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One significant perk of being an entrepreneur is that it provides freedom.
The freedom to be your own boss.
The freedom to control your financial destiny.
The freedom to build a business you’re passionate about.
These are all great advantages of becoming an entrepreneur.
However, those same advantages can one day feel like a ball and chain if you haven’t prepared your business for sale.
On the latest episode of the Inner Edison Podcast with Ed Parcaut, we talked about the importance of preparing an exit strategy for your business when it’s time to retire.
We spoke with Joshua Lindsey, founder of American Business Brokers, which helps entrepreneurs prepare their businesses for purchase.
He shared a little bit about his journey into entrepreneurism, his brokerage firm, and advice on creating an exit strategy for your business when the time is right.
A Brokerage Firm With Entrepreneurial Roots
Joshua Lindsey is, at heart, an entrepreneur.
Before starting his brokerage firm, American Business Brokers, he helped launch and sell several businesses.
His first business was in the financial services industry and focused on prepaid debit cards and ATMs. It went public in 2006.
Two years later, he launched a company in the education space. It helped students learn the fundamentals of acquiring grants and scholarships by supporting students through the ACT/SAT process and the money application process. He later sold that business.
He launched a private equity family business where he bought and sold businesses. The experience taught him valuable lessons about buying and selling businesses.
American Business Brokers
Since 2011, American Business Brokers has offered hands-on representation for sellers, assisting with negotiations and contracts.
Some of the services they provide are:
- Business Reviews
- Free Business Appraisals
- Preparing Your Business to Sell
If you’re an entrepreneur looking to buy or sell your business, American Brokers can help. As a national broker, they offer assistance for a wide variety of industries, including:
- Logistics
- Medical Staffing
- Towing Company
- Fireworks Distributor
- Retail E-Bike Business
- Online Women’s Boutique
- American Ninja Warrior Gym
- Franchisor (Commercial Cleaning)
To learn more about the process of how to buy or sell your business, contact American Business Brokers today!
The Two Things You Need to Sell Your Business
Throughout his experience in selling his own businesses and brokering deals for sellers, he has learned the two major things every business needs to prepare for sale.
Those two things are:
- To know what your business is worth today.
- What you hope your business to be worth when you sell it.
While this sounds very simplified, it does require some sophistication to pull off well. Let’s look at the first phase:
The Appraisal Process
Knowing what your business is worth today is often referred to as the appraisal process. Most business owners think appraising your business is as easy as attaching a multiple to your earnings.
Joshua says this is the wrong way to appraise your business.
To confidently appraise your business, you need:
- Financials – good accurate bookkeeping following GAAP principles.
- EBITDA – Earnings before interest, taxes, and depreciation
- Discretionary cash flow
- Comps
- Industry Standards
The Selling Process
Once you have a business appraisal, the next thing you need to consider is what your walk-away number is for your business.
The walk-away number is the number you would be willing to walk away from your business today. Your business may be ready to sell depending on where you are in the appraisal.
If not, you’ll have to decide what you need to do to reach that number. Once your business hits your walk-away number, your business is ready for the selling process.
The next steps to sell your business are to:
- Prepare your listing agreement with the number you plan to sell for
- Take the business to market
American Business Brokers can help with this by preparing a generalized listing for your protection.
As buyers show interest, they need to sign a non-disclosure agreement and a non-circumvent form with a million-dollar damage clause.
After that, they require proof of financials to ensure buyers are prepared before entering the buying process.
Does Your Business Have An Exit Plan?
If your business needs an exit strategy, American Business Brokers can help. Contact them today to see how you can get started.
As always, if you’re looking for more great interviews about business, entrepreneurship, and more, please follow the Inner Edison Podcast with Ed Parcaut.