{"id":210,"date":"2012-05-21T03:32:47","date_gmt":"2012-05-21T03:32:47","guid":{"rendered":"http:\/\/www.shanecampbellcfo.com\/?p=210"},"modified":"2023-10-05T21:13:19","modified_gmt":"2023-10-05T21:13:19","slug":"the-coming-small-business-exodus-2","status":"publish","type":"post","link":"https:\/\/www.b2bcfo.com\/shane-campbell\/the-coming-small-business-exodus-2\/","title":{"rendered":"The Coming Small Business Exodus"},"content":{"rendered":"<p style=\"text-align: justify;\">You\u2019ve heard the statistics.\u00a0 <a href=\"https:\/\/www.exit-planning-institute.org\/index.php?section=exit-planning&amp;content=key-facts-about-exit-planning\">\u00a0Somewhere between 8 and 10 million small U.S. businesses owned by baby-boomers will come to market over the next ten to fifteen years.<\/a>\u00a0 That sounds like a buyer\u2019s market to me.\u00a0 That is why it is also predicted that less than 20% of these companies are expected to have a successful exit.\u00a0 So how will you be the one in five to exit successfully?\u00a0 How will you stand out among the crowd?<\/p>\n<p style=\"text-align: justify;\">The best place to start is with the <a href=\"https:\/\/www.stephencovey.com\/7habits\/7habits-habit2.php\">end in mind<\/a>, looking at it from a buyer\u2019s perspective.\u00a0 Here are some red flags that a prospective buyer will notice.\u00a0 They will likely keep your business from selling, or diminish the eventual selling price:<\/p>\n<p style=\"text-align: justify;\"><!--more--><\/p>\n<ul style=\"text-align: justify;\">\n<li>You have <span style=\"color: #993300;\"><strong><em>individual customers that that make up 10% or more of total sales<\/em><\/strong><\/span>.\u00a0 This adds to the risk assumed by the buyer, thereby reducing the amount they will buyer will pay for your business.<\/li>\n<li><span style=\"color: #993300;\"><strong><em>Poor or non-existent sales growth<\/em><\/strong><\/span>.\u00a0 A buyer wants a company that has upside potential, not one that has peaked.<\/li>\n<li><span style=\"color: #993300;\"><strong><em>No new products<\/em><\/strong><\/span> on the horizon.\u00a0 Most products have a life cycle.\u00a0 If the business is not positioned to take on new products, then the prospective business buyer will heavily discount future cash flows from the older products, and thereby reduce the price he is willing to pay you.<\/li>\n<li>Executive staff that will need to be replaced by the buyer.\u00a0 <span style=\"color: #993300;\"><strong><em>Do you have the right people<\/em><\/strong><\/span> in high level executive positions?\u00a0 If you have under-qualified or underperforming individuals in these positions, they will cost you money when it comes time to sell the business.<\/li>\n<li>The selling price of your business will be discounted if you as the <strong><em><span style=\"color: #993300;\">business owner can\u2019t take significant time off<\/span>.<\/em><\/strong> \u00a0The business is not worth much, as logic has it, since you run the whole show and won\u2019t be around after the sale.<a href=\"http:\/\/www.shanecampbellcfo.com\/files\/2012\/05\/FTE-logo-with-new-registration_12-101.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"alignright wp-image-216\" src=\"http:\/\/www.shanecampbellcfo.com\/files\/2012\/05\/FTE-logo-with-new-registration_12-101-150x150.jpg\" alt=\"\" width=\"150\" height=\"150\" \/><\/a><\/li>\n<li><span style=\"color: #993300;\"><strong><em>Deferred maintenance<\/em><\/strong><\/span> on the building and\/or equipment.\u00a0 Every business, like real estate, must have curb appeal.<\/li>\n<li>Poor accounting systems.\u00a0 When buying\/selling, it really is all about the numbers.\u00a0 If <span style=\"color: #993300;\"><strong><em>you can\u2019t prove out the numbers<\/em><\/strong><\/span>, the prospective buyer will likely move on to another acquisition prospect.<\/li>\n<li>An <span style=\"color: #993300;\"><strong><em>unreasonable selling price<\/em><\/strong><\/span> expectation.\u00a0 Historically, most companies sell for 3x to 5x the adjusted cash flow of the business, less debt.<\/li>\n<\/ul>\n<p style=\"text-align: justify;\">Fortunately, these shortcomings can all be fixed, but <a href=\"http:\/\/gameplan.b2bcfo.com\/exit_strategy_info.php\">you have to have a plan<\/a>.\u00a0 A good long-term exit plan will address the challenges above, as well as tax and financial planning objectives.\u00a0 Check out the <a href=\"http:\/\/www.b2bcfo.com\/\">six-step process<\/a> so you can be the one in five to successfully exit your business.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>You\u2019ve heard the statistics.\u00a0 \u00a0Somewhere between 8 and 10 million small U.S. businesses owned by baby-boomers will come to market over the next ten to fifteen years.\u00a0 That sounds like a buyer\u2019s market to me.\u00a0 That is why it is also predicted that less than 20% of these companies are expected to have a successful&hellip;<\/p>\n","protected":false},"author":25,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_editorskit_title_hidden":false,"_editorskit_reading_time":0,"_editorskit_is_block_options_detached":false,"_editorskit_block_options_position":"{}","cybocfi_hide_featured_image":"","footnotes":""},"categories":[16],"tags":[19,31],"class_list":["post-210","post","type-post","status-publish","format-standard","hentry","category-shanes-really-deep-insights","tag-exit-planning","tag-selling-a-business"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>The Coming Small Business Exodus | CFO Services | B2B CFO<\/title>\n<meta name=\"description\" content=\"Somewhere between 8 and 10 million small U.S. businesses owned by baby-boomers will come to market over the next ten to fifteen years.\" 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