The notion that small businesses drive America is not a cliché that can be easily dismissed; there are some hard-to-dispute numbers that support this notion.
While supranational, publicly traded, behemoth corporations unquestionably make a big contribution to our economy, smaller enterprises employ half of working Americans and regularly generate roughly 60 percent of new jobs (U.S. Census Bureau statistics).
In line with this, small business owners are among the most sought-after clients. If you’re fortunate to have some of them on your client list, there are special considerations in providing them with top-notch service, especially if they are considering selling the company. Bear in mind that if you’ve been selected to guide your client through this sales process, the sale most likely represents the lion’s share of their life’s work and will likely be intended to fund their retirement.
Perhaps the most difficult part of this process takes place before the sale actually begins: establishing a realistic price. This requires the utmost sensitivity to your client, because their business undoubtedly represents countless hours of toil and a lifetime of hopes, ambitions and dreams. Very often this business has been passed down through the family. It may be an important part of the client’s identity. As a result of this emotional tie-in, they may not have realistic expectations for the sale price.
One of the best ways to steer your client away from chasing phantom, top-of-market prices is to encourage a sale sooner rather than later. This will make it possible to survey the genuine appetite for their business, and will give them time to make the necessary adjustment in their price expectations. However, this process cannot begin until all aspects of retirement have been considered, including the usual issues of future income and likely expenses.
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The most overlooked aspects of selling the small business is that additional input of time and money may likely be required during as well as after the sale. It is reasonable to expect that the sale may take years to come to fruition, thereby necessitating costly maintenance and even equipment upgrades. Additionally, if the business is service-based, the new owners may require that the previous management remain on board for a period of time to ensure carry-over of the key client base.
For more information, please read:
How To Help Small Business Owners Prep for a Sale | Wealth Management