What Type of Buyer is Right for your Company?

Part 3 of 3

Individual Investors
Individual investors are high net worth individuals seeking to own and manage their own company. Individual buyers expect to be integrally involved in the leadership and management of the company after their purchase. This buyer segment is usually more focused upon the geographic location of the target than its industry, as the buyer is typically not seeking to relocate.

Most individual investors are seasoned businesspeople, with experience in either corporate positions or other entrepreneurial ventures and ordinarily prefer established businesses with proven performance to newly started companies. Due to capital constraints, individual investors usually purchase businesses at the smaller end of the middle market spectrum.

The advantages of working with an individual investor include:

• They’ll have direct involvement, and therefore a stake in the success of the business
• They generally only require active shareholders to remain for a short transition period
• They’re usually not seeking  to relocate the business or drastically change operations and culture

Possible disadvantages include:

• They’re typically  inexperienced in purchasing businesses, which may prolong negotiations
• Their financing and deal structure options are normally not as broad as with other buyer segments
• They’re not as likely to pay a premium price for the business
• They may not have direct industry expertise

Keep in mind that the payment portion of a buyer’s offer should not be your only focus in a transaction. Your understanding of the buyer’s ultimate plans for the business, their expected level of involvement and network of resources, are all important considerations. Knowledge of a buyer’s expectations for the business can be highly beneficial for both negotiations and the closing of a successful deal.

Brought to you by:

Dwight Lester, Performance Business Brokers, Edmonton Alberta

Performance Business Brokers has had the pleasure of engaging many business owners and buyers regarding buying and selling businesses. Sure there are industry multiples, rules of thumb and valuations for determining a price. But what are the things that a buyer really evaluates when scanning the business horizon for their next investment? I have narrowed it down to three fundamental things regardless of price.

The three key factors a savvy buyer evaluates are:

1. Is the business profitable?   2. Will the business run well without the current owner?   3. Are the financial records adequate?

Many business owners get a little nervous showing their financial statements. One of the best kept tax secrets is owning a business. A well run business with a good book keeper or tax accountant will show great cash flow and modest profit. Buyers not only understand that fact, they are attracted to it. There is nothing wrong with showing a net operating loss as long as the business has strong cash flow. Business owners do not get extra credit for overpaying their taxes. High debt combined with a net operating loss will chase buyers away.

Business buyers are attracted to businesses that are immune to the owner’s skills. Clearly there must be basic business management in place. What I’m referring to here is the critical elements of success must be able to thrive under new ownership. For example, if the owner is successful due to their active involvement in a key process, buyers will often pass even if they have the same skill set. Think of it this way. It is the difference between an artist and a painter. Painters are more about process and can be duplicated. Artists are the brand and take a piece of the business with them when they leave. One exception here is when a Private Equity entity assumes ownership and the “artist” remains in place.

In today’s environment with nifty software applications, financial records are typically not an issue. A simple profit and loss statement combined with tax returns are sufficient in most situations. If the business offers employee benefits, make sure you check the contract language to determine if “change of control” creates any lump sum payouts. Buyers want cash flow and leverage. Paying off key employees can be a deal breaker.

Before you begin the journey of determining the price tag for your business, make sure you have these three critical components in place. Do not underestimate the time it takes to market and sell a business. You should begin serious preparation 1-2 years in advance. Buyers always come to the table with a healthy dose of caution, but the deals that are consummated are inked with mutual respect between buyer and seller.

Brought to you by:

Dwight Lester, Performance Business Brokers, Edmonton, Alberta

How to Increase Customer Loyalty at Your Small Business in Edmonton Alberta

So, you’ve already accomplished one of the hardest parts of running a business: drawing in new customers. Now, an equally difficult task awaits: keeping your current customers loyal to you. In this economy, customers are more particular than ever about the companies with whom they choose to do business, so it’s extremely important to ensure that you are doing everything you can to retain the customer base you already have. Here are several pointers you can abide by to make customer retention one of the main priorities of your small business:

Monitor the behaviour of your customer service staff.

Whether your staff interacts with its customers in person or over the phone, making sure that their behaviour is at least professional is mandatory. With the unemployment rate as high as it is, you need to find a nice way to remind your employees that they can’t take their employment for granted. It is more important than ever for employees to remain on their best behaviour, because it makes all the difference in customer loyalty

Make it easy for customers to communicate with you.

One common mistake identified by Performance Business Brokers made by many larger businesses is by making their customers jump through hoops to communicate with them. It is not a smart move to install a phone service that requires customers to punch in dozens of keys on their telephones before they can get an answer to their question. Furthermore, putting customers on hold for too long is a serious mistake that could very well cost you customers and jeopardize your business’ reputation. Make it a priority to be able to clearly communicate with each and every one of your customers. This involves having good customer service over the phone, quick responses to email inquiries, and even offering a live chat option on your company website.

Be responsive on social media.

A smart tactic you can implement at your small business is by providing quick responses to any and all social media interactions with your customers. If one of your customers writes on your company’s Facebook wall, sends you a Tweet, or bookmarks your site somewhere online, you need to be gracious and responsive! If your customers are using social media to let you know of any problems or issues they had at your small business, it is especially important to let them (and the public) know that you are taking their concerns to heart and doing something about it. Using social media sites to actually be “social” will certainly set you apart from your competitors

Brought to you by:

Dwight Lester, Performance Business Brokers

Selling Businesses is our ONLY Business

Lakeland Artic Spa – Business For Sale, Bonnyville AB

A great opportunity to buy an established growing business in Bonnyville has just been listed for sale.

 Lakeland Arctic Spa is a full retail outlet that sells, installs and repairs the top brand names in the hot tub industry, such as Arctic Spas and Coyote Spas at great prices. They also sell outdoor structures, Steam Showers, and cedar accessories.  For your indoor enjoyment they also retail pool tables and games room furniture and furnishings.

 Arctic Spas are made locally in Throsby Alberta and are made to handle the worst our cold climate can throw at them due to superior engineering. The tubs are 33% more efficient to run than any tub in the market.

 Lakeland Arctic Spas has been in business since 2005 and has shown profitable growth every year. The store is located on the busiest corner in Bonnyville giving it excellent exposure.

 You can view their new Web Site at: www.arcticspasbonnyville.com

 Bonnyville is the centre of oil field activity and is expanding rapidly. Due to the influx of people there are ample opportunities for growth in the above mentioned product lines.

The Town of Bonnyville is located in northeastern Alberta, approximately 240 kilometers (150 miles) from the provincial capital of Edmonton. The Town’s motto – “it’s Multi-Natural” – refers to the town’s celebration of its diverse cultural heritage and rich natural resources.

The economy is growing and expanding faster that the provincial average creating employment opportunities in construction, oil and gas, as well as retail sales. As a major service area, the Town serves more than 10,000 people. The Bonnyville market area is strong with a population of 27,000 within 30 minutes driving time, 49,500 within 60 minutes, and 56,500 within 90 minutes. Bonnyville is the HUB for the oil and gas industry with over 60 national and international companies setting up head offices within the Town.

Additional community information can be viewed at: www.town.bonnyville.ab.ca

This business can also be purchased with a complementing business that operates out of the same building. Please see our Purified Water Store listing as well.

 For full information, please give us a call today (780)-756-2990 of email us at info@performancebb.ca

Brought to you by:

Dwight Lester, Performance Business Brokers, Edmonton Alberta

Talk About Your Business Everywhere

You can really help your business if you’re bold enough to talk about it to everyone you encounter. Casual connections can easily turn into serious business. A business survey asked members about where they made unusual connections and the answers ranged from diners to dog parks to funerals and everywhere in between. One guy even made lemonade out of lemons, selling to the person who rear-ended his car.

Brought to you by:

Dwight Lester, Performance Business Brokers, Edmonton Alberta

Why Use a Business Broker

Are you asking yourself, why use a business broker, when considering the sale of your business? Many owners consider selling their business themselves. They know and understand their business and how it operates. However owners can themselves become too emotional when they attempt to sell their own business. In addition, research suggests 90% of prospective buyers do not proceed with an acquisition. That number in itself may indicate why use a business broker when selling your business!

As a business owner, you will be investing significant time on the sale of your business and conversely little time on the business. We firmly believe the question should not be, why use a business broker, but rather how Performance Business Brokers can assist in selling your business.

Why use a business broker?

• Performance Business Brokers has transaction experience and an intimate knowledge of the sale process;
• Performance Business Brokers have an in depth up to date knowledge of the market value of your business based on current market conditions;
• We have immediate access to qualified buyers and an extensive database search resource;
• Performance Business Brokers have immediate access to high traffic business sale websites for additional marketing;
• Performance Business Brokers is independent. We provide objective guidance and expertise to help you through the sale negotiation, due diligence, contract negotiation and transition from seller to buyer;
• We ensure confidentiality is maintained throughout the process;

As you can see, there are many benefits in engaging a broker and we hope we have provided some insight on why use a business broker.

Contact Performance Business Brokers today to assist you on selling your business and remember, don’t think why use a business broker, think Performance Business Brokers to achieve a premium result for you and your business.

We look forward to working with you soon

Brought to you by:

Dwight Lester, Performance Business Brokers, Edmonton Alberta

Beat the Competition With Better Service

Contrary to popular opinion, most purchasing is not based on the lowest price. Service is a key component in many buying decisions and can take many forms: shorter turnaround in shipping, a customer-friendly website, dealing with problems quickly, admitting, correcting, and paying for mistakes. Excellent service almost always wins out in the end.

Brought to you by:

Dwight Lester, Performance Business Brokers, Edmonton Alberta

Consider Marketing With Lumpy Mailings

Lumpy mailings are marketing materials that are a different shape than a flat letter–such as a small product sample or a ball with your logo on it–and are sent in the mail. A bulky envelope will make the recipient curious enough to, at the very least, open the mailing to find out what’s inside. Just satisfying the curiosity could give you a leg-up on the competition.

Brought to you by:

Dwight Lester, Performance Business Brokers – Edmonton Alberta

Communicate With Your Customers in Every Way Available

There are so many avenues of communication going on right now, and business owners need to take advantage of as many as possible. Surveys, emails, Facebook and twitter are where the younger generation–who get older every day–are getting their information. Don’t miss out on staying top of mind.

Brought to you by:

Dwight Lester, Performance Business Brokers, Edmonton Alberta

Spread the Message Over & Over Again

Experts say potential customers need to hear about your business up to 12 times before they are ready to do business with you. So keep marketing and use as many venues as possible (especially the free ones) to get your message in front of the right people as often as possible.

Brought to you by:

Dwight Lester, Performance Business Brokers