain. For some small businesses, the past year has been challenging. While there are no guarantees that the Wichita economy will bounce back in 2010 and 2011, this has created some excellent opportunities for people looking towards the future.
Availability of Capital – Routinely, there are people who have a small amount of cash and are ready to buy a business. They have heard or read that the SBA will guarantee up to 90% of the value of their loan and think this is all need to purchase a business along with the 10% down. Unfortunately, this is not usually the case. Lenders still have requirements and the very nature of many small business transactions include intangible assets that a bank cannot consider as collateral. Whether your loan is backed by the SBA or not, there must be assurances in place that the money you are loaned can be recovered should you fail to make payments.
The inability of buyers to secure conventional financing has led to more seller financing and has enticed savvy entrepreneurs to bring in investors. Just because a transaction does not meet the criteria for a lending institution, does not mean it is a bad deal. There is a degree of risk involved with any business. The challenge is balancing the risk tolerance of the buyer with the risks of the business. The assurances offered by a seller willing to help carry a note on their business can help to minimize the concerns of this risk.
The decision to buy or sell a business is never one to be taken lightly. The advice of a competent professional is essential to moving forward. A business broker is one of these professionals that can help you make this move.
