Operating for 40+ years, this locksmith business has much to offer in this small but growing community in Northern Nevada. The building is in a well-known shopping center and there are very few competitors around the area. The walk-in storefront and professional services welcome many new clients and makes solid customer relationships. All services of the company are designed to meet all the security needs of the customer and are backed up by years of experience and knowledge.
This Tactical and Firearms retail business is well known for their knowledgeable and generously helpful staff, which has created a loyal customer base. Many satisfied customers on various reviews have mentioned their great experience at the store and their amazement in finding exactly what they need. The meticulous retail space is located in a high traffic area locationally favorable to the many locals here in Northern Nevada, as well as the many California customers who visit the area” This retail business has many competitive advantages — including their own lines of target systems and body armor, customized gun builds, gun smithing, and firearms education. The business has an established rapport with dealers ensuring the business with hard-to-find inventory, which separates them from most competitors. Growth opportunities include offering concealed carry classes (CCW training), first aid classes, and gun building classes. With nothing but positive reviews and many competitive advantages, this business has high potential to continue to thrive.
Here’s an opportunity for an animal lover who wants to own their own business without having to start from scratch. Well-established, full-service dog grooming business. This is a Turnkey operation with many long-standing clients and referral relationships. Seller works as one of the groomers. If you love animals and enjoy promoting pet health, then this is a great business for you. Pet grooming was one of the few industries to grow after the recent shut down and there are many reasons this grooming business and pet boutique can grow exponentially.
Locally, the Reno, Sparks, and Carson City area has a small town feel with a big city attitude. The city offers excellent shopping and dining options, robust nightlife offerings, high-performance schools, including a Tier 1 University with over 25,000 students—and is just a half hour from beautiful Lake Tahoe.
From a Business perspective, Northern Nevada is highly regarded as a pro-business, low-tax environment that appeals to a wide range of business and industry. With no personal, corporate, franchise, estate, inheritance, or inventory tax, it’s no wonder that Nevada ranks #3 Most Business-Friendly Tax Climate.
Value is a tricky thing to measure. This is due in part to the subjective nature of the term “value”. How one person evaluates the worth of something will often be vastly different from how another individual would appraise the same object. As the old cliché goes, one man’s trash is another man’s treasure. Business valuation can be subjective in that an acquirer can have strategic reasons for purchase that don’t rely on traditional methods of valuation. Even so, there are a number of value drivers that consistently and predictably increase the value of a business in the eyes of potential acquirers. In many cases, business owners can make relatively simple changes that will increase financial performance, growth potential, cashflow, profitability, stability, and customer satisfaction; all of which are attractive to business buyers. The following post contains tips and information on how to make your business more valuable and easier to run.
Step #1 Develop Recurring Revenue
As business brokers, we frequently speak with buyers that are concerned with revenue stability. No one wants to buy (or own) a business that is on a revenue roller coaster. Creating a recurring, predictable stream of revenue makes the business easier to run on a month-to-month basis and provides a foundation for future growth. There a number of ways to create recurring revenue. At the most basic level, this means having a product or service that people need on a regular basis. At the highest level, it involves multi-year contracts for your products and services. Almost any business can create recurring revenue. If you want more information on this topic we recommend reading “The Automatic Customer,” by John Warrillow. You can look at purchasing options here.
Step #2 Diversify Your Customer Base
A little bit of revenue from a lot of customers more valuable than a lot of revenue from one or two big customers. Generally, if you have a single customer that is responsible for 15% or more of your revenue it negatively impacts the value of your business due to the increased risk. If the loss of a key customer would cause financial hardship, your business will be less attractive. If your revenue is weighted toward one or two customers focus on stabilizing your business by balancing your customer base. One of the easiest ways to reduce your reliance on a big customer is to sell more of your products and services to your smaller customers. Examine your existing product and service offerings for opportunities to cross-sell to existing customers.
Find new customers/markets for your existing products and services. By adding new customers and customer segments you can target groups that have diverse seasonality or cycle to minimize revenue swings. Another advantage of expanding into a new segment is the ability to target segments with different cycles and seasonality to smooth out your revenue month to month.
Step #3 Focus on What Makes Your Business Special
The markets of today are vast and filled with numerous options for customers to choose from. This forces each company to differentiate to gain a competitive advantage over competitors in the same field. Factors that make a company unique can include innovation, speed of service/product delivery, overall quality of service/product, price, convenience, customer service, corporate social responsibility and the brand message/identity. By promoting what makes your company unique, you build a loyal customer base, and you decrease the possibility that your service/product becomes indistinguishable from competitors.
The Liberty Group of Nevada, Inc., and our business brokers are here to assist in the process of assessing and building value. To see how your business scores on 8 key value drivers take our 13-minute questionnaire and get your Free Value Builder Score. https://score.valuebuildersystem.com/the-liberty-group-of-nevada-inc/kathryn-guthrie
For more information, please visit http://thelibertygroupofnevada.com/.
Bolton, S. (2020, February 26). 3 Strategies to Diversify Your Customer Base. https://www.seed.partners/post/3-strategies-to-diversify-your-customer-base.
Brown, J. (2016, July 28). Six Ways To Increase The Value Of Your Business. Forbes. https://www.forbes.com/sites/johnbrown/2016/07/27/six-ways-to-increase-the-value-of-your-business/?sh=6e271332d956.
Kenton, W. (2020, September 16). What It Means to Commoditize. Investopedia. https://www.investopedia.com/terms/c/commoditize.asp.
Tracy, B. (2016, October 19). 7 Ways To Add Massive Value To Your Business. Entrepreneur. https://www.entrepreneur.com/article/282961 .
Warrillow, J. (2016, September 26). 10 Things That Make Your Business More Valuable Than That of Your Industry Peers. https://www.forbes.com/sites/johnwarrillow/2016/09/26/10-things-that-make-your-business-more-valuable-than-that-of-your-industry-peers/?sh=6bc7f8ba770f.
By The Liberty Group of Nevada
When a business owner decides to sell their business, it is important to plan for a smooth process and transaction. From finding the ideal buyer to understanding the true value of the business, there are a variety of challenges owners can face and common mistakes that can happen during an ownership transfer. Preparing properly when selling a business can assist in preventing these common missteps.
Mistake #1: Not Having an Exit Strategy in Advance
A major mistake that many business owners make is not preparing an exit strategy in advance of their decision to sell the business. Typically, owners think about planning the transfer of ownership after they have made the decision to sell. However, it is important to start the exit planning process in advance. In doing so, owners will be given more time to consider a variety of factors including succession of management, knowing the true value of the organization, developing a pre-qualification process for prospective buyers, and how this transaction will affect the owner’s personal finances.
Mistake #2: Selling a Business When Not Profitable
When a business is struggling, owners may begin to consider selling their organization. However, this is not the ideal time because if a business is not profitable, the pool of potential buyers will be small. If a business is in trouble, it can appear less valuable to buyers and make finding one an even more daunting prospect to achieve.
When selling a business, it is vital to have the business appear in the best shape possible. This can be done through a variety of ways. Increasing the profit of the company, increasing and diversifying the customer base, illustrating a consistent source of income, and developing long-standing contracts that will guarantee work for the company in the future are all great ways to improve the value of the business. This in turn will allow a stronger selling price and attract the attention of more potential buyers.
Mistake #3: Not Getting The Business’s Affairs in Order
When many people decide to sell their business, they go into the transfer process believing that it is time to wind down their activities and begin thinking about their next adventure. This is should not be the case. Most purchase agreements contain a clause regarding continuation of business using the best efforts of the business owner. In other words you need to keep selling and moving the business forward throughout the business transfer process.
In addition to continuing your normal business operations, several additional things that must be addressed before business owners can move on. Getting the business prepared to transfer often requires reorganizing the financial statements preparing a of contracts for the ownership shift. Contracts between the business and clients, franchise agreement, vendor and supplier agreements and leases are critical to continuing operations. Failure to ensure that these relationships are prepared to be transferred has caused more than one business acquisition to fail.
Selling a business can be a long and complex process, but with proper planning and guidance, it can be not only profitable but incredibly rewarding. The benefits of a successful transition cannot be overstated. The Liberty Group of Nevada is well-aware of the laborious and often challenging process of selling a business and is equipped to assist owners in navigating through each step of the transaction. We provide high-quality service and guidance through the entire process to make the selling of your business as simple, profitable, and painless as possible. If you have any questions or would like more information, please contact us today, www.thelibertygroupofnevada.com/contact-us/.
Cohen, D. L. (2014, January 3). How to Sell a Small Business in 7 Steps. Retrieved February 10, 2021, from https://www.nfib.com/content/resources/money/how-to-sell-a-small-business-in-7-steps-63818/
Lauckner, S. (2020, November 18). Selling a Small Business: The 8-STEP GUIDE. Retrieved February 10, 2021, from https://www.fundera.com/blog/selling-a-small-business
Yuille, B. (2020, February 27). 7 Steps to Selling Your Small Business. Retrieved February 10, 2021, from https://www.investopedia.com/articles/pf/08/sell-small-business.asp
With the recent passing of the Consolidated Appropriations Act, in December of 2020, small businesses will be receiving unprecedented levels of support from the U.S Federal Government. This assistance comes in the form of the revival of many programs started by the CARES Act. This continuation of resources creates the ideal scenario to receive the funding that many need present an unprecedented opportunity both current business owners and for those wishing to become business owners.
Although frontline workers and other essential members of our nation are receiving the vaccine, the pandemic is still affecting a majority of Americans. To further combat the virus’ harmful effects, Congress passed the Consolidated Appropriations Act, 2021 on December 21st. Taking effect on December 27th, this act will continue the economic assistance provided by the CARES Act, including $325 billion being allocated to help small businesses through loans assistance programs and restarting of the Paycheck Protection Program (PPP).
The New Rules for Loans
As the nation saw the implementation of the PPP, there are numerous rules and regulations in the Consolidated Appropriations Act, 2021that lendees need to take into consideration prior to apply for and taking the loans.
For more information, please visit the official U.S. Small Business Administration website with the following link: https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program
What this Could Mean for Potential Business Buyers
As seen in March of last year, the government is attempting to provide financial support to American small businesses. This provides prospective entrepreneurs, who are looking to buy a pre-owned business, a unique opportunity. By applying for the loans offered and covered by the discussed programs, new business owners can finance their newly purchased small business with guaranteed financial assistance from the Federal Government.
This makes buying a business much less expensive and less risky, therefore more desirable for a variety of reasons which are listed below:
Typically, many people are dissuaded from owning a business due to their concerns of the major risks and investments involved. Add a pandemic that has majorly shifted the economy and job market, and it’s understandable why most would shy away. However, as the nation is seeing, there is a magnitude of support from both federal and state governments along with the idea that when businesses thrive, our economy will thrive.
The Liberty Group of Nevada understands the idea of purchasing a business can be daunting. Our business brokers are dedicated to making the process of purchasing a business an informed and efficient experience with no surprises. They bring industry knowledge and expertise to each transaction and are able to assist the buyer with their purchase. If you are interested in purchasing a business or would like more information, please visit http://thelibertygroupofnevada.com/.
The Liberty Group of Nevada was featured in the Northern Nevada Business Weekly! Take a look at our company profile below!
Today, we profile The Liberty Group of Nevada, LLC, in Reno.
Founded in 2004, The Liberty Group of Nevada, LLC is Northern Nevada’s most professional business brokerage firm. Our goal is to make the process of buying or selling your business an informed and pleasurable experience, with no surprises. Our business brokers have either owned, managed, and/or sold a variety of businesses and therefore understand the importance of providing top-notch customer service.
We believe that a fair evaluation, full disclosure of facts, and professional handling of all matters through the close of escrow are crucial to successfully buying or selling a business.
“Most of what we call management consists of making it difficult for people to get their work done.” -Peter F. Drucker
When deciding to buy a business, prospective buyers sometimes are faced with the following dilemma: Do I buy an existing business, or do I buy a new franchise?
Some of the advantages of an existing good independent business include a proven track record of sales and profits, a well-known name and location, a strong mix of products and services, a group of knowledgeable employees and a good customer base.
Buyers will be able to use the business’ established customers for immediate cash flow and as a base for future business growth. This will help eliminate what can often be an extensive and challenging start-up period for owners.
Because of seller financing, the new buyer of an existing business is able to leverage their buying potential into a larger business with bigger cash flow. Also, due to the seller financing the transaction, the seller will want to ensure that there is a smooth transition to ensure the buyer’s success.
Finally, buyers of existing businesses will have full control of the company’s strategic direction without having to share their profits with anyone else.
There are benefits with buying a franchise too.
Buyers are able to purchase an established business plan with step by step guidelines.
Most franchisors offer training and operational support due to their incentive of the royalty fees that they will earn from the franchisee. Usually, the franchisee will also have access to other owners for help, ideas and moral support.
Regardless of which path a buyer chooses to follow; they need to exercise a considerable amount of diligence. In fact, in many ways, a buyer has to ask more questions and do more research when considering purchasing a franchise.
For instance, they will not only need to thoroughly understand the business and the current economic landscape; they will also need to comprehend all the issues associated with the franchisor.
Franchise buyers will need to understand the immediate out of pocket expenses they will incur upon their purchase. They will need to research what other fees they will be responsible for paying.
Buyers will likely have to pay the franchisor a royalty as a percentage of their sales, and they may also be required to lease equipment, purchase supplies or services directly from the franchisor.
Buyers will need to explore the level of regional protection they will have. What are the franchisor’s guarantees that they will not sell other franchise in the area – and for how long?
What kind of empire building opportunities will the buyer have? Some of the more successful franchise owners are those who own multiple outlets in the same area and are able to utilize their economies of scale.
Buyers should also find out if they will have first right of refusal for new franchises?
Unpleasant as it may seem, buyers need to know what percentage of the franchises they are considering purchasing fail each year and how many close within the first two years.
Understanding the turnover rate of franchise ownership will also help paint a picture of attractiveness.
As with purchasing any business, a buyer not only needs to have a plan going into the business, they should have an exit strategy as well. Franchise buyers need to identify what kinds of restrictions they will be under when they decide to sell.
Will they be able to sell it to anyone or only to the franchisor? They should also research the comparable sales prices of franchises that have recently sold.
Although it’s difficult to make blanket statements about which franchise models are better than others, buyers need to understand where their franchisor’s interests lay before they purchase.
“More and more these days I find myself pondering how to reconcile my net income with my gross habits.” – John Nelson
I happened to find a tattered article from an old business journal which contained a variety of “absolutes” about buying and selling businesses.
It reminded me of the time a couple of years ago when I found a marketing article which talked about the importance of name recognition in successfully operating a business. A surprise came at the end of the article when I read that the article was written in 1951 by a funeral director! As the saying goes, “The more things change, the more they stay the same.”
Certainly, one of the “laws” that has withstood the test of time is “what a business buyer is really buying is a stream of earnings.” Over the years the term may have changed to “cash flow” but the principle remains the same. The assets of any business are simply the tools that help build its cash flow, a business essentially has no value. When looking at a business under these terms, a business can easily be worth less than the fair market value of its assets, or in many cases more.
Consider the following recent example from two Northern Nevada businesses. One business was a manufacturing company that had over $1.2 million in equipment and the other was a roofing company with only $45,000 in hard assets. Both grossed about $3 million dollars annually. The manufacturing company generated $200,000 in cash flow and the roofing business earned $800,000.
Even though the manufacturing company had significantly more hard assets, most buyers found the roofing business a much more attractive company because of significantly stronger cash flow. A professional business broker understands this principal and can help expedite a transaction for both the buyer and the seller by uncovering the real value of a business.
The article I found also stated that “99 percent of potential business buyers never buy a business.” Although the 99 percent figure may be a little high based on my own experiences, it’s pretty close. This by itself may be reason enough for a seller to retain a professional business broker to represent their interests in selling their business. There are a number of reasons why this number is so high.
Buyers often have unrealistic expectations regarding the price of a business and the capital required to purchase it. Or, they might have an urgent “need” to get a business but lack the courage to take the “leap of faith” necessary to go through with the purchase. A good broker knows how to separate the non-qualified buyers to get to the few who actually have the means and motivation to buy a business.
Even then, sometimes a buyer may experience a financial setback that impacts their ability to meet their financial obligation as a part of the deal. This is what happened last year when the buyer of a Reno based business that had cash flow in excess of $1.3 million lost a significant amount of money in the stock market and couldn’t excuse the deal.
Another of the article’s points was that “negotiations must stop at the signing of the Purchase Agreement.” Once this document has been agreed to and signed by both parties, there is still only a slightly greater than 50 percent chance that the actual sale will take place because of the contingencies often involved. If either party try to reopen negotiations, it will most likely lead to a collapse of trust and then a collapse of the deal.
For example, last September a buyer of a local business constantly tried to re-negotiate the purchase price. When this didn’t work, the next “strategy” the buyer tried using ways to secure more inventory than what was originally agreed to. When this tactic failed, so did the deal itself. Having a business broker involved can minimize this from happening by reminding both parties about the terms and conditions of their contract.
As mentioned earlier, even though the landscape and business environment has changed over the years, many of the reasons why a buyer and seller should use a business broker have not.
Finding buyers for an existing business can be a frustrating and time-consuming process. Surveys have shown that less than 8 percent of those who have intentions of buying a business never do.
Of those who do, there are many types of people. One is a strategic acquirer. Not to be confused with competitors, these are buyers who are interested in the synergies that are created when integrating another company into their existing company.
Competitors, suppliers and customers are another groups of business buyers. Because of the risks associated with divulging propriety information to them, this group needs to be approached very cautiously.
Another potential group of buyers is employees. Employee stock-ownership plans or selling to an existing manager can sometimes be beneficial. However, if the deal falls through, hard feelings can be the result.
Investors are another large group of buyers. Because of the recent volatility of the stock market, many investors have realized that as a business owner, the return on their investments can be significantly greater when successfully operating their own company.
Career changers have also become a significant pool of buyers. Former middle managers and executives who have taken early retirement packages are eyeing the advantages of being in business for themselves.
Business sellers should not fall into the trap of focusing all their efforts on a single prospect, regardless of how attractive it might be. If buyers know they are the sole interested party, they are in a position to control the negotiations.
Investors and career changers have certain traits. They typically have a strong business background and a real entrepreneurial spirit. Surprisingly, one trait that is usually not present is specific knowledge of the business they are buying.
This is a big surprise to may sellers. Many owners believe that there is no one who can run their business like they can. They rightfully should be proud of this. However, a new owner will usually bring a new set of competencies to the business, which can complement what is already there. The results can be extraordinary.
One of my favorite examples is the junior executive with an international mining company that had strong management and communication skills who ended up buying a flower business. The other is an attorney who had excellent negotiation and marketing skills who ended up purchasing a sub-contracting business. Even though these two buyers lacked specific in-depth technical knowledge of the business they bought, both are thriving.
Competitors can also bring innovation during an acquisition, but it can also be the other way around. A recent merger saw the purchaser implementing many procedures into his existing company that he found in place at the business they just bought.