NAPLES — QUESTION: I am ready to retire and would like to sell my retail business. However, in this current economic climate there are few buyers and I can’t afford to give it away. Any suggestions?
ANSWER: It is said that timing in life is everything. Unfortunately we can’t always choose the best time to make investment decisions. Developing an exit strategy is something that every business owner should start thinking about ten years prior to the sale.
There are several methods to consider. You can slowly downsize, liquidate inventory and withdraw as much cash as possible over a period of several years. This method usually entails letting good people go and that can be a tough decision in this economy.
You can sell to a friendly competitor whose methods of operation and clientele is similar to yours. You can also begin conversations with trusted employees who have expressed an interest. In both instances the buyers are familiar with the operation and have a good sense of its growth potential.
A typical buyout usually entails a third party appraisal of the business assets, customer base, and good will. Often the seller requires a cash down payment and takes back a note for the balance from the buyer, payable over time, with interest. All cash deals are rare and usually result in a generous discount to the buyer.
If yours is a family business there are several issues you must sort out well in advance of the sale. Which sibling will make final decisions? What will be the percentage of ownership and responsibilities of each? And what about the child who is not working for the company; is he or she entitled to some ownership or will you give them other assets?
Sticking one’s head in the sand like an ostrich won’t cut it. The sooner you begin the thought process the better the end result. The volunteer counselors at SCORE Naples can offer guidance and resources to help you make the right decisions.
To learn more about management issues facing your small business, contact SCORE Naples. Counseling is provided FREE of charge to all U.S. citizens and legal aliens. To register call 239-430-0081 or visit our web site http://tinyurl.com/43aqelw.
If you would like an answer to your question, please fill out the form located at http://naples.score.org/mentors . A counselor will contact you within 48 hours. Please include your name, email address and a contact phone number.