Franchise Opportunities and Tips

Franchise businesses rank as one of the leading business opportunities. Many entrepreneurs opt to buy a franchise business. Franchises offer a host of appealing benefits including stability, a proven concept, as well as a network of established resources.

To see current franchise businesses for sale, click here.

If you are considering exiting your franchise, follow these tips for reselling a franchise business.

Your Guide to Reselling a Franchise

According to recent findings from the International Business Brokers Association (IBBA), experts have declared it’s currently a seller’s market and a great time for owners to consider exiting. To help guide you through your transition, utilize the following four tips.

Consult Your Franchise Agreement

Before you make any significant decisions, be sure to review your franchise agreement. Many franchisors layout specific parameters for franchisees looking to sell their business and some franchisors even offer assistance in the selling process.

In addition to reviewing the agreed-upon selling process, you should also make careful note of any transfer fees or mandatory training for the new owner once your business switches hands. While selling any type of business presents a variety of challenges for owners, reselling a franchise often involves a few more obstacles.

Contact Your Franchisor

After reviewing your franchise agreement documents, contact your franchisor as soon as possible to alert them of your exit plans. During this conversation, consider asking the following questions.

  • Will I receive assistance selling my business?
  • What qualifications must a prospective buyer have?
  • How is my franchise location valued?

While these questions are a great start to beginning your exit process, consider enlisting the help of a certified business broker to provide the best guidance.

Prepare the Business for Sale

To receive the best asking price, ensure your business is in tip-top shape from your books to the building condition both inside and out. Consider investing in small maintenance fixes or even a professional service to obtain an accurate business valuation to further help you obtain desirable offers.

Keep in mind the franchise business industry has grown for the eighth year in a row. The industry’s performance paired with your well-prepared business should provide plenty of offers to consider.

Negotiate a Deal & Exit Your Business

After listing your business for sale, consult with your franchisor about any offers you receive. Depending on the franchisor’s level of involvement with the selling process, any prospective buyers may need to be approved before the sale is final. For tips on exit planning, click here.

Why Chutes and Ladders Is an Awful Metaphor for Building Value in Your New Mexico Business

Building value in your New Mexico company can sometimes feel like a maddening game of Chutes and Ladders. The minute you’ve achieved one goal, you realize you’ve slipped on others.

This is why we don’t take a one size fits all approach to helping our clients. Every business has unique assets, strengths and opportunities. There’s lots of good information out there in the business press and no lack of advice, but does it all make sense for you? Selectively choosing what you hope to accomplish, prioritizing, setting your benchmarks, and measuring the results can save you from falling down the chutes and help you climb the ladders.

Chutes and Ladders is a totally random, roll-of-the-dice game. Running a successful business isn’t. If you are looking to build value in your company, here are some of the elements that we will review, work with you to prioritize, and help you develop a strategy to put your business on a solid footing that will help maximize its value.

What Is Your Value Statement?
Not every business can be the dominant force in their market. Take restaurants, for instance. Tourists and locals have abundant options when it comes to choosing where to dine out in Santa Fe and Albuquerque. It is the combination of service, menu offerings, ambiance and location that make for a memorable evening and return guests. Understanding and articulating your value in this competitive market place can help you determine where to spend your valuable advertising dollars, concentrate on what distinguishes you from the competition, and develop the relationships that will promote referrals.

Are You Replaceable?
If this business can’t function without you, look at how you can grow a management team that can take over your many of your functions. Cultivating the right talent, having key employees sign non-compete agreements, and putting clear-cut employee guidelines in place can help you achieve the goal of being (more or less) inconsequential to the everyday operations of your company.

Can You Replicate Your Model?
If you have a good business, consider that you have a good business model. What would it take to open new locations?

How Satisfied Are Your Customers?
Word of mouth advertising is one of the oldest and most valuable ways to grow a business. Maybe you have loyal, longtime customers, but what are you doing to keep them informed of sales, specials and to acknowledge their loyalty? Are you asking them for referrals and testimonials? Are there ways you can automate the “ask”?

Are You Overly Concentrated with One Client?
If one client accounts for 30% or more of your revenue, your company is vulnerable. What should happen if your competition steals them away or they go out of business? Having a good distribution and minimizing your reliance on anyone customer makes your business more reliant and increases its value.

If you would like to learn more, we welcome your call. Whether you are looking to sell your business in the next year or the next five years, take this opportunity for a no-cost, no-obligation first consultation to learn what you can do to strengthen your New Mexico business’ value and position it to achieve the maximum proceeds from a sell. We invite you to contact us.

Popular Nob Hill café-coffee shop has new owners

Limonta-Int-002-small

Reporter- Albuquerque Business First
Bill and Brenda Ennis recently acquired Limonata Italian Street Food Caffe — located at 3222 Silver Ave. SW — from Maxime and Daniela Bouneou. The Bouneous are the co-owners of Italian restaurant Torino’s @ Home in the North I-25 submarket.

Well-known Santa Fe-based business broker Michael Greene, president of Sam Goldenberg & Associates, had the business listed for about three months. The Bouneous said that while selling a business can be “tough and stressful,” they were happy with the marketing and the valuation — that the final sale price was for an expected amount.

“I mean this when I say that this transaction was as easy as listing and selling a house with a real estate agency,” Daniela Bouneou said.

Click to read the complete article.

 

Timing the Sale of Your New Mexico Business

timing-the-sale-of-your-NM-businessConditions are coming together that benefit both business buyers and business sellers. During the first month of January and into the first few weeks of February, we closed two businesses and put three other businesses under contract. While this is an impressive amount of activity for one month, 2015 is simply continuing the trend that began in 2014.

BizBuySell, the largest and most active online small business market place, keeps track of the pulse of small business acquisitions and sales across the U.S. It reported that business transactions reached an all-time high the fourth quarter of 2014 and increased 41% of the same quarter 2013. The service industry was the greatest beneficiary of this increased market activity, but restaurants and retail followed closely behind. Read more

Why Sell Your New Mexico Business?

SGA's blog post regarding  how to recognize when it is a good time to sell your NM business.Selling one’s business can be an emotional experience for some. Your business may have been in the family for generations, you may have built it from scratch, or taken a struggling business and turned it around into a stable, growing company.  Your business not only represents your investment of time and energy, but vision, making the right choices, and perfecting your operating model and marketing strategy.

However, there are times when selling your is the best course to take. Here are a few of them. Read more

What a Buyer May Really Be Looking At

Buyers, as part of their due diligence, usually employ accountants to check the numbers and attorneys to both look at legal issues and draft or review documents. Buyers may also bring in other professionals to look at the business’ operations. The prudent buyer is also looking behind the scenes to make sure there are not any “skeletons in the closet.” It makes sense for a seller to be just as prudent. Knowing what the prudent buyer may be checking can be a big help. A business intermediary professional is a good person to help a seller look at these issues. They are very familiar with what buyers are looking for when considering a company to purchase.

Here are some examples of things that a prudent buyer will be checking:

Finance

Is the business taking all of the trade discounts available or is it late in paying its bills? This could indicate poor cash management policies.
Checking the gross margins for the past several years might indicate a lack of control, price erosion or several other deficiencies.
Has the business used all of its bank credit lines? Does the bank or any creditor have the company on any kind of credit watch?
Does the company have monthly financial statements? Are the annual financials prepared on a timely basis?
Management

Is the owner constantly interrupted by telephone calls or demands that require immediate attention? This may indicate a business in crisis.
Has the business experienced a lot of management turnover over the past few years?
If there are any employees working in the business, do they take pride in what they do and in the business itself?
Manufacturing

What is the inventory turnover? Does the company have too many suppliers?
Is the business in a stagnant or dying market, and can it shift gears rapidly to make changes or enter new markets?
Marketing

Is the business introducing new products or services?
Is the business experiencing loss of market share, especially compared to the competition? Price increases may increase dollar sales, but the real measure is unit sales.
When business owners consider selling, it will pay big dividends for them to consider the areas listed above and make whatever changes are appropriate to deal with them. It makes good business sense to not only review them, but also to resolve as many of the issues outlined above as possible.

A “Pig in a Poke"

Once a buyer has negotiated a deal and secured the necessary financing, he or she is ready for the due diligence phase of the sale. The serious buyer will have retained an accounting firm to verify inventory, accounts receivable and payables; and retained a law firm to deal with the legalities of the sale. What’s left for the buyer to do is to make sure that there are no “skeletons in the closet,” so he or she is not buying the proverbial “pig in a poke.”

The four main areas of concern are: business’ finances, management, buyer’s finances, and marketing. Buyers are usually at a disadvantage as they may not know the real reason the business is for sale. This is especially true for buyers purchasing a business in an industry they are not familiar with. The seller, because of his or her experience in a specific industry, has probably developed a “sixth sense” of when the business has peaked or is “heading south.” The buyer has to perform the due diligence necessary to smoke out the real reasons for sale.

Business’ Finances: The following areas should be investigated thoroughly. Does the firm have good cash management? Do they have solid banking relations? Are the financial statements current? Are they audited? Is the company profitable? How do the expenses compare to industry benchmarks?

Management: For a good quick read on management, the buyer should observe if management is constantly interrupted by emergency telephone calls or requests for immediate decisions by subordinates? Is there a lot of change or turn-over in key positions? On the other hand, no change in senior management may indicate stagnation. Are the employees upbeat and positive?

Buyer’s Finances: Buyers should make sure that the “money is there.” Too many sellers take for granted that the buyer has the necessary backing. Sellers have a perfect right to ask the buyer to “show me the money.”

Marketing: Price increases may increase dollar sales, but the real key is unit sales. How does the business stack up against the competition? Market share is important. Does the firm have new products being introduced on a regular basis.

By doing one’s homework and asking for the right information – and then verifying it, buying a “pig in the poke” can be avoided.

The Pre-Sale Business Tune-Up

Owners are often asked, “do you think you will ever sell your business?” The answer varies from, “when I can get my price” to “never” to “I don’t really know” to everything in between. Most sellers may think to themselves when asked this question, “I’ll sell when the time is right.” Obviously, misfortune can force the decision to sell. Despite the questions, most business owners just go merrily along their way conducting business as usual. They seem to believe in the old expression that basically states, “it is a good idea to sell your horse before it dies.”

Four Ways to Leave Your Business

There are really only four ways to leave your business. (1) Transfer ownership to your children or other family members. Unfortunately, many children do not want to become involved in the family business, or may not have the capability to operate it successfully. (2) Sell the business to an employee or key manager. Usually, they don’t have enough cash, or interest, to purchase the business. And, like offspring, they may not be able to manage the entire business. (3) Selling the business to an outsider is always a possibility. Get the highest price and the most cash possible and go on your way. (4) Liquidate the business – this is usually the worst option and the last resort.

When to Start Working on Your Exit Plan

There is another old adage that says, “you should start planning to exit the business the day you start it or buy it.” You certainly don’t want to plan on misfortune, but it’s never to early to plan on how to leave the business. If you have no children or other relative that has any interest in going into the business, your options are now down to three. Most small and mid-size businesses don’t have the management depth that would provide a successor. Furthermore liquidating doesn’t seem attractive. That leaves attempting to find an outsider to purchase the business as the exit plan.

The time to plan for succession is indeed, the day you begin operations. You can’t predict misfortune, but you can plan for it. Unfortunately, most sellers wait until they wake up one morning, don’t want to go to their business, drive around the block several times, working up the courage to begin the day. It is often called “burn-out” and if it is an on-going problem, it probably means it’s time to exit. Other reasons for wanting to leave is that they face family pressure to start “taking it easy” or to move closer to the grandkids.

Every business owner wants as much money as possible when the decision to sell is made. If you haven’t even thought of exiting your business, or selling it, now is the time to begin a pre-exit or pre-sale strategy.
Photo Credit: tallkev via Compfight cc

 

Considering Selling? Some Things to Consider

  • Know what your business is worth. Don’t even think about selling until you know what your business should sell for. Are you prepared to lower your price if necessary?
  • Prepare now. There is an often-quoted statement in the business world: “The time to prepare your business to sell is the day you buy it or start it.” Easy to say, but very seldom adhered to. Now really is the time to think about the day you will sell and to prepare for that day.
  • Sell when business is good. The old quote: “The time to sell your business is when it is doing well” should also be adhered to. It very seldom is – most sellers wait until things are not going well.
  • Know the tax implications. Ask your accountant about the tax impact of selling your business. Do this on an annual basis just in case. However, the tax impact is only one area to consider and a sale should not be predicated on this issue alone.
  • Keep up the business. Continuing to manage the business is a full-time job. Retaining the best outside professionals is almost a must. Utilizing a professional business intermediary will allow you to spend most of your time running your business.
  • Finally, in the words of many sage experts, “Keep it simple.” Don’t let what looks like a complicated deal go by the boards. Have your outside professionals ready at hand to see if it is really as complicated as it may look.

 

Photo Credit: Jason Hargrove via Compfight cc

Can You Really Afford to Sell?

In many cases, the sale of a small company is “event” driven. That is, the reason for sale is often an event such as a health decline or illness, divorce, partnership issues, or even a decline in business.

A much more difficult reason for selling is one in which the owners simply want to retire and live happily ever after. Here is the problem:

Suppose the owners have a very prosperous distribution business. They each draw about $200,000 annually from the business plus cars and other benefits. If the company sold for $2 million, let’s say after debt, taxes and closing expenses, the net proceeds would be $1.5 million. Sounds good, until you realize that the net proceeds only represent about 3 1/2 years of income for each (and that doesn’t include the cars, health insurance, etc.). Then what?

The above scenario is not atypical, especially in small companies. These are solid companies that provide a very comfortable living for two owners. In the above example, the owners obviously decided they couldn’t sell because it didn’t make economic sense to them. The business was worth much more to the owners than to any outside buyer. Perhaps they thought that an intermediary could produce a buyer who would be willing to pay far more than the business was worth. But, the M&A market is a fairly efficient one.

So, what should they do?

The downside is that competition could enter the fray and their business would not bring in the same cash flow.

The business could also suffer because the owners are not continuing to build it. They apparently want to retire and take life easy, and this mind-set could dramatically undermine the business.

If the owners are forced to sell the business because it is declining, they, most likely, won’t even receive the $2 million they might have received earlier.

On the other hand, the owners, ready to begin their happily ever after, could bring in a professional manager. This addition would cut their earnings slightly to pay for the new manager, but it would also reduce their responsibilities and give the business a chance to grow with new energy and ideas.

 

Photo Credit: Dave Dugdale via Compfight cc