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[businessbrokers]

What Are Equipment Appraisals?

Equipment appraisals use information about tools, machines, or other devices to determine how much they are worth. People can utilize value estimates in many different situations, such as purchasing insurance, taking out loans, selling excess assets, and especially when it comes to selling a business. Techniques vary depending on the specific purpose of an equipment appraisal.

Methods

The most basic equipment appraisals only involve sending information to the appraiser. He or she uses this data to estimate an asset's worth. Though this particular method saves time and money, it can actually limit accuracy. Appraisers normally prefer to visit facilities and directly examine the property to determine its value. They might inspect everything, or only check some units if an owner has many identical devices.

Worth

An appraiser can determine how much money equipment will fetch under different circumstances. Examples include auctions, liquidations and standard sales. The price varies depending on how much time a seller has. Moreover, depending on the type of coverage desired, insurance appraisals may identify the replacement or depreciated values of assets. In selling a business, appraised assets that will remain with the business are added and calculated into the business valuation to help determine an accurate selling price.

Factors

Appraisers consider many different characteristics of the equipment they evaluate. They take its age, condition, and average lifespan into account. Any optional features or modified components could also affect the selling price. For instance, a unit that has been converted to run on a different kind of fuel will not have the same value as its unmodified counterparts.

Research

After thoroughly examining a piece of equipment, appraisers use research to help determine how much it’s worth. They may look up selling prices for identical or similar models. If an insurance replacement value proves necessary, the cost of equivalent new units must be ascertained.

In summary, equipment appraisals involve gathering data about the assets in question, conducting thorough research, and providing a value estimate. An appraiser will perform more accurate assessments if he or she has in-depth knowledge about the factors that make a specific device more or less valuable.

Learn more about appraisals with buying or selling businesses.

[businessbrokers]

What Months Are Big For Selling A Business In Houston?

Selling a business in Houston is not just about selling a name. What you are selling is the fundamental groundwork that your buyer will not have to worry about. Think of selling a business like selling a piece of land, versus selling land with a house already built on it. This is one of the reasons why selling can be so lucrative.

On the contrary, selling a business can feel like an impossible feat when you are unfamiliar with selling protocol. Hiring a business broker is a sure-fire solution to accomplishing this goal. Yet, before selling your Houston business, there are many things that a broker will help you take into consideration.

First off, you should avoid selling a business out of desperation; potential buyers will pick this up and either purchase it way below its true value, or not purchase at all. Secondly, in selling a business, be sure to sell when productivity and profitability is up. Brokers help in this manner by showing potential buyers your business' projected growth. Finally, it’s most important that selling a business should be done at the right time.

Best Months For Selling A Business

Depending on the type of business, selling in the month of December, as well as November and January should be avoided. Simply because most people are thinking of the Holidays, and making big purchases for business or family. It’s also possible that many will travel during the winter season.

So when should you plan to start making your pitches to possible buyers? The best time is May; however, March, April, and June should work for you too. Most of the months in the Summer are optimal months, and so is September. Summer and Fall are great times to show off some of your numbers, since many businesses do well during the vacation seasons and at the start of a new school year.

Of course, these are general tips and could vary depending on your particular business and location. Business brokers will help you pay attention to fluctuations and market to make the most out of your sell. Learn More about selling a business.

[businessbrokers]

Don't Sell Your Business Without These 3 Tips

There are several reasons that may lead to your needing to sell your business. You may have changed your investment portfolio, the market might be very volatile, or you would like to raise some cash by selling off one of your businesses. Whichever the reason for selling your business, there are a few things that you should keep in mind. Here are a few of them.

1. Plan your exit in time.

Businesses have a close attachment to their owners, since the owner is the vision carrier. Unfortunately, when systems are not put in place in the right time, the business may go down soon after selling it. If you plan to sell your business, start preparing for exit at least two years before the sale.

Do not hurriedly sell your business due to such problems as, ill health and financial problems. Chances are that you are going to sell the business at a throw away price; which will be a loss, considering the efforts you have put in it.

2. Eliminate elements that affect your business value.

Few things may negatively affect the value that the buyer places on the business. If the business has several barriers that prevent an exit such as angel financing, and pending court cases, they must be dealt with before selling. You must also decide if you will step aside, or stay in to enhance a smooth transition. Finally, before you sell your business, it’s important to inform and prepare the business public- such as suppliers, employees, customers, and other groups, of the change of guard.  

3. What is the current business environment?

The best time to sell your business is when the market is doing well. One of the things that the clients would like to see is a robust cash flow, a long list of clients, and several sources of revenue. Buyers consider businesses where a single client accounts for 10% or more of the total sales volume as risky. Time your sale when both the finances and market conditions are favorable. Learn More if you need to sell your business.

[businessbrokers]

How Much Is Selling Your Business Worth?

There is no single formula that can be used to value any business; especially when looking to sell your business. The seller will want to wind the price up, and the buyer will want the price of the products to be lowered. Knowing what your business is worth will help you and the buyer negotiate a reasonable deal.

When looking at the overall value of the business, there are several valuation methods that are commonly used to sell your business:

Method 1: Asset valuation

This method is more appropriate for established companies with high level of tangible assets like property companies.

How this works

Add up the value of all assets such as stock, cash, plant and equipment, and receivables.

Add up liabilities, such as any bank debts and payment due.

Subtract your business liabilities from its assets to get the net asset value.

For example: Edwin wants to buy a manufacturing business with assets worth $300,000 and liabilities of $200,000. The net asset value of the business will be $100,000.

Method 2: Capitalized future earnings

When you sell your business, you are selling not only its assets but also the right to all profits the business might generate. This method is commonly used to place value on small businesses. The method also focuses in on the rate of return on investment a buyer can expect to get from the business.

How it works

Work out the average net profit your business over the last 2-3 years using its profit and loss statements.

Decide on the annual rate of return a buyer might be looking for. Also look for the rate of return that similar businesses in the same industry achieve.

Divide net profits by the rate of return to determine the value of the business, then multiply by 100.

For example: Edwin is looking at buying a butchery with average net profits of $200,000 per annum after adjustments. Edwin wants an annual rate of return of 20%. The capitalized earnings valuation will be equal to the average net profit divided by the rate of return, and multiplies by 100. In this case it would be $100,000.

[businessbrokers]

5 Ways To Sell Your Business Fast

Selling your business is a process that may be new to you. This is especially true if you are a long-time owner of a small, family business. Not only is this process foreign, but so are the emotions that may ensue... It is never easy letting go of something with rich history and roots, after all. However, the rewards you reap, and the financial stability you gain, is well worth the change. If you are at a loss for how to sell your business, and quickly, then these five quick facts can get you on the fast track to selling your company.

Offering Perks Can Produce a Quicker Sale.

While lowering your asking price for a pithy sale is one way to go, without lowering it too much, you can also offer additional or alternative incentives. Think of what might be beneficial to a new buyer. Perhaps including preexisting equipment might sweeten the deal; or instead, some training on the ins and outs of running the company.

Bringing in a Third Party Doubles Your Chances of a Fast Sell.

It can be difficult to tread through the ins and outs of selling a business alone. Consider bringing in a third party, like a professional broker who has experience in moving working businesses from "for sale" to "sold". Having someone who understands your particular service industry, and the inner workings of selling a business, is an invaluable tool for not only selling your business quickly, but also doing so in the best, most beneficial way possible for you and your bank account.

Selling to Your Employees is a Great Way to Insure its Future Success.

Though not a common option, you can sell your business to your employees and open up a well of opportunity for them in the process. You would need an ESOP - otherwise known as an “Employee Stock Ownership Plan”. This would allow you flexible presence in your business, while still giving you the out you desire. Speak to your lawyer for more information on this fulfilling option that is mostly synonymous with small businesses.

Reaching Out to Potential Buyers Can Get the Ball Rolling.

Competition is as great a motivator for buying out a company as is acquiring coveted accounts. Reach out to companies who might see a benefit in taking over your company. This gives you a leg up on advertising, and in some cases, may prove it even obsolete in the long run.

Advertising in the Right Areas Can Increase Your Chances of Selling.

Advertising is a key way to get the word out there; but advertising in the right places is essential. If possible, cast a wide net and do not forget to list in the "Business Opportunities" section in the newspaper and online.

From beneficial incentives, to taking initiative and contacting potential buyers, you can sell your business quick and successfully when you take time to feel out the market and do your research. If you are having trouble finding a buyer, do not be afraid to reach out for help. A helping professional can insure that your business not only sells, but that you keep your cool in the process... and that’s what they call a win/win.

[businessbrokers]

How To Sell Your Business The Right Way

Selling a business is not easy, especially if it's a small business. Smaller business owners do not have all the resources essential to sell their company- unlike a bigger, more established firm. Therefore, small-scale entrepreneurs are first advised to build their company and make it more attractive in the eyes of investors and other business houses with significant assets. And if you were to sell my business, I would like you to follow the tips/techniques mentioned below.

Proper Timing

Most businesses commit the age-old mistake of putting their commercial property on the market immediately after a major business catastrophe. This means that, at the time when the business is put up for grabs, it isn't as lucrative or making as much money as it did during its hay days. As a result, the business is likely to garner funds below its potential. Long story short, sell your business when it's doing well.

Generally, getting ready for sale a year or two before the actual sale period is recommended. The preparation should assist with work on your financial records, and improve your customer base and business structure. When everything is in place, it makes it easier for the buyer (new owner) to take control and run the business from where you left it.

Business Valuation

Knowing your business' worth is important to ensure you do not price your company too low or high. Contact a professional for valuation, such as a business appraiser. The appraiser would provide a detailed account of your business' market value. Such documents offer credibility to a firm. The valuation price also serves as a gauge for listing price.  

Multiple business valuations may be required based on the buyer, the deal, and nature of business. Get in touch with a business valuation firm that specializes in your industry, and is aware of your cash flow and overall business.

Document Preparation  

Go over your tax returns and financial statements from the last three to four years, and let an accountant review them. Also, create a list of business equipment sold with the property. Once done, circulate the documents among qualified potential buyers.

The information packet must also throw light on the business' routine operations and operating manual. Ensure the business is presentable. Any faulty equipment or broken business areas must be replaced or fixed before the sale.

Locating a Buyer

Businesses don't get sold within a few days or weeks. According to historic data, on an average, a company would usually take anywhere between six months and two years to find its buyer. Proper advertising and promotion will also make it easier to sell your business. For a quicker sale, the following are important:

Don't converse with only one potential buyer. Constantly engage with a couple or three interested in your company.

Don't be rigid with your pricing; offer some space for negotiation. Remember, it doesn't matter how well you price your business, buyers will never miss out on the opportunity to negotiate the price further down. However, don't undersell your company, and stay firm on what's reasonable.

Write down any agreement arrived at. Also, potential buyers must be made to sign a confidentiality/nondisclosure agreement to safeguard your business information.  

Important Tip: Keep the sale idea/process silent and confidential as much as possible. Letting your employees, vendors, clients, and landlords know about an impending major transaction will result in unnecessary commotion and confusion.