Sell Your Business and Retire – What You Need to Know.

Read a great article in the December 2013 issue of Entrepreneur Magazine (“Ask the Money Guy” column) that discusses the issues surrounding the prospect of selling a small business to fund retirement.

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What Would Your Business Sell For?

A commonly accepted method to price a small business is to use Seller’s Discretionary Earnings (SDE) and applying a multiplier.  Essentially, SDE is an estimate of the cash flow the business produces for one working owner.  The multiplier is developed from the characteristics of the business and/or sales of similar businesses.

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Burnout: An Ever-Present Threat

Burnout is an often-used reason for an owner selling his or her business. Potential buyers may have trouble accepting this as a valid reason for sale. However, burnout is a valid reason for selling one’s business.

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Time to Create an Exit Strategy?

There is the old adage that says: “The time to develop an exit strategy is the day you open for business.”   Sounds good, but not very realistic or very optimistic.

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What’s Unique About a Particular Business?

Most business owners think that their business is unique, but what are the factors and attributes that really make a business stand out from others.  There are key factors that make a business both unique and, at the same time, make it more valuable in the marketplace and more desirable to prospective purchasers.

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You want how much for your business ???

This question is often a potential buyer’s first response when given the price of a business – often accompanied with an expression of astonishment. Especially when a very profitable business has few tangible assets.  The difference between the actual physical assets and the asking price is often called “blue sky.”  Goodwill has often been a prime force behind the blue sky concept; goodwill has been called many things – very few of them good.

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