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The Coming Tsunami of Baby Boomer Business Owners Retiring Is Creating A Cataclysmic Shift on How Businesses Are Sold.

The Massive Wave of Baby Boomer Business Owners Retiring And Placing Their Businesses Up For Sale Is Already Clogging Databases.

Competition For Buyers Is Fierce and The Landscape For Selling a Business Is Shifting Like No Other Time In History …

 

Are You Ready For It?

Research indicates that more than $10 trillion Dollars in Baby Boomer Owned Businesses will be passed down or sold by 2025.

According to BizBuySell.com, the nation’s largest online business sales database, the median sales price of a business is $200,000. By using simple math, it breaks down to a startling 50,000 Baby Boomer Owned Businesses will be coming on the market over the next 8 years.

Talk about a Coming Tsunami!

Now get this ….. according to the 2015 US Family Business Survey conducted by
PriceWaterhouseCoopers, 73% of private businesses Don’t Have a Clear Exit or Succession Plan – meaning about 36,497 businesses will come on the market with no plan whatsoever.

Personally, I think the numbers and percentages are a bit low because my office consults with approximately 100 businesses per year, and when we ask the question about a succession plan, less than 5 of them say yes, so I believe the number upwards of 47,500 businesses with no plan.

This is Unfortunate Because Trillions of Dollars in Value Will be Lost.

Exit planning is probably the single biggest challenge facing family-owned businesses today. And if the family owned business has multiple offspring and generations working in the business, it’s an even bigger challenge.

The Tsunami of Baby Boomer Business Owners Retiring and placing their businesses up for sale is creating a ‘Business Buyer’s Market’ like nothing we’ve ever seen before.

It’s wreaking havoc on databases and has made the competition for attracting ready-willing-and-able business buyers fierce, and will only get more so in the future.

Making matters worse, if you take any 100 business and put them up for sale, the results will be this:

  • 4 out of 100 will sell within 3 months at the full asking price
  • 16 out of 100 will sell within 6-9 months at a 30% to 50% discount.
  • 80 out of 100 will never sell and the owners end up closing the doors in a liquidation sale. Leaving shattered dreams in its path.

So what does a business seller do?

The Answer Is Business Staging.

Only properly staged businesses with the most positive outlook and best books are attracting ready-willing-and-able buyers with CASH!

Business Staging, although a new concept in Business Brokerage is rapidly becoming a necessity.

Staging homes for sale has been around for about a decade, and can be done with minimal real effort. Check the curb appeal, add a few plants, pictures, maybe a sofa and paint.

Yet staging a business can take anywhere from one to three years.

When it comes to staging a business for sale, there is more that goes into it.

Below are 4 of the most important parts of the puzzle when it comes to properly staging a business for sale.

  1. First off, you need squeaky-clean and easy to understand books. QuickBooks is the darling bookkeeping system for small business. If you’re running an antiquated bookkeeping system, you’re taking a big risk.

    “The longer the spreadsheet, and the more explaining you need to do, the less you can expect to get for the business.” … Paul Forsberg

  2. Second, you need to develop a positive and believable future of success for the business under new ownership. Business Buyers will only buy a business with a believable future – (based on past performance of course).
  3. Third: You need to have systems in place so the business can run without your constant daily involvement. 20 hours is the key number –
    If your business requires more than 20 hours per week of direct involvement by the owner, you can start slashing the asking price by tens of thousands of dollars.
  4. Fourth: You want to have a good customer mix. If your business is dependent on 20% or more sales coming from one customer, you’re going to have a very hard time selling your business for Top Dollar.

Business Staging = The Wave Of The Future.  
Business Staging is going of be of paramount importance in the coming future because:

  1. The tidal wave of baby-boomers getting ready to retire is already making the competition for business buyers fierce. Like selling a house, the one that sticks out in the crowd will be the one getting the most attention.
  2. Buyers who are willing to pay a premium for a business will only do so if they can walk in and begin making money immediately. Easily understood operations, book, customers, etc. will sell at a premium.
    Complicated businesses will not.

To sell your business, or borrow money for any reason, you need to demonstrate to a buyer or a bank that you have a sales engine that will produce predictable, recurring revenue without your daily, active involvement.” Paul Forsberg

Business Staging is for the most part and unknown to most business brokers because it’s never been needed before.

Staging homes for sale was a closely held secret of residential home developers until the real estate crash of 2007. Then it was widely adapted and used in residential home sales. It’s only been around for about a decade.

For more information about staging your business, contact us.

We have been working with business staging methods for the past 18 months almost exclusively and have found exceptional results for our business sellers!

About the Author Paul Forsberg

I Solve Business Puzzles and Help People Buy, Build & Sell Businesses For Monthly Cash Flow & BIG Paydays. Author #1 Amazon Best Selling Business Book "The 5 Fundamental Elements of Every Successful Business .... Why Most Businesses Cannot Be Sold & What You Can Do About It."

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