Buying & Selling a Business in Lincoln – August 2021

Buying & Selling a Business in Lincoln – August 2021

Buying or selling a business is a big venture, and whether you are the buyer or the seller when it comes to this milestone, it is an important transaction to not cut corners on. A business is a significant investment to dive into or hold onto and there is much more to the process than many realize. The Lincoln community is full of valuable assistance that is here to support you through the sale of a business and help both parties gain the most benefit.

Know Your Options

Lutz (lutz.us) Consulting and M&A Shareholder, Bill Kenedy offered the variety of ways that Lutz is able to help someone who is interested in buying or selling a business. From accounting and financial help to tech assistance, Kenedy is confident that his team will make your business sale go smoothly.

“Our Lutz accounting and financial teams can help you not only manage but optimize your financials so that you can focus on what truly matters, running your business. The talent division can help relieve your staffing burden by searching, vetting, and hiring the top talent your business needs, and the tech team can provide your startup with everything from managed network and IT services to custom software and application development to help your organization optimally function,” says Kenedy. He also suggests utilizing their M&A group for assistance with middle-market businesses up for sale, recapitalization, or new investment, with senior-level attention reserved for larger companies. Finally, Kenedy suggests meeting with the Lutz consulting division if you are a small to mid-sized company looking for business consulting solutions from risk assessment to data analytics, litigation support, business transitions and exit planning, and more.

Buying a business for the first time is a huge decision, and Kenedy offers his advice through some key issues one should consider before they invest.

“First, be sure you understand the current owner’s role in the business and his/her key relationships and knowledge. This will help you properly assess the risk to the business without the seller’s involvement. Second, make sure that you determine the proper amount of compensation (salary) for this role when calculating the amount of money the business makes. You do not want to end up ‘buying a job’!” says Kenedy.

Kenedy believes the current market for businesses that are looking to sell remains very strong. Bank financing is readily available for good businesses, and small business administration (SBA) loans continue to be an excellent way to finance the acquisition of a small business. For larger businesses, Kenedy says strategic buyers and private equity interest remain strong, and valuation multiples are at very high levels. This creates a great time for business owners who are seeking a third-party buyer as their exit plan.

Creating a Great Future

Rob Cruise with Cruise & Associates (cruise-associates.com) understands the excitement that comes with buying a business, but cautions that a buyer should ensure they are well educated before they dive in.

“Before you get too excited, slow down and do your homework. It is always important to weigh the pros and cons. Be sure to have a business valuation completed to determine how much the business is worth. A good idea might also be to shadow the business for a period of time to make your own assessment of what it is worth,” says Cruise. “If you are about to buy a business, you’ll want to know exactly why the business is up for sale. It could be something as simple as they just want to retire or something more worrisome like there is a problem with the business.”

Cruise’s business can help a potential business buyer with properly interpreting financial documents and guiding the buyer to determine the full costs of purchasing and operating the business. He says to remember the need to review documents, including the letter of intent, confidentiality agreements, contracts and leases, financial statements, tax returns, and sales agreement. Finally, after reaching a purchase price, make sure you understand the written agreement before signing.

“Don’t leave any ambiguities that could cause trouble at closing or even after the sale has gone through,” Cruise says. “Choosing to buy an existing business is a valuable entrepreneurial feat and will impact your life for years to come. With the right connection and a lot of hard work, you can be the perfect person to turn a good business buying opportunity into a great future.”

Accounting

Regardless of if you are on the buying or selling side of the sale of a business, it is helpful to have guidance when determining the value or purchase price of the property. In order to receive the best help when forming these numbers, call the team that knows numbers best: SP Group, P.C. (spgrouppc.com) We spoke to Jason Hardy, CPA at SP Group, and took some of his advice for those who are thinking about buying or selling a business.

“When buying a business, a buyer should gather as much information as possible, including prior year’s financial statements and tax returns. Past performance is no guarantee of future results, but it is a good indicator of the future, which can help determine the value of the business, and in turn, can help determine a purchase price,” Hardy explains. “In addition to providing guidance regarding the purchase price, SP Group can help assist in the allocation of assets in the purchase of the business. Asset classification in a business purchase is often overlooked, but can be vital in helping the new business owner with depreciation and amortization in the early years of business ownership.”

Hardy says that these key factors are equally as important to the seller when conducting the sale of a business, and they can lend help on either end of the transaction.
“At SP Group, we have assisted our clients with selling their business, and just like with buyers, purchase price and asset classification are key in the transition. Decisions with asset classification can determine the tax obligation related to the sale of the business. Another key factor is the collection of the sales proceeds. SP Group can assist the seller with the decision to collect the proceeds in one year or over a period of years,” Hardy says.

Buying a business could have a lasting impact on an individual and their family, which is why Hardy stresses the significance of taking the appropriate steps in the buying process. The process will involve professionals for different matters, and you should expect to stay connected to these professionals for years to come.
“With such a major decision, one of the first and most important steps is to hire trusted professionals for legal matters, tax and accounting, and for commercial lending. These individuals can help with the purchase of a business, but you should plan on using their services for years to come. The purchase of a business should be the start of a professional relationship that lasts through the life of the business and beyond,” Hardy advised.

Hardy also explained how the pandemic has affected businesses differently across the spectrum, and how a business owner looking to sell can market their value, regardless of the effect the pandemic had on them. He said that even if your business had a negative effect from COVID-19, there is still a chance to have a successful sale by focusing on the strengths.
“For sellers with thriving businesses, the pandemic has highlighted the strength of the business and should be an asset when trying to sell,” said Hardy. “For sellers with struggling businesses or having down years, the key to selling will be in the historical financial records and tax returns. Years of accurate financial information can help potential buyers in accessing the long-term impact of the pandemic.”

Accounts Receivables

Before you decide to make the big decision to buy a business, it is important to thoroughly evaluate the company’s receivables before signing the papers. If you are looking for real answers that yield real results, visit the team at AR Solutions (arsolutionsinc.com). They can help you analyze the assets and liabilities that you are considering purchasing and determine what those liabilities are, along with the likelihood that you will collect them. As a collection agency, AR Solutions can have a different skillset to offer to you compared to other accounting professionals when evaluating a business. For those who are selling, they will work closely with you to determine the reason for any nonpayment of receivables and find out how you’ve communicated with your customers to collect. Then they’ll help figure out what you might expect to bring in from them.

“For potential business purchasers, it’s important to understand that not all of the billings a business sends out are going to be paid, and it’s good to know that up-front and create a policy for handling those cases of nonpayment,” suggests Aaron Newell, owner of AR Solutions.

AR Solutions can act as an extension of your new company and is tasked with conducting direct communication with your clients. Their competitive fees are also contingent upon collection, so you do not pay unless they collect.

Help is Around the Corner

When deciding to buy or sell a business, there are many questions that need to be answered. While it may seem easy enough to answer these questions yourself – especially if you are well experienced with the business – it is best to reach out to professionals to ensure that the conversation is attending to all questions either party may have. SCORE Lincoln (lincoln.score.org) is a great place to start when entering into the sale of a small business.

“When considering the sale of your business, you need to consider its value, which isn’t as easy as it sounds. There are several companies that specialize in business sales, but SCORE Lincoln can help you start the conversation, know what questions to ask, and better prepare for the sale,” says Diane Siefkes, SCORE Lincoln Outreach. SCORE Lincoln has mentors that are available to help you through your small business journey. Offering free, confidential small business advice, they will pair you with a mentor based off of your industry, location, expertise, or even business question. Asking questions is important in this process, even if you are asking them to yourself.

“Before buying a business, ask yourself several questions: Have you worked in a similar business? Are you passionate about the business? Is this business new or has it been operating for a period?” Siefkes suggests. “Check in with SCORE Lincoln to get free mentoring to help you sort through the answers, ask more questions, and discover if it’s a good move for you.”
Siefkes also says there is no perfect time to buy or sell a business, and understands that there may be challenges related to the type of business a buyer is interested in, such as evaluating the revenue stream and government dollars that a business may have received. These potential problems may seem intimidating, but she emphasizes that SCORE Lincoln is here to help you navigate through the process.

Commercial Realty

At Guiderock Commercial Realty LLC (guiderockrealty.com), their primary focus is helping business owners make the best decisions they can about commercial real estate. Cathy Kottwitz, CPM, explained why her business is a great option to help your own.

“We have experience working with both businesses selling real estate alongside their operations, as well as entrepreneurs buying businesses who may need to negotiate a new lease for the business,” Kottwitz explained. “And if the business you bough has grown and needs more room or another location, we can help you find the right fit.”

In addition to commercial real estate sales and leasing, Guiderock Commercial Realty LLC offers other services that may benefit your business and can connect you with trust partners for other business needs. Whether you are buying or selling your business property, between the years of experience among the Guiderock team, you are sure to have it done smoothly and efficiently.

Another local company you can turn to when trying to find the perfect space for your business is Greenleaf Commercial Real Estate.They work to understand each client’s unique circumstances and objectives to tailor a strategy designed to accomplish their goals. With their experienced group of professionals and established track record, you’re guaranteed to receive valuable help reaching your goals for both your business and the community. Take advantage of their brokerage service and receive professional support through all the phases of property or site acquisition, disposition, and tenant representation. Greenleaf Commercial Real Estate also offers consulting and development services, as well as property management, which includes both facilities and asset management. Their team can offer to you extensive knowledge to whatever industry your business falls in, whether it’s in office, retail, warehouse, or industrial.

At HIP Realty (Holroyd Investment Properties, hiprealty.com), you will receive five-star services that today’s sophisticated commercial market requires. They are a full-service commercial and apartment real estate sales, management, and leasing firm, offering personalized real-estate services while employing the highest ethical standards. They also have HIP OffiCenters, or office suites that come with additional services such as receptionist services, paid utilities, phone system, free parking, mail pick-up, janitorial services, complimentary coffee, a conference room, and more. They can assist with any new or established businesses by not only leasing them office space, but with all of these additional services that come along with it.

“We can attribute our success to our accomplished, detail-oriented team, and we keep an emphasis on maintaining close relationships with our clients through quality service,” said founder Michael Holroyd. “Our property managers take a proactive approach to onsite inspections and the follow-up of details, and we hold an expert in-house accounting team. We also possess one of the strongest and most qualified maintenance teams in the industry.”

HIP OffiCenters offers a wide range of lease terms to meet your commitment level, as well as a variety of office sizes and styles – they can even furnish it for you! HIP OffiCenters are a great way to promote a professional image to your clients and customers without breaking the bank. For new business owners, Holroyd recommends exuding confidence and professionalism to your new clientele.

“New business owners need to be sure their office is convenient to find and that sufficient parking is available,” suggested Holroyd. “And first impressions matter. Be sure your office appears professional to portray confidence and success to your customers, and that anyone representing your company is providing excellent customer service.”

After the Sale

You’ve bought your business, and now you need to prepare for the grand opening. The best way to ensure a truly “grand” opening is by marketing your new business to the community, and this is where Austin Friesen with Relentless Merch (relentlessmerch.com) comes in. Offering a variety of promotional options to market your business, you can be sure that success is on the way with their products.

“We can help with promotional materials and custom apparel,” Friesen said. “We also have a graphic artist on our team that can do affordable graphic design. Custom printed and embroidered apparel is our primary focus. Right now we’re doing a lot of custom socks, water bottles, coolers bags, koozies, and kits that have a mixture of a few items.”

Friesen said that it is important for a new business to execute good marketing strategies into the community, as it will help them identify and remember you.

“Having printed apparel really adds legitimacy to a business when networking,” Friesen explained. “Handing someone something that helps them remember you will greatly increase the chances of them contacting you in the future.”

If you need help marketing your new business to the community, contact Austin Friesen and his team at Relentless Merch for all of your promotional needs.

One of the best ways to promote your new business to the community is through useful items that we all use every day. Visit Flicker Promotions (flickerpromotions.com) to browse their wide variety of promotional items, including mugs, socks, sunglasses, stickers, and much more that you can use to build brand recognition in the community.

“Flicker Promotions can help you get your brand anywhere. For example, we can customize the perfect koozie that will allow you to continue to promote your business wherever that koozie is at: drinks at home with friends, a concert, Husker tailgate, or a lake day,” suggested Owner Amy Doele.

Writing utensils are another great marketing opportunity that Flicker Promotions provides. Think about all of the people that use pens daily, whether in an office, serving in a restaurant, or taking notes. You never know when a pen with your brand is going to end up in a potential customer’s hands! Flicker Promotions doesn’t just stop at koozies and pens. They go even bigger, and can supply you with t-shirts, sweatshirts, jackets, coolers, shopping bags, backpacks, tech products, and more. If you are looking to promote your new business the community, Flicker Promotions is one of the best marketing opportunities around.

Looking to go even bigger when placing your logo? Work with the team at Sign Pro to invest in signs, banners, and vehicle graphics! Sign Pro (signprolincoln.com) has a variety of signage solutions to fit any project or budget. They offer interior and exterior signs, as well as yard signs to help you best advertise your new business. Signage is crucial to a business; 8 in 10 consumers enter a store or business they had never visited before based simply on its signs, while 60% said that the absence of signs deters them from entering a store or business. Signage for your new business is an important investment! If you don’t want to go with a sign quite yet, options like banners and flags can be created with Sign Pro, and their line-up includes retractable banner stands, x-stand banner stands, and feather flags. They can also give your company vehicle a new look using vinyl lettering, partial wraps, or full wraps. Regardless of which route you want to go with when advertising your new business, Sign Pro can help you find successful promotion.

Buying or selling a business is a life-changing decision, which is why Lincoln has specialists with careers specifically designed to help you with every step of the way during the process. Reach out to our local experts and let them help you with all of your questions and give you professional advice based on their knowledge and experience. The best way to successfully transition into or out of a business is with some expert guidance!