In the entrepreneurial ecosystem, business owners looking for an exit strategy are likely to find 2014 an optimal year for selling. Peter Lehrman, Entrepreneur Magazine

Timing any market is always a tricky proposition, especially in this era of diminishing returns and lowered expectations. The market for selling a small to mid-sized business is no exception.

Anyone considering selling a business, especially boomer business owners thinking about retirement, should have a list of compelling reasons why they want to sell and a plan to help them do so.

For most business owners, the timing will never be perfect, so waiting until the ideal moment to sell could be an impractical course of action. However, certain indicators are pointing to a better than average success rate for selling a business in 2014.

That’s why it’s a good idea to employ strategies right now that will help you get the maximum money for your business.

2014: The “Year of The Seller?”

Three or four years of turmoil in a struggling economy makes some business owners understandably cautious when it comes to optimistic projections for 2014. However, there are some very good indicators pointing to the possibility of a perfect selling environment for at least the next 18 months or so.

For example:

• The majority of businesses have experienced increased profitability for the past 2-3 years.

For numerous business owners, 2008-2010 were flat as far as profits were concerned. Those who survived this period felt lucky to break even, much less put profits on the books. With demand down across the country for services and solutions, business owners were unhappily treading water.

However, the recession is slowly retreating, allowing businesses to recover. Many are now in a position to show the three or four years of solid growth that qualified buyers want to see when they build projection models.

The ability for a company to demonstrate upward trends in their financials shows prospective buyers that it is right to make positive projections for future growth. This in turn gives owners better valuations and does wonders to make the deal viable. Buyers want to know that a business they purchase is poised to survive even a serious economic downturn.

• Low interest rates (for a little while longer, anyway)

You don’t have to have an advanced degree in economics to understand that the artificially maintained low interest rates we now experience will soon be a thing of the past. Forecasters have been fretting that the Federal Reserve will be forced to curtail its’ bond-buying program soon.

A growing number of experts now say that 2014 could be the year when that finally occurs. This means, naturally, that waiting too long to sell might mean an owner will see higher interest rates and a lower price for his or her business.

The reason for this is that interest rates always have a direct impact on the price of capital used to purchase a company. Buyers who rely on loans to acquire a business will feel the sting of these rising rates since earnings are used to pay the interest on loans. An increase in the price of capital will almost certainly lead to lower valuations for businesses.

It makes sense that the more expensive it is for buyers to get capital, the less willing they are to pay top price for a business. As soon as rates begin to rise in 2014, there will be a negative impact on business valuations.

• Low levels of debt and lots of positive cash flow

Credit Suisse reported in February, 2014 that 73 percent of U.S. companies and 56 percent of European companies have incredibly low levels of debt on their balance sheets compared to their total market capitalization.

Private equity companies are awash in cash, with nearly $1.1 TRILLION in cash on hand. At the same time, levels of corporate debt are falling to new lows. So, what does this mean for you as a business owner who is seriously considering selling?

Well, for one thing, since all this cash needs to go someplace other than under the CEO’s mattress, private buying groups will be out en masse looking for successful businesses they can buy and from which they can see immediate cash flow.

For another thing, there is a natural mood elevation that goes on when so many dollars are in play.The old saying “a rising tide lifts all boats” is applicable here. Every billion dollar mega-deal that goes down makes every smaller business deal more attractive. Small businesses are sure to benefit from the optimism that comes with any boom.

• Changing demographics are pushing boomers to sell.

The first half of the “Baby Boomer bubble” (2005-2010) has passed. During that period, older Boomers were able to sell to younger boomers, although the success rate was still a mere 3%.

However recent research indicates that the number of boomer owners indicating they wanted to retire increased from 50,000 in 2001 to over 750,000 in 2009.

It is possible we could see over one million businesses go on the market in the next 10-15 years in a transition tsunami. If this holds true, then it makes sense to sell ahead of the herd and reap the benefits of the current buying frenzy fueled by low debt levels and loads of cash.

Even if you think you aren’t ready to leave your business yet, you should plan as if you are. Positioning your business to sell is never a bad idea or waste of time.

By crafting a well-thought-out exit plan, you will be prepared if circumstances (either good or bad) push you to sell, or if you get an offer from a qualified buyer that you just can’t afford to pass up.

You never know, maybe 2014 will be the year you make a profitable transition from your business and start enjoying everything for which you’ve worked so hard.

Get our free report, “How to Sell Your Business, Receive Cash Flow For Life, And Pay Zero Taxes” or Call us at 210-369-4161 to discuss the sale of your business.

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Baby boomer business owners are retiring in record numbers only to learn that selling their business is a lot harder than it looks. One of the main reasons there is only a 3% success rate for owners who sell their businesses in the United States is the presence of business brokers.

In this video, we’ll show you why you should avoid using business brokers when the time comes to sell. We have tons of excellent resources available for baby boomer business owners who want to sell their businesses with less stress, sell for more money, and pay zero taxes.

The unique Delta Solution is changing the landscape of business selling forever. Check out the video now.

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No thinking person would ever willingly choose to throw their time, money, and effort into an investment that yielded them only a 3% return (or less).

Yet, that is precisely what happens, day in and day out, when business owners sell their businesses. Sellers in today’s market are at the mercy of a broken, inefficient system dominated by incompetent brokers who contribute little to the process. Since most business owners do not have business succession plans in place, they are unprepared to gain the upper hand in the complex, fragile undertaking of getting their companies sold successfully.

Industry statistics paint a dismal picture: the odds are stacked against any seller who wants to sell in today’s marketplace and the situation shows no signs of improving in the future. Over 368,000 business owners turn 65 every year. Of those, around 226,000 say they want or need to sell their businesses and retire. However, the current system closes only a fraction of sales, a mere 24,000 or so a year.

These horrible statistics are having a big impact on all sellers, but are especially hard on Boomer owners looking to retire. Because they have such a low expectation of selling, many owners are forced to stay in their businesses even when they have health, family, or other situations that need their immediate attention. You don’t have to talk to too many owners to realize they are stressed-out, tired, and afraid for their futures. The system is irrevocably broken and hindered by factors such as a lack of qualified, competent buyers, too much third-party involvement (business brokers, lawyers, banks, etc.) and too many investment choices for the small pool of buyers that exists.

When I began my business career, it didn’t take long for me to realize that those of us in the business of buying and selling successful small businesses needed to come up with viable alternatives. After examining over 300 deals, deals in which nearly every seller was getting hosed, I came up with what I called the “Delta Solution.” My partner and I determined that certain key elements MUST be included in any deal in order to ensure a successful outcome for sellers.

Before discussing the best plan for dealing with shortcomings in the business selling process, let’s take a look at a typical scenario. While this is a fictional illustration, it will help you understand the challenges you face as an owner who wants to sell his or her business and give you an idea of how a new approach will work.

Let’s say that Anthony owns an air conditioning and refrigeration company with revenues around $2 million dollars a year. Anthony’s business creates approximately $300,000 in cash profits per year. In a traditional selling situation, the company, if it sold at all, would probably sell for between $900,000 and $1,000,000.

After paying broker fees, (10% or more), professional fees, and taxes (at least 20%), Anthony would be left with around $700,000 in cash profits from the sale. More than likely, especially if he is near retirement age, he will be faced with investing that money securely, so that it will generate a stream of income but not face exposure to risk.

The problem with this understandably conservative approach is that Anthony, even if he is a pretty savvy investor, is likely to get a 10% return at most. So, he now winds up going from a lifestyle based on a $300,000 a year income to one in which he makes only $70,000 a year. This represents a huge change in lifestyle; one which Anthony and his family are unwilling to make.

Unfortunately, unless he is exposed to another way of selling, Anthony may find he has no other choice when he decides to he needs to leave his business. This is the type of situation faced by business owners every day and it has long-term repercussions for the entire economy.

Sellers want and need:

• A quick, efficient sale that takes weeks, instead of years.

• Predictable, secure income that they will not outlive.

• No broker fees

• Less tax or no tax at all

• Competent buyers who will grow their business and not run it into the ground

Our experience led my partner and I to believe that the only way to achieve these goals was to create a method of selling that sets up a business so that it becomes an annuity.

Properly structured, with an iron clad, asset-backed guarantee that removes all risk for the seller, such a plan is radically different than anything currently being done. The ideal exit strategy would, first of all, provide the owner with qualified, competent buyers committed to growing the business and keeping it intact.

It would create a steady, reliable monthly paycheck for the owner that contains a cost of living adjustment and a guarantee to alleviate risk. Ideally, a balloon payment to the family would occur upon the owner’s death. The entire process of selling would take only a few weeks instead of several months or years, allowing the seller to get on with the rest of his or her life more quickly.

If you are an owner looking to sell your successful business, you can’t afford to settle for anything less than the criteria I mentioned above.

You certainly can’t afford to turn this crucial phase of your life over to an incompetent, commission-drive business broker.

I encourage you to check out the recent webinar I did which explains in more detail how business owners can successfully retire with more money, a lifetime stream of income, and with paying a lot less in taxes.

To watch the webinar, click here.

If you like what you see and want to explore these alternatives further, please visit our Getting Started page.

Delta Business Services is the only company in the United States to offer this unique 5 step strategy that gives business sellers the upper hand when the time comes to exit. Delta is passionate about helping sellers of small businesses find the best, most qualified buyers, avoiding paying unnecessary fees and taxes, and creating a lifetime income from the sale of their company that they will never outlive.

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Nearly 80% of all business owners, even highly successful ones, admit that they don’t have a plan for exiting their businesses.

Owners often fail to make succession plans because they have assumptions about the future which may or may not be true.

For example, a business owner may believe that his business will naturally pass to his spouse or other family member. What happens, though, if that designated family member is unwilling or unable to take the reins?

Another common assumption owners make that causes them to avoid succession planning is the idea that they will be able to run the business until they die. They don’t put a plan in place because they don’t like to think about the possibility of having to leave the business sooner than planned, perhaps due to ill health or family problems.

What happens in the absence of proper exit planning is that am owner can find him or herself in the unanticipated position of having to sell quickly, perhaps for less money than they need in retirement.

Frustrated, tired, stressed, and sometimes ill, business owners who need to sell make what they feel is a logical decision and turn the process over to their local business broker.

Over the years, my partners and I have reviewed over 300 selling deals and have come to the conclusion that using a business broker might be the worst decision any seller can make.

We began to question the entire sales process, wondering why most businesses in America never sell, and those that do sell often do so under extremely unfavorable terms for the sellers.

Looking for common threads in those deals, we eventually came to the conclusion that a major culprit hindering the business selling process is the typical business broker.

This came as a surprise as we initially assumed the logical fallacy that someone with the title “broker” is sctuslly experienced in facilitating deals.

The vast majority of business brokers we have run across, however, have disproved this assumption time and again.

Here are just a few of the reasons that I believe you should NOT engage the services of a business broker if you are trying to sell your successful business.

  1. Most business brokers have never owned a business themselves.
  2. They are often more motivated by commissions than they are by doing what’s right for both buyer and seller.
  3. In most states, brokers are not required to have any training, licensing, or continuing education, unlike real estate or insurance brokers.
  4. Many of them are super at selling their services, but poor at actually providing those services once you’ve paid.
  5. They could care less if they get referrals, so they don’t care if clients complain about them to others.
  6. A lot of times they are simply lazy and don’t do much of anything to help the seller.
  7. Many brokers lack basic financial literacy, business intelligence, and organization that is essential to a successful outcome.
  8. They don’t know how to plan and excute a successful sales strategy.
  9. They try and cover their lack of knowledge and training with slick self-serving rhetoric that makes them look better than they really are.
  10. Many brokers get into business because they’ve failed at other ventures.
  11. They often have no clue of how to properly valuate a business, thus potentially cheating the seller out of thousands of dollars or causing the sale to drag on longer than necessary.
  12. They don’t understand risk.
  13. Often business brokers let sellers think a business is worth whatever the seller wants, however unrealistic that figure may be, just to get the listing. They then pass the buck to the potential buyer, who is made out to be the bad guy for showing the seller the business isn’t worth anywhere near that much.
  14. Business brokers often ignore confidentiality agreements.
  15. Many are willing to lie, as long as it serves their purposes.
  16. Commission-hungry business brokers are obsessed with getting mass listings because they know that without a listing there is NO possibility of getting a commission.
  17. Focusing on mass listings means they don’t have the time to push the listings they get, causing listings fall through the cracks.
  18. Many business brokers don’t understand due diligence.
  19. Most brokers will never tell a seller the truth about their success rates: 87% of listings NEVER sell at all, and of those that do, 3 out of 4 FAIL to meet the sellers initial goals. Sellers have less than a 4% chance of a successful exit.
  20. Brokers have been known to lie about their personal track records. Many brokers are lucky to complete just 2 successful deals in a year, much less the 10-20 about which they will brag to you.

These are only a few of the reasons why I urge potential sellers of businesses to avoid using business brokers.

Instead, it is much better to seek out the advice of a business acquisition specialist; someone who has experience in the process of buying and selling businesses, who thoroughly understands valuation, and who is not focused on getting as many listings as possible but rather on the needs of the seller and buyer.

Having such a mentor can assist you in developing a viable business exit plan. This means that you will not be forced into making hasty decisions if you are forced by circumstances to sell.

A good business acquisition expert does not work on commissions, and has the best interests of both buyer and seller in mind. He or she also has a tried and true process for selling and a verifiable record of success, along with references and client testimonials.

My suggestion is that before you ever need to sell, you should contact a business acquisition expert first. Most selling specialists are more than wiling to give you a free telephone or in-person consultation.

Prior to this meeting, be sure to write down all your questions, your goals for the sale, even your fears and apprehensions about the process. This will help you make the most of this initial consultation and get a gut feeling for how this particular business solutions provider operates.

If your primary reason for meeting is to ask for business succession planning assistance, discuss fees and expectations and ask for some professional references.

This will help you determine if this is the kind of person you want partnering with you on one of the most important changes you will ever experience in your life.

If you’d like to learn more about the selling process and how to be successful with it, please download the free resources on the website or email me at info@deltabusinessservices.com

Delta Business Services is the leader in business acquisition processes. Our highly-trained staff is competent in every nuance of selling a business and has a particular expertise in attracting qualified, motivated buyers.

We are not business brokers, but rather acquisition professionals who understand and respect the needs of both buyers and sellers. Most importantly, we are actual business owners who have completed dozens of successful deals ourselves. The Delta Solution™ is the result of years of painstaking research and real life experience.

Learn how you can avoid making mistakes selling your business that could cost you thousands of dollars and cause you a lot of headaches as well.

Call us at 210-369-4161.

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Most business owners ignore these… until it’s too late.

If you are like most business owners, you’ve occasionally found yourself wondering what your life would be like without the stress and hassles inherent to business ownership.

Perhaps you are facing personal challenges, such as divorce, a death in the family,or other issues that need your full attention.

Maybe you have health concerns that prevent you from engaging in your business as fully as you would like.

Or, it could just be that you are ready to try something new, go back to school, buy a home in the islands, or devote more time to a hobby or interest that you’ve had on the back burner for far too long.

Whatever reason you have for contemplating the sale of your successful business,you must understand that selling a business is a process for which you can fully prepare.

The first place to start in those preparations is to recognize some of the warning signs that let you know it is time to plan your exit.

  • Life changes are causing you to lose focus. It’s difficult enough to run a successful business without the added stress of unforeseen life events. Situations such as divorce, illness of a family member, or the need to care for elderly parents can upset any work/life balance you think you have achieved. If you feel overwhelmed and depleted trying to focus on both the business and family matters, you might seriously consider selling.
  • You have a hard time getting up in the morning and going to your workplace. Everyone in business experiences episodic burnout. However, if you have a regular pattern of looking for any excuse not to go to the office, it might be time to sell. Forcing yourself on a daily basis to engage with your business can have a negative impact on your financial, physical, and mental well-being. Your attitude can wind up costing you lots of money, time, and effort.
  • You spend a lot more time thinking about retirement than you do about your company. There’s no shame in doing this. Many of us look forward to a life without work. However, spending inordinate amounts of time watching the travel channels on television and visiting trip planning websites might point to your deep-down desire to get on with the rest of your life.
  • Your kids don’t want, or are incapable of running, your business. Even if your children or other family members have worked with you in the business for years, this doesn’t mean that they necessarily want to take it over when you leave. As badly as you may want the company to stay in the family, you can’t make assumptions. Junior may love working with customers at your pool company during the summer, but he might very well have bigger plans for his life. Even more painful to contemplate is the fact that your chosen successors might not be capable of running the business, even if they want to do so.
  • Everything has grown stale and you’ve run out of ideas to keep things moving. Years ago, when you started the business, creative thoughts spewed out of your brain with the speed and intensity of a high pressure hose. You had tons of ideas about how to differentiate your business and make your brand unforgettable. These days though, you feel stuck and the idea well is bone dry. Without improvements and innovations, your company’s growth will stagnate. If you can’t re-ignite the idea machine, it could very well mean that it is time to sell.
  • You need to pour tons of money into updating your business. If you are in a highly competitive niche that is continuously evolving, you might find that you’ve fallen behind and need to do an extensive (and expensive makeover) in order to stay profitable. Even if you are currently making a nice income, it might not be in your best interest to spend money to stay in business, especially if you aren’t having fun with it anymore.
  • You get an offer you’d be foolish to refuse. This happens more than you might think, even during a down economy. Someone out there has his or her eye on your business and they like what they see. Out of the blue, they make you an offer that is considerably more than current valuation. In most of these situations, it would be crazy not to sell.
  • Interest rates are lower than ever before. I am writing this article in 2014, a time when interest rates are historically low. There has never been a better time to leverage other peoples’ money. For investors, it makes sense to borrow like crazy and snatch up any and every appreciable asset they can, especially companies which, if managed properly, will generate nice returns.
  • You have an opportunity to participate in another venture. Most business owners, even those who are only marginally successful, are constantly approached by purveyors of new “business opportunities.” These can range from hyped-up multi-level marketing positions to Ponzi schemes to legitimate investment opportunities. I am sure you’ve probably been approached by more than your fair share of people pitching these kinds of things. However, once in a while a really good opportunity manages to come your way. Maybe it’s a chance to partner with another successful entrepreneur in your local area or it’s a start-up with amazing potential. When you find something like this and your gut feeling is that you want to be in on the action, then it might be time to sell your existing business and try something new.

It is never too soon to plan for the eventual sale of your business, especially if any of these warning signals sounds familiar to you.

As the starting point for planning your exit, seek out real business experts who, unlike the majority of business brokers, have actually bought and sold businesses.

Such experts will help you gain an understanding of the business selling cycle from A-Z and learn methods to avoid common pitfalls associated with the process.

I believe that the greatest legacy you can leave to your family is a company that you have converted into a money-creating machine, protected by design against erosive elements such as taxes and inflation that threaten to consume your wealth.

Consulting with experts enables you to do just that by showing you exactly how to design a custom plan that lets you to sell your business, get cash flow for life and pay no taxes.

Imagine how much peace of mind you would gain by incorporating this kind of proven business exit plan into your business- before you need it.

Successful business transitions don’t come about by accident. They are the result of painstaking planning under the guidance of seasoned business professionals who know how to get the job accomplished with outcomes more favorable both to sellers and buyers.

Savvy business owners realize that the complexities of selling a business are many and that it makes sense to partner with people who have been in the trenches.

Delta Business Services offers a free initial consult to successful business owners who are looking for expert advice on the process. We can help you exit your business on your own terms, gracefully, from a position of strength.

Call us today at 210-369-4161 to arrange a phone consultation.

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