Next to your home, your business is most likely where most of your wealth is concentrated. Most qualified financial planners would point out the value of receiving all cash at closing rather than worrying about whether the buyer will pay a promissory note as agreed. Typically, if a seller has to foreclose and take back the business, the business will have much less value than at the time it was sold.
Two top items a bank will want to see to consider before granting a business loan to your buyer is that the sales and cash flow trend are steady or growing, and that no one customer represents more than 10% of total sales. If there is a sales decline with a reasonable explanation, the bank usually will want to see at least three months of stable or increasing sales before considering offering an SBA-guaranteed business loan.
One way to potentially reverse a downward sales trend is to buy a book of business from a competitor. Dolan Sales, Inc. can help you with a plan or make suggestions to accomplish this, if it is of interest. Another alternative is to consider adding products or services that can be offered to find new sales. Look at who your top customers are, and then look for similar potential customers to prospect. Start a tasteful, quality e-mail blast program that has been professionally designed, with a to-the-point message (with as few words as possible). The idea is to keep in contact with your customers and potentially cross-sell other products and services.
For a confidential, no-obligation meeting to explore ways to increase the value of your business in preparation for selling, contact Bob Dolan at Dolan Sales, Inc. Bob has more than 40 years of sales, marketing, business brokerage, intermediary and M&A experience with customers nationwide. For more information, look around our website (www.dolansales.com) or visit Bob’s LinkedIn profile at www.linkedin.com/in/dolansales.
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