That’s why we have compiled our best tips to help you navigate securing a business loan. Read on to discover how you can turn financial challenges into opportunities for success. 

Craft a Winning Business Loan Request

To create a compelling loan request, begin by presenting a powerful prospectus. Condense your business or project details into a concise document that clearly articulates the purpose of the loan and how it aligns with your overall business strategy. 

Showcase your commitment by highlighting your financial contribution and capacity for future reinvestment. This demonstrates dedication and reduces the perceived risk for the lender.

Check out our guide on how to write an effective business plan for tips and inspiration. 

Establish Credibility 

To alleviate lender concerns, understand and address leverage, liquidity, profitability, and activity ratios. Familiarity with your company’s financial ratios is crucial for a credible loan application.

Support your loan request with robust research and evidence. Focus on presenting one project, avoid industry jargon, and ensure your proposals are grounded in realistic data.

Master Your Credit History

Maintaining a stellar credit history is crucial. Regularly check personal and business credit scores for errors and to understand your current status. Use these scores as a tool for improvement, implementing practical tips like timely bill payments and paying down debt.

Scrutinize Lenders’ Terms

Beyond the interest rate, delve into the terms and conditions offered by various lenders. Flexibility and optimization should be prioritized over mere cost considerations. This strategic approach ensures that the chosen loan aligns with your business needs.

When exploring financing options, ask questions about loan terms, percentage financed, repayment flexibility, and collateral requirements. A comprehensive understanding of these factors helps you make an informed decision.

Deal with Challenges Transparently

Confronting financial challenges is inherent in entrepreneurship. Transparent communication is key—keeping stakeholders informed, presenting a detailed recovery plan, and involving them in decision-making fosters trust and collaboration. 

Acknowledge mistakes, anticipate challenges, and maintain a positive outlook. This transparent approach transforms hurdles into opportunities for growth and reinforces your commitment to long-term success.

Conclusion

Securing a business loan is a pivotal step toward achieving entrepreneurial success. This expert advice will help you confidently navigate the loan application process. We have even more information about how borrowing money can be a great business move and how to do it right in this blog post.  

If you’re thinking about buying or growing a business, get in touch to find out how we can help! 

The post Successfully Navigate the Business Loan Landscape first appeared on Acuity Business Group.

The days when small business loans took a mere two months to finalize are gone, and the process is now considerably longer. To successfully navigate this challenge and secure the funding you need to acquire your dream business, you must be well-prepared and proactive. In this blog post, we’ll explore how you can increase your chances of obtaining small business funding in Western Canada with the help of a case study.

One Canadian’s Journey to Business Ownership With Small Business Financing

Sarah had always dreamed of owning a business. She had the skills, the passion, and a clear vision. After years of saving, researching, and attending business acquisition seminars, she was finally ready to take the plunge. Sarah set her sights on a small manufacturing company in Alberta, but soon realized that securing financing wouldn’t be a walk in the park.

Challenges Faced in Obtaining Financing

Sarah quickly learned that commercial loans were no longer the straightforward process they once were. With the help of an experienced business broker, she identified one of the main challenges to obtaining financing: tougher documentation requirements. Financial institutions wanted to see comprehensive documentation to evaluate her creditworthiness and the viability of the business she intended to purchase.

Proactive Strategies for Financing Success

Undeterred, Sarah knew her dream was within reach with the proper preparation. She put together a financing package that would impress any lender.

Buyer Profile: Sarah crafted a compelling buyer profile that showcased her extensive industry experience and the skills that would help her succeed.

Net Worth and Bank Statements: She provided a detailed and accurate net worth statement along with transparent bank statements that clearly outlined the source and amount of her down payment.

Credit Score Report: To be fully prepared, Sarah obtained her own credit score report, revealing a high score and a history of responsible financial management. If her score had been low, she would have provided extra documentation to explain the rating.

Business Plan: Sarah’s business plan was nothing short of impressive. It laid out strategic and achievable marketing strategies, staffing plans, and product development initiatives. Check out our step-by-step guide on how to write a business plan.

Realistic Financial Projections: Her financial projections were realistic and clearly showed how the business would support her, generate a return on investment, and enable her to repay the loan efficiently.

Preparation Pays Off When Applying for Business Financing

With her well-prepared business financing package in hand, Sarah’s small business loan application stood out among the rest. The financial institution recognized her as a sophisticated operator who had done her homework. Sarah secured the financing she needed, and the loan processing time, although longer than expected, did not hinder her dream of business ownership.

Sarah’s journey to business ownership in Western Canada is a testament to the importance of preparation and determination in today’s competitive financing landscape. Remember, the key to success is demonstrating your readiness and commitment to loan lenders, making them more inclined to support you. Take the time to gather the necessary documents, plan meticulously, and position yourself for financing success in the exciting world of business buying.

If you’re considering franchise ownership, we have even more tips just for you in our blog post about how to finance buying a franchise. Your dream business may be closer than you think!

The post How To Secure Financing To Buy a Business in Western Canada first appeared on Acuity Business Group.

In this step-by-step guide, we will walk you through each section of a business plan and provide valuable tips to help you write an effective plan that stands out and inspires confidence from potential lenders.

The Importance of a Business Plan

A well-structured business plan serves as a roadmap, outlining your goals, strategies, and vision. It provides direction and clarity, ensuring everyone in your business is on the same page and working towards a common objective.

Externally, a comprehensive business plan impresses investors and lenders by showcasing your professionalism, market analysis, and financial projections. It instills confidence and increases the likelihood of securing funding or partnerships.

Internally, a business plan aligns your team, providing a solid foundation for decision-making and action. It forces you to critically evaluate your ideas, market potential, and financial feasibility, ensuring you are well-prepared to overcome challenges.

Executive Summary

The executive summary needs to be compelling in two ways; it should grab attention and provide a concise overview of your business plan. Use this section to effectively communicate your unique value proposition and outline the key points that will entice potential investors or lenders to dive deeper into your plan.

Pro tip: Craft a captivating opening sentence that hooks readers from the start.

Company Description and Vision

Tell your readers a story about your company that includes its history, mission, vision, and values. In your company story, showcase your products or services, define your target market, and highlight your competitive advantage. This section of your business plan should capture the essence of your business and demonstrate your understanding of the market landscape.

Pro tip: Clearly define your target market and address a specific need or problem that your business solves. Show how your unique value proposition sets you apart from competitors.

Market Analysis and Strategies

In this section, you dive deeper into the market landscape by identifying your target audience, assessing competitors, and analyzing industry trends. Share your marketing and sales strategies, the reasons why you’ve chosen them, and the success you’ve already had. Providing data-driven insights and actionable plans demonstrates your market expertise.

Pro tip: Conduct thorough market research to identify emerging trends, customer preferences, and potential growth opportunities.

Organization and Management

When presenting a business plan to investors, it is important to showcase the people who make up the company. Introduce yourself and your management team, and highlight relevant qualifications and experience. To help people have a better understanding of how the company works, include a clear organizational structure, and define roles and responsibilities. Showcasing a capable leadership team instills confidence in investors and demonstrates your ability to execute your business plan effectively.

Pro tip: Emphasize your team’s ability to drive the company’s success and showcase any unique skills or expertise that differentiate your team.

Product or Service Offering

Now is the time to delve into the specifics of your products or services, highlighting their unique features, benefits, and pricing. Clearly outline your value proposition and address customer pain points. If applicable, include details on your production processes, technology, and intellectual property to showcase your operational capabilities.

Pro tip: Highlight the unique features and benefits of your product or service, but also focus on the emotional appeal it brings to customers. Clearly articulate how your offering solves their pain points or improves their lives. By emphasizing the emotional connection, you grow stronger brand affinity and differentiate yourself from competitors in a meaningful way.

Sales and Marketing Strategies

This is a key section of your business plan because, without sales, your business will not be successful. Outline your sales and marketing strategies, including customer acquisition plans, pricing models, and promotional activities. Add a comprehensive marketing plan that aligns with your target audience and differentiates your business from competitors. Be sure to highlight key metrics and milestones you will use to measure success.

Pro tip: Craft engaging narratives that showcase the value of your products or services and demonstrate how they solve customer problems. Incorporating storytelling techniques into your marketing strategies helps you create a memorable and impactful impression on potential investors and lenders.  

Financial Projections and Funding Requirements

Investors and lenders will be very interested in this financial information. Objective and realistic financial projections, including sales forecasts, income statements, cash flow analysis, and break-even analysis should be included in this section. Be sure to justify your assumptions and demonstrate financial viability. Present a clear understanding of your funding requirements, showcasing your plans for utilizing investment or loan proceeds effectively.

Pro tip: Provide a well-supported explanation of your financial projections, demonstrating a thorough understanding of your industry’s trends and market conditions. Incorporate key performance indicators (KPIs) and benchmarks to track your progress and demonstrate your ability to achieve sustainable growth.

Risk Assessment and Contingency Plans

Risk is part of any business venture and should be tackled head-on, not swept under the rug until it can’t be ignored. Identify potential risks and outline strategies to mitigate them. By anticipating challenges and developing contingency plans, you will maximize your risk management capabilities and be prepared for potential hurdles.

Pro tip: Conduct a comprehensive SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis to identify potential risks and develop robust contingency plans. Show that you have considered various scenarios and have strategies to mitigate risks, ensuring your business’s long-term stability and success.

An effective business plan requires careful thought, research, and attention to detail. By following this comprehensive guide, you will be well-equipped to create a compelling business plan that captures the attention of potential investors and lenders. Your plan also serves as a roadmap for your business’s success.

Start writing your winning business plan today and pave the way for a prosperous future!

The post Mastering the Art of Writing an Effective Business Plan: A Step-by-Step Guide first appeared on Acuity Business Group.

Did you know that one-third of small businesses in Canada will change hands in the next three to five years? Getting your business ready for a new owner is crucial, even if you are not planning on selling soon. Life is unpredictable, and being prepared for an unexpected sale can help you attract the right buyer and achieve a higher sale price.

Here are three things every business owner can do today that will help their business sell in the future:

1.            Update your business growth plan

A business growth plan is a document that evolves alongside your business. It maps out the next one to two years with a focus on strategic operations and revenue generation.

An effective growth plan consists of a financial plan, an analysis of your business’s strengths, weaknesses, and opportunities, and a detailed plan for revenue-generating goals. It can be referenced regularly to identify areas that require a new approach.

Since 2020, we have learned what factors make a business more resilient and successful. According to the Business Development Bank of Canada, small business owners that adopted digital technology and were innovative during the initial phases of the COVID-19 pandemic were more likely to recover and emerge with a stronger business. Many businesses are again achieving and surpassing 2019 sales volumes.

A growth plan will help you see beyond the day-to-day activities of your business so you can focus on the strategic details that need attention for your business to grow under various circumstances. It can be used to show buyers potential avenues for growth.

2.            Document your exit strategy

An exit strategy is an important document for any business owner, yet most never draft one. Planning your exit can make your business more profitable, earn a higher sale price, and give you time to find the most tax-advantageous sale strategy.

• Selling is difficult when a business is deeply intertwined with the owner’s skills and expertise.
  • An exit strategy can show potential buyers how you will transition out and what they need to do to take over.

• An exit strategy maximizes the value of a small business.
  • Planning allows you to take the required steps to implement changes or processes that will increase profits, minimize expenses, and improve operations.

• In consultation with a qualified accountant, you can structure the exit strategy to reduce your tax burden or take advantage of tax incentives available to small business owners.

• An exit strategy makes it easier to sell your business even when you hadn’t planned to.
  • Over the past few years, many Canadian small business owners spent a lot of time dealing with unforeseen circumstances, highlighting the need to be more prepared and have a plan to navigate challenging times. If your health or other personal circumstances suddenly change, you will be better equipped to list your business for sale.  

3.            Assemble a team of qualified experts

Assembling a team of qualified experts is crucial for any small business owner who wants to sell their business successfully.

One of the most important members of your team is a lawyer who specializes in buying and selling businesses. This person can advise you on important legal considerations that may arise during the sales process. They can draft legal agreements and contracts to protect your interests throughout the sales process.

Another key member of your team is an experienced accountant. This person can prepare your financial statements, tax returns, and other documents potential buyers will review. They can advise you on important tax implications of the sale, and structure the deal in a tax-efficient manner.

In addition to a lawyer and an accountant, you should work with a qualified business broker. A broker can develop a comprehensive growth plan to make your business more attractive to potential buyers. They will market your business to a wide range of potential buyers and negotiate on your behalf to ensure that you get the best possible price.

Preparing in advance is one of the best ways to set your business up for success. It allows you to take advantage of unsolicited offers that come your way or sell sooner than expected. Even if you aren’t planning on selling for a few years, contact Acuity Business Group to find out how we can help. Your future self will thank you!

The post Maximize the value of your business first appeared on Acuity Business Group.

Background

Approximately five ago, I helped a client to buy a business. The transaction was a success and I was confident he had what it takes to do well. Last year, I received a phone call from this client. He had grown a wholesale distribution business to over $3M in annual revenue. The owner was now ready to retire and knew that Acuity Business Group could help him do that.

Key achievements

This business owner came prepared to sell. He had done his due diligence in a number of different ways. First, he interviewed other business brokers to see if there was someone else he wanted to work with. Ultimately he chose Acuity Business Group again, citing our “practice of setting realistic expectations and being reasonable throughout the valuation process” as key reasons to reengage.

Second, the owner had meticulous and accurate records about every aspect of the business and was ready to share that information. This made it easier for our team to put together a detailed overview of the business, price it accurately, and start to attract qualified buyers ready to make an offer.

Finally, the owner stepped back and let me handle as many aspects of the transaction as possible. He focused on the business while I answered inquiries, screened potential buyers, negotiated terms, and dealt with anything else that arose. By continuing to work hard during the sale process, he maintained strong revenue, inspiring buyer confidence.

Challenges overcome

As with all business for sale transactions, there were challenges. Revenues had been affected by the early months of Covid-19, and this was reflected in the financial records. However, the owner worked hard to rebound from those months and posted a significant increase in revenue in 2021 and onwards.

The business was listed for sale during the height of global and national supply chain issues. The owner quickly responded by increasing focus on customer pricing. The price increase was well accepted for a few reasons. There had not been any significant price increases since 2017, and customers were very aware of rising product transport and purchase costs. The business implemented and communicated the increases without any decrease in product demand.

Due to the overall economic climate, there were concerns that accessing financing would be a hurdle for buyers. In this transaction, the Business Development Bank of Canada (BDC) played a significant role in financing the sale. BDC is a bank that specializes in helping Canadian entrepreneurs to access small business loans with competitive rates. 

The end result   

The business sold relatively quickly and the owner was able to retire. When asked about his experience, the owner said, “The listing process and buyer vetting went very smoothly, largely in part to Ken’s facilitations. He did a great job shielding me from tire kickers and poor-quality leads, allowing me to focus on my business. As with any major negotiations, there were a few surprises, but Ken remained flexible and ensured that everything was taken care of. My business sold more quickly than I had anticipated, and the entire process went much smoother than I thought was possible. Having worked with Ken on both sides of the process, I highly recommend him to anyone looking to sell their business. You can be assured he will be completely straightforward through the entire process and will work on your behalf until the deal is closed.”

Selling a business can feel overwhelming, but preparation and the right partners can help it go smoothly. I was thrilled to have the opportunity to work with this client for a second time. My goal as your business broker is to ensure your experience is so good that you invite me to partner together when you decide to sell or grow! If you are thinking about selling your business this year, let’s talk. 

The post Why one business owner came back to Acuity Business Group first appeared on Acuity Business Group.

If you are considering selling your business in the next twelve months, you should not reduce expenses related to updating and maintaining business records.  This means no DIY accounting, no skipping legal advice, and no eliminating financial advisors.  Read on to learn how scaling back in these areas could cost you.

Accounting

Did you know that accurate accounting records can help increase the value of your business?  This is critical when you are planning to sell.  Accurate accounting records make it easy for buyers to evaluate the

• Income and expense history,
• Assets and liabilities, and
• Financial health of the business.

When working with potential buyers, presenting accounting records in a transparent and verifiable way shows the value of the business, and it goes a long way in helping them to obtain funding.  As you prepare your business for sale, a qualified accountant can provide an income statement, balance sheet, and cash flow statement.  Buyers need to review this information before they can make a reasonable offer. 

Over the past few years, more buyers have requested review engagements from accountants.  A review engagement is a thorough examination of financial information used to provide limited assurance that the data is correct.  These documents are helpful when the buyer needs a loan for $300,000 or more.   Some buyers are unwilling to move forward with the transaction without a review engagement. 

An accountant can also help owners determine the financial and tax implications of selling their business by reviewing considerations like

• A share sale versus an asset sale,
• Personal tax liability, and
• Proper reporting on personal and business tax returns. 

Legal Advice

Lawyers can be expensive, but their expertise is worth it when selling a business.  There are two important ways that lawyers help owners sell their business.  The first is ensuring the business is compliant with industry-specific regulations and legislation.  Selling a business not in compliance can have significant legal and financial ramifications.

Lawyers must also draft, review, and execute paperwork throughout the process.  This includes offers, counteroffers, business transition details, financial documents, licensing, contracts, and final payment terms.  Skimping on any of these steps can cause a deal to fall through and cost the business owner money.  In worst-case scenarios, it can lead to legal proceedings that waste valuable time and resources.   

Financial Advice

The right financial advice can take a business for sale from precarious to successful!  A qualified financial advisor will analyze the business’s overall health and help owners optimize different areas.  They review things like

• Inventory levels,
• Obsolete stock,
• Current inventory turnover,
• Staffing levels, and
• Overall efficiencies and barriers to growth.

Working with a financial advisor helps business owners to focus on improving finances and ensure changes are properly documented. 

Without these key players, you may lose money during business operations and when you try to sell.  After helping you get the right team of advisors in place, a qualified business broker can mitigate some of these losses and enhance your return on investment by

• Providing strategic recommendations to improve the saleability of the business,
• Eliminating barriers to a successful sale,
• Determining the accurate market value of the business,
• Providing education and expertise on vendor financing,
• Working with your lawyer and accountant to draft a vendor financing agreement that benefits all parties,  and
• Determining the next steps for an eventual sale by comparing market conditions with the current state of the business. 

Selling a business is a team effort, and each member adds significant value.  Eliminating any of these players is like benching your star quarterback right before the championship game!  Instead of considering these services as expenses, reframe them as investments that will pay a return when you sell your business.  If you are considering selling your business, get in touch to learn more about how we can help.  

The post Learn about the costly mistake business owners are making (and how working with a business broker can help recoup some of those losses) first appeared on Acuity Business Group.

• Increasing inventory to meet demand,
• Purchasing equipment that is more efficient or that operates at a higher capacity, and
• Moving into a new location with more space or increased foot traffic.      

A good business loan offers flexibility, allowing business owners to use it to meet their business goals.  However, borrowing money is never without some risk.  To maximize the positive impact of a business loan, there are three mistakes that you need to avoid.

1.            Not borrowing enough money

This one sometimes confuses people.  Isn’t it better to have a smaller loan amount to minimize the total cost?  Not always.  You need to borrow enough money to have an impact.  Take the time to determine how you will use the additional funds and calculate the amount needed to achieve those business goals.  Then, put together a cash flow forecast and include potential contingencies and delays.  This can help you more accurately calculate how much money you need to turn the loan into profits.  If you skip this step and don’t borrow enough, you risk getting caught with a loan repayment that didn’t generate additional revenue.

2.            Not understanding the value of loan repayment terms

The first thing most people look at when taking on a loan is the interest rate.   The interest rate is important because it affects the total cost of the loan, but it isn’t the only thing to be considered.  Working together with your accountant and loan officer, look for ways to optimize aspects of the agreement like

• The repayment schedule,
• Loan length,
• Flexibility for seasonal payments,
• Interest-only options, and
• The guarantee terms. 

3.            Paying back the loan too quickly

Business owners love to get loans and debt off the balance sheet and often accelerate loan repayments to do so.  Sometimes, paying it back too quickly doesn’t make financial sense.  The first reason is that there may be a penalty for completing the loan repayment before the agreed-upon date.  The second reason is that by doing so, you may expose your business to a cash flow shortfall in the event of low revenue or unexpected expenses.  The third reason is that without access to the additional capital, you may miss out on the opportunity to take action that can help increase the business’s overall financial health. 

Loans are a significant commitment for small businesses and should be treated accordingly.  While a loan is considered a financial liability, it has the potential to add real value and improve the bottom line.  If you think your business would benefit from a loan, start by talking to your accountant and a loan officer to learn more about your options and crunch the numbers. 

The post Borrowing money can be a great business move (as long as you do it right) first appeared on Acuity Business Group.

Phase 1 – Research and education

During the initial phases of exit planning, business owners need to learn about the exit process.  This includes learning about the different options for selling their business and understanding how each option will affect them.  During the research and education phase of the exit planning process, a qualified business broker can help by providing expertise, guidance, and the most up to date and accurate information about selling a business in a particular industry and geographic location.  A business accountant with experience in similar transactions can help owners determine the most favourable sale type for their business that will help minimize the tax burden.  The research and education phase gives business owners a unique insight into their business that can help them to create targeted and effective short and long-term strategies that will increase profitability in the present and make the business more attractive to qualified buyers when they are ready to sell.

Phase 2 – Implementing strategy

Once the research and education phase is completed, business owners have a better idea of the strategies, ideas, and processes they need to implement to help improve their business and the bottom line.  Focusing on both business processes and overall profitability make the business more appealing to qualified buyers.  Beginning to implement improved strategy a year or two prior to selling can help business owners objectively demonstrate the actual value of their business through bettered cash flow and profits.

I worked with one client who had initially been disappointed when she received the Broker Opinion of Value for her business.  Like most owners, she had unrealistic expectations of the value of her business.  Instead of becoming discouraged, she reviewed the feedback regarding changes that would improve her business and ultimately increase the value of the business.  With a renewed effort and focused strategy, she continued to build the business.  Within 18 months, the value of the business had doubled and it sold for the full asking price, which was considerably higher than the price it would have sold for a year and a half prior.

Phase 3 – Executing the deal

Most business owners think that phase 3 will demand the most amount of time on their part.  This is incorrect.  Phases one and two require the most significant effort from business owners and these phases take place long before executing the deal.  Once the research has been done and the strategies have been implemented for a period of time, business owners can formally engage with a business broker and have them take the reins and execute the deal.  A qualified business broker will handle most aspects of the transaction including advertising, qualifying potential buyers, negotiations, and finalizing the sale.  During this time, business owners should continue to focus on their business, not on the details of the sale.

Successful business sales are a marathon, not a sprint.  Ideally, exit planning should begin long before an owner needs or wants to sell.  Without strategic planning, a business misses out on opportunities to improve and create a track record of success that will appeal to potential buyers.  Exit planning can help to identify and minimize weaknesses, further improve areas of strength, demonstrate growth potential, and show a positive cash flow history.  Contact Acuity Business Group for more information on how you can start exit planning today to have a successful business sale in the future.

The post Exit planning is critical to business success first appeared on Acuity Business Group.

1. Multiple streams of income

Motels can provide more than just overnight accommodation for guests.  A motel can increase revenue by adding multiple streams of income.  Additional income can be generated through an onsite restaurant, convenience store, gaming pub with VLT’s, an ATM machine, or boardroom facilities that can be rented out to community groups and organizations.

2. Flexible service offerings

Motels, and the accommodation industry in general, offer owners a great deal of flexibility with respect to the level of service offerings.  The accommodation industry has three levels of offerings including limited service, mid-range, and extended-stay options.  Motel owners can analyze the costs and revenue generated by each level of service offering in their particular geographic location to determine which offers the greatest opportunity for reliably increasing profits.  Service offerings can be re-evaluated and adjusted in response to changing market conditions.

3. Owners can decide how involved they want to be

Motel owners can choose to live onsite and be involved in day to day operations or they can remain at arm’s length and hire a team to manage the business.  Motels are a great option for a business owner who would like to spend a few years running the business and then transition to a more hands-off approach.  With guidance from the right team of professionals, motel owners can create a business and operations plan customized to their preferred level of involvement.

4. Cash flow

With most motels, there is typically established cash flow.  Since payments are made daily and reservations are year-round, a new motel owner does not have to wait for a first big purchase or account receivables to generate cash flow.  Provided a new motel owner has done their due diligence during the purchase process, future cash flow should be relatively easy to estimate based on historical occupancy rates and upcoming projected reservations.

5. Return on investment

Return on investment for motels is generally healthy.  Like any business, it is affected by various factors such as location, physical condition, size, operations, and the current economy.  When it comes time to sell, if the business has been run well, revenue streams are diversified, and occupancy rates have been strong then it is more likely to earn a higher sale price.  A business plan that outlines future opportunities for growth can help increase the return on investment by showing potential buyers how to continue to grow the business into the future.

Purchasing a motel is a business opportunity that can meet the needs and wants of many business owners.  With flexibility in terms of service levels, involvement, and succession planning, a motivated owner can truly create their own optimal balance between work and life.  If you have been considering purchasing a business in the accommodation industry, a qualified business broker can help you assemble the right team of professionals, evaluate listings to determine the best fit for your business goals, and help you create a business plan that will propel you towards success once the deal is done.

Contact Acuity Business Group to learn more about accommodation businesses currently on the market.

The post 5 Reasons a motel can be a great business venture first appeared on Acuity Business Group.

Underestimating how long it takes to sell a business

Many business owners assume that selling their business will take a few weeks or a few short months.  In actuality, selling a business can take months and sometimes years.  Without knowing how long the process can take, many owners wait too long to put their business up for sale and are inadequately prepared for the process.  This puts the business at risk for dissolution and the owners at risk of a very disappointing outcome.

One way to avoid this common mistake is to draft an exit strategy.  Ideally, exit planning should begin long before selling.  Without strategic planning, a business misses out on opportunities to improve and create a track record of success that will appeal to potential buyers.  Exit planning can help to identify and minimize weaknesses, further improve areas of strength, demonstrate growth potential, and show a positive cash flow history.

Assuming the “right buyer” will walk through the door

Business owners presume their successor will be similar to themselves in terms of background and business goals.  They are confident that the perfect person is just waiting to put in an offer when the business is listed for sale.

This is a very dangerous mindset.  It eliminates any sense of urgency to market the business creatively to a wide variety of potential buyers.

While the buyer may fit the owner’s ideal image, they may also be

• A competitor looking to grow by acquisition,
• A business that is expanding into new products or service offerings, or
• Someone who wants to take the business in a new direction.

Finding and qualifying a buyer is one of the most labour intensive aspects of the business for sale purchase.  At the end of the day, the right buyer is the person who has liquid cash to invest in the business and can meet the other terms listed in the business for sale contract.

Misunderstanding the value of the business

Perhaps the most common and detrimental mistake business owners make is failing to understand the value of their business.  Accurately determining the fair market value of a business is one of the most misunderstood parts of the selling process.  Business owners often overestimate the value of things like goodwill, assets, niche markets, and potential.

Business owners are also guilty of pricing their business based on what they need or want to see as a return on their investment.  These considerations are meaningless to a potential buyer and will rarely align with how much a buyer is willing to pay.

Fair market value and the asking price are determined after analyzing several factors, including industry and local economic factors, and completing a specialized calculation.  Following an objective process highlights the true value of the business and makes it easy for potential buyers to understand how the asking price was determined.

Pricing a business accurately and objectively will help a business sell more quickly and close to the asking price.

There are three things every business owner needs to remember when they decide to sell their business.

• It will take time and it is important to plan accordingly.
• Owners need to be open-minded and remember the “right buyer” may not be who they imagined for their business.
• In order to sell, the business must be priced based on fair market value.

Business owners that understand these aspects of the business for sale process will be more likely to have a successful sale with far less stress and disappointment.  If you are ready to sell your business, contact Acuity Business Group to learn more about how we can help.

The post 3 mistakes that prevent businesses from selling first appeared on Acuity Business Group.