Successful Business Transaction of Greenhouse in Wisconsin
The confidential business offering #1025 was successfully transferred to a new owner last week! This greenhouse business has been serving the area for over 25 years and the seller was ready to retire. There were over eighty interested buyers looking at the business profile for this opportunity.
The Lakes Business Group sales rep was able to find the right buyer for this business and close the deal last week. Congratulations to all the parties involved!
Owning a Business
Have you been thinking of buying a business? From managing a business to marketing it, owning a business can be both exciting and overwhelming. If you’re thinking of taking that step to start looking at ‘being the boss’ and owning a business, here are a few tips to help improve your chance to be successful.
Realize that not everyone is cut out to be a business owner: If you haven’t already considered and explored whether you are suitable with running your own business, take the time now. Some people are better off financially (and happier) getting a paycheck from someone else.
Get your finances in order: Before taking on a new venture, make sure your personal money matters are set straight.
Know which hats you wear best: After purchasing a business, there is much to learn and many new skills to acquire. Gain the background needed to oversee all the angles of the business and then determine what tasks you should outsource or give to employees to manage.
Pay attention to your customers: No matter how busy you are, especially in the early years of owning the business, be sure to spend at least a quarter of your time with customers. What are they thinking? Are they happy with the service/product you’re providing? To make the right business decisions, you need to understand the customer’s point of view.
Keep your focus on the people: Whatever happens to a business, happens at the hands of the people who work for it. It’s the people that makes the company.
Develop a passion for learning: As you grow the business, you need to change and grow with it. Marketing is one area that needs to be checked monthly on what’s working and what’s not working. To continue building the business with new customers, you need to learn new ways to get the word out.
These are just a few tips to start considering as you begin looking at your goal of becoming a business owner. The team here at Lakes Business Group is available to answer questions you may have as you begin the search for the right business to own.
Successful Business Transaction
The successful acquisition of a residential septic service company was completed last week. This business has been serving the local community and provides services in the septic pumping, cleaning and repair industry. The original owner had started this business and has been operating it for over 25 years and he was ready to retire.
The acquisition took place last week with Dan Williamson as the intermediary from the Lakes Business Group team. Best wishes to the seller as he starts his retirement. And congratulations to the new owner of this Wisconsin Septic Service business!
Buying a Business with ‘Absentee Owner’
One of the VR agents in North Carolina wrote a newsletter article about a question he gets asked every week. “Can you find me a nice absentee business I can buy?” Below are the points he gave on why you don’t see many absentee businesses for sale.
- While it sounds good in theory, businesses generally sell due to burnout when owners are tired of the responsibility of running a business. This burnout does not usually exist with an absentee owned business
- If a business is completely absentee and profitable, why would anyone sell it? Many baby boomers aren’t looking to sell their absentee owner business to retire, but rather want or need to keep it into retirement.
- In the case of a death, divorce, or emergency, most absentee businesses are sold quickly to a family member, employee or vendor so the odds are it will never make it to the market.
The truth is most businesses need owner engagement and involvement to be successful. However, there are always exceptions. Currently we have two businesses that are absentee owners. One of our absentee ownership businesses is a massage business in Wisconsin and the other is a staffing business in southeastern Wisconsin.
Bankers’ Objections in Business Acquisitions
A recent article from the International Business Brokers Association (IBBA) talks about the ‘Banker’s Dozen’ objections compiled from one of the top SBA lenders in the country. To have a successful and timely closing, start discussing documentation needed and addressing concerns early in the process.
Below are some of the due diligence items needed to avoid delays in getting a deal done.
Citizenship of the Buyer
- Early on determine the citizenship status of the buyer and obtain a copy of the documentation of proof.
- A buyer can secure SBA financing if they have a green card and are legal permanent U.S. residents.
Buyer’s Personal Credit Report
- A resume and Statement of Personal History questions are required for each guarantor. Knowing any issues early on give the bank time to clear through them during the underwriting. This will help avoid delays.
- If the buyer’s credit score is under 700, a written explanation should be provided.
More Equity in the Deal is Needed
- The Equity requirement for business acquisitions are changing with the release of the SBA’s new version of its Standard Operating Procedures (SOP).
- The SBA will be providing additional insight into these changes, the basic change is that the buyer must contribute at least 10% equity towards the entire transaction and there must be at least 10% equity on the post-transaction pro form balance sheet. A seller note can still be used and can provide for up to half of the required equity injection. However, the seller note must be on full standby (no payments at all) for the life of the SBA loan.
- If the buyer’s equity is coming from a gift, it will be required to have a Gift Letter with 2 months of bank statement showing the source of this gift.
Pledge of Personal Assets as Collateral
- If the business assets do not fully secure the loan, the SBA will require that any personal real property with lendable equity must be pledged as collateral. If your business plan and financial statements are strong, you might avoid putting up a lot of collateral.
Successful Business Transaction – Custom Cabinet Showroom
In January the successful business transaction of a custom cabinet shop in Wisconsin. The seller decided to sell now because the market was right. He knew he could get the value of the business in today’s market. This business sold within six months of the listing date.
This business has both residential and commercial customers and is well known and respected in the community. Seller was willing to negotiate a non-compete with the new owner and to assist in a smooth transition.
Congratulations to the new owner and our team for getting this deal closed.
Buying an Existing Business
Are you in the market to buy a business? Many baby boomers who own an established business are looking to retire. Many of these owners have grown the business but are realizing they don’t have the drive to expand and grow it. And they may have the staff in place to run it and want to give it over to a new owner who can make the needed changes for growth.
If you’ve been thinking of owning a business for a while, have you done your research? Learning as much as you can about the industry before looking at specific businesses. See what the market trends are for the industry and research competitors. This will be helpful as you start your search and look at prospective businesses.
You can start your search online. There are many websites with businesses for sale. Our website, Lakes Business Group has all our business opportunities and are updated in a timely manner. Bizbuysell.com is a good tool, too, to look for business opportunities.
Be ready to sign a confidentiality agreement. Most business owners don’t want it known that they are selling their business. At Lakes Business Group, we do not release any information about the business until we have a signed non-disclosure agreement on file from a potential buyer
Do you know the amount you can put down or put toward a business? Have you talked to a business consultant or banker about business loans (SBA)? Have your financials ready and available when you are ready to pursue a business since it will be required as part of the process. The owner wants to know when he gets an offer that the buyer is financially capable of buying the business. Sometimes, even before an offer, an owner will not show a business until he knows the person (or group) coming is financially able to make an offer.
Once you have a signed contract to purchase the business, be patient! This is the time you want to take the steps to fully complete the deal including all the federal and state licenses and registrations and other due diligence required to own and run this business. Our team has helped with hundreds of closings, so we can help you get through the process until the deal is done!
SOLD! Fabricator and Manufacturer of Stone Products
In December this long established fabricator of all type of natural stones and manufacturer of veneer stone products was successfully transferred to a new owner. This business was on the market for nine months and had over fifty interested buyers.
Some of the highlights of this business:
- a very experienced and skilled professional staff of key employees
- the seller only worked 10 hours per week
- in a good location and building is owned by the business
- many long-time commercial and residential customers
Congratulations to the seller and new owner of this long established business!
If you are looking to sell your business, NOW is the time. As you read from this transaction, there are many buyers looking to own an established business.
2018 – Right Time to Sell your Business?
Optimism for small & medium business owners is strong. According to a National Federation of Independent Business survey released last week, business optimism is reaching an all time high. This is the highest since 1983; small business optimism has not been this high since the Reagan economy.
Because of the strong business climate, 2018 may be the right time to sell your business. When you do plan to sell, here are some ways you can help in the process:
- Be Friendly and cooperative: When the buyer asks for information, provide it to them in a timely manner. This helps with building trust and gives the impression that you have nothing to hide.
- Communicate openly and honestly: Most transactions are closed in a timely manner when trust and good chemistry exist between the Buyer and Seller. This is built through honest, open communication.
- Avoid being defensive: Buyers may ask personal questions, but rarely are they intended to serve any purpose other than gathering needed information for a Buyer to make a decision.
- Help the Buyer see himself/herself as the new Owner: Let the Buyer know they are capable of successfully managing this business.
- Make your Business a Showplace: First impressions count! A Buyer may draw conclusions about product quality and the organization of the business based on the appearance of the facility.
- Be candid and optimistic about growth opportunity: A Buyer will look at the business from the perspective of managing and improving it. Help the buyer understand the opportunities and allow them to see the upside potential.
- Make Yourself available: Once a buyer has been identified and qualified, plan meetings when you will be available and not have a threat of having to cancel or being interrupted. This is critical as the due diligence process begins.
- Keep Financial Records Current: When a Buyer has to wait weeks for the Seller’s accountant to prepare financial statements, the enthusiasm to move forward is usually lost. When you decide to sell is the time you should notify your advisers of your intentions and explain that you will require their services in a timely manner.
- Understand the Emotional Roller Coaster: There is no way to avoid the emotions you will experience as you go through the due diligence and sale process. You have poured yourself into this business the past number of years and you need to keep reminding yourself the reason for selling. The Buyer will also experience emotions as he/she goes through the process.
- Create a team of professional advisers: Have a team of qualified transaction-oriented professionals who understand that your goal is to sell the business in a timely manner. Bring them into confidence early in the process so there are no surprises.
- Continue to focus on your business: It is easy to let the enthusiasm about the sale distract you from running your business. It’s important that you continue to focus on “business as usual” so that the business remains healthy and vibrant during this critical time. A Buyer wants a business that has been well managed right up to the sale. Do not postpone or ignore critical decisions.
These points are taken from an article written by Adam Petricoff from the VR Office in Charlotte, NC.
Holiday Office Party at Lakes Business Group
Our office is having our annual holiday office party next week. Although, we haven’t really ‘decked the halls’ in our office, we do enjoy planning a party with good food, since our team appreciates good food. The holiday party is a time for our team to get together in a more casual setting where we have a gift exchange planned. Finding the right gift takes time, so we’ve had our party on the calendar over a month ago. Our gift exchange is not quite a white elephant, although we use the ‘rules’ for white elephant. Everyone gets a number and start with number 1. When your number is up, you can pick a wrapped gift or steal a gift that’s already been opened, and the person who has their gift stolen, gets to open a new gift. This continues until we get to the last number and the gift you are left with is yours.
Our December holiday party also has a brief time of looking back at the year to see what we have achieved and also to look at our failures and see what changes to make for a better year in 2018. We give accolades to those who have had a good sales year and encourage all to have goals for the coming year.
Whatever your office or work place does for this time of year, we hope you have time to relax and to reflect on the past year and look forward to 2018. Happy Holidays!