Buyers Profits can be Maximised
Story five – With This profit we don’t need to sell
I have had the opportunity to assist many businesses in finding their true potential. Another story that stands out is how we helped a husband-and-wife team realise they didn’t need to sell their business by adding value in extraordinary ways.
Husband-and-wife team who were working quite long hours in their business and actually held-down a second job each at the time they approached our business to sell; because they were too weary to continue.
Their goal was simple: because their business was not earning revenue, and was not paying a wage, they thought it was all over. During the due diligence process of developing our opinion of market value, we identified a number of deficient operating, financial and marketing areas.
“Value” simply wasn’t present, and our advice was the business was worth equipment and stock; but no more.
However, we worked with that couple, the goal was to improve both income and profit in order to recover their investment upon a future sale. After approximately 18 months, we could have sold that business for $220,000. During that 18 month period they had each sacked their second job, had even employed an offsider and were earning a decent wage – very capable of paying the mortgage.
The decision to work to a different process, and pay attention to the basics to maximise sale proceeds worked so well – the business wasn’t offered to the market at all.
The cold hard facts are – irrespective of marketing expenditure – not all business can be sold.
About 25% of businesses can and will be doing much better after a diligent market assessment by a professional points out the gaps. When those gaps are closed – the business will have increased in value.
It is true – people pay more when the risks are lower.
