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When it comes to getting reliable advice on buying or selling a small business, we turned to the experts in the field. Top M&A advisors, business brokers, certified appraisers, and SBA lenders, with their extensive experience in complex business transactions, exit strategies, deal structures, and financing, are here to share their invaluable wisdom. Let’s dive into the eight key things they want you to know before embarking on your business journey.

  1. Pre-Qualify Your Business Listing for an SBA Loan

To give your business an edge in the market, consider getting your business listing pre-qualified for an SBA loan. If approved, this not only attracts buyers in need of financing but also allows you to organize your documents and address any crucial questions from lenders upfront. It’s a significant advantage that can make your business stand out.

  1. Results Matter: Don’t Settle for a Business that Undervalues Your Efforts

Running a business requires hard work, often involving long hours and personal sacrifices. However, when it comes to selling, buyers want to see tangible results and growth potential. No one will pay a premium for a business that simply amounts to working tirelessly for minimal returns. Discover the two areas that truly make a difference in attracting buyers.

  1. Leverage the Value of a Semi-Absentee Owner Business

Did you know that a semi-absentee owner business holds greater value compared to an owner-operated one? In an owner-operated business, the risk lies heavily on the individual who plans to exit, affecting its attractiveness to buyers. Learn about three different business operation models, along with their benefits and risks, to make an informed decision.

  1. Understanding the Metrics: Cash Flow, Earnings, SDE, and EBITDA

Before making an offer to buy a business, it’s crucial to grasp the difference between cash flow, earnings, SDE (Seller Discretionary Earnings), and EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). These metrics play a vital role in determining the price and evaluating the business’s true performance. Educate yourself on how the sale price is determined and ensure it aligns with your expectations.

  1. Unveiling the Price Components in Small Business Asset Sales

When purchasing small, privately-owned businesses, most buyers prefer asset sales due to lower risks. However, it’s essential to understand what is included or excluded from the purchase price, particularly in terms of working capital. Explore different deal structures and learn how to incorporate working capital effectively. Examples will provide clarity on this topic.

  1. Retain Key Employees for a Smooth Business Transition

For a successful business transition, it’s crucial to retain key employees who contribute significantly to the company’s operations. Buyers seek assurance that the business will continue to thrive after the ownership changes hands. If important roles and proprietary knowledge are concentrated in a few individuals, it poses a risk. Discover effective strategies to retain key employees during the sales process.

  1. Set a Defensible Asking Price with Third-Party Business Appraisals

Properly valuing a small business is key to a successful sale. Owners and their brokers often face disadvantages when a business is improperly valued. To overcome this challenge, successful brokers and sellers increasingly rely on objective and credentialed third-party appraisals. Gain insights into selecting a qualified third-party appraiser who can help set and defend the asking price.

  1. Discover Potential in ‘Turnaround’ Restaurants for Smart Investments

Why start a restaurant from scratch when you can invest in a struggling “turnaround” restaurant? These establishments come with a lower price tag and offer the potential for higher profits. Learn how to identify restaurants with the promise of success

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