Frequently Asked Questions:
How much is my business worth? What methods do you use to calculate a business valuation?
A business valuation is more of an art than a science. At the end of the day, a business is only worth what a buyer is willing to pay. It is important to understand what sets your business apart from other similar businesses on the market. There are many different methods for evaluating a business but in most cases, it comes down to return on investment. Some buyers buy a business because of the lifestyle it will bring them. However, most buyers are primarily interested in how many years it will take them to recapture their investment. That answer will widely vary depending on a number of factors: i.e. Industry, Location, Longevity, Niche, Turn-Key, Profitability, etc. It is important to realize that every business is unique. You cannot compare a deli on one side of the street to a deli on the other side of the street. Our detailed evaluation will explore several different methods including cash flow analysis, recently sold comps, current listings and the modular method.
Where do you advertise businesses for sale? What is your marketing strategy?
Let’s face it. Print advertising is a dying breed. We have premier memberships to every prominent business for sale website. We are able to attract local, national and international buyers from our aggressive marketing strategy. Keep in mind, every business we advertise is done so confidentially. So how do we attract buyers without divulging the name or location of a business? Take a look at our ads. They are short and sweet but effective at generating enough interest for buyers to contact us to want to learn more. Every buyer is required to sign a non-disclosure agreement (NDA) prior to learning any confidential details about one of our listings.
What types of financing are available for buying a business?
Financing resources for buying a business are hard to come by these days. It seemed like if a buyer had a pulse, they could walk into a bank and ask for a loan prior to 2006. SBA financing is a tedious process with stricter requirements than ever. However, a sizeable business with solid books and records may qualify. The buyer must also have excellent credit, substantial experience within the industry and outside collateral. A fairly new program and excellent resource for buyers is a 401k rollover. Guidant Financial is the leader in the industry for helping individuals convert their 401k or similar retirement funds into a corporation to purchase a business. To learn more, visit Guidant Financial’s website, click here.
Which industries do you specialize in?
It’s not the industry that matters, it’s the process. We know how to evaluate and sell businesses of any size and industry. It isn’t often these days that we encounter a type of business we haven’t worked with before. When we do, we educate ourselves on what is necessary for us to know to effectively market the opportunity to the right audience. We have sold businesses in the following industries: retail, manufacturing, service, distribution, salons, transportation, franchises, print / postal, restaurants / bars, etc.
Do you only sell businesses in San Diego?
Our office is located in Sorrento Valley and we primarily sell businesses within San Diego County. However, we are licensed to sell businesses in several locations and have sold businesses throughout California and have done numerous transactions in other states as well.
Can you help me negotiate my retail or industrial lease?
We are well versed in the commercial real estate market in San Diego. We can help seek out and negotiate a retail or industrial lease for your concept. We have established relationships with property management companies throughout San Diego County and have access to hard to find leasing opportunities. Having a professional broker represent you in your lease negotiations is critical to ensuring that you are getting the best deal possible. Best of all, you don’t pay us a dime for this service! We earn our commission from the property management company and this does not affect the terms of your lease. Commercial property owners hire management companies to represent their end of the lease negotiations and pay them a percentage of the overall lease value. We simply split the commission with the property management company so it does not influence the landlord’s negotiations.
What are the steps in selling a business?
Where do we begin? This process is best explained in person and we can give you a thorough step by step plan for how we will sell your particular business. Every business transaction comes with different elements and challenges. We are very thorough in our process and will work diligently to ensure the transition is as smooth as possible.
Do you use a bulk sale escrow company for the business transaction?
The buyer and seller typically agree to use a bulk sale escrow to facilitate the transaction. We prefer to use Debbie Howe at Heritage Escrow because she has years of experience and is very attentive and thorough with every transaction. Escrow fees are typically split between buyers and sellers.
Should I consider a seller carry note? What are the advantages / disadvantages of carrying a note?
A Seller Carry Note should be treated like any other investment. There are elements of risk and reward. Typically a note will range from 12 – 60 months with interest rates from 0 – 10% (5-7% is typical in the current market). A seller who is willing to carry a note is showing faith in the continued success of their business. It also provides a financing option for buyers who may not have any other option to purchase a business. Sellers who are willing to consider carrying a note will attract a larger pool of buyers and can often generate a higher overall price. Buyers and Sellers should contact their legal and accounting professionals for any advice regarding the risks involved.
What makes you the best Business Brokers in San Diego?
I’m glad you asked! What sets us apart from other business brokers? Our thoroughness, attention to detail, negotiation skills, marketing background, marketing budget, number of transactions under our belt, ability to adapt to any situation, professionalism, focus (we don’t sell homes or boats on the weekends), energy, poise, time management, honesty, empathy…need we say more? Pick up the phone and call us already!