Are you building a business to sell or is it just a hobby? On a weekly basis I get calls from business owners asking the value of their business as they have decided it’s time to sell. The owner explains the history of the business and what their business does, which is important as I want to understand their business, their different revenue streams and then importantly, the cash flow the revenue streams are generating after all business expenses are paid.
A lot of business owners then go into detail about the potential and opportunity to a new buyer if they were to buy and own the business which is also good as a business needs to have good potential for it to be attractive to a buyer. For example, the other day I had a call from a business owner that had a shoe repair business that he worked and owned for 35 years and now he was planning to retire and so wanted to know how many buyers I could introduce to him. One of my early questions was to ask what his gross sales each year had been over the last two years. After giving me the number and I asked the cost of his rent and other expenses the business was making a little money but an obvious question was how many buyers were interested in buying a shoe repair business and just as importantly, how would a new buyer learn the skills of repairing shoes?