Should you Start Selling a Business in this Economy?

Selling a business for whatever reason is affected by the current economic status of a business community.  Whether a business owner should start selling now depends on the reason and the gains he or she expects from the sale. This article discusses the issue further.

Even if you have planned and scheduled your exit strategy, there is still one factor that you cannot possibly foresee accurately - the economy.  For a small business owner, the business mindset is usually focused on the local or the immediate market.   But when you decide to sell, the scope of concern and prospects gets wider.  However, the economic health of a business community is only an important factor if you wish to sell at a profit.   Otherwise, if your goal is simply to retire and have just enough then price, buyer profile, employee welfare and the present economy are not main considerations.   In this case, anytime is the right time as long as the sale is completed immediately.

 The present economy is also not a factor if you are selling a business that you wish to continue and flourish.  In this case, the buyer’s profile is more important than price and the time element.  In situations like this, the right buyer would most likely be from within the business.    In short, the reasons for selling a business dictate the factors that matter, whether it is price, time, economy or buyer profile.  And the only time the current economy is a concern is if the seller wants to dictate the price and terms of the sale.

In a healthy economy, banks are more confident in lending money.  The creditors who are subsequently the investors or your actual buyers are most likely to have higher budgets.  But in a struggling economy, it’s usually a buyer’s market.   This is when there are a few buyers and more sellers.  The buyers have more options so they dictate the price.  You can raise your list price as much as you want but when the negotiations start, prepare for some serious bargaining.

The economy is in the state of recovery and small businesses are booming.  And if you are thinking of selling a business now, you’re chances to sell profitably will depend on the preparations you make.

Presentation is key.  Work with a business broker who understand your industry and work on improving your cash flow, your financials, your marketing plan and your business plan.  Make changes in key operations if necessary.  Remember that your business should look good for your buyers and their financial backers.

In the end, the outcome of selling a business does not entirely depend on economic status but on how prepared the business is for the buying market.

Advantages of Merchant Cash Advance

The Merchant Cash Advance funding alternative has been around for almost a decade.  It has given small businesses a lifeline when the cash flow is less than favorable.  For some it provides the needed freedom to put plans into action and fund necessary changes to improve their product, service or place of business.   

For small business owners who are new to the Merchant Cash Advance option, here is a closer look at what the service is all about.

·         Merchant Cash Advance providers require very little documentation and verification. Compared to bank loans that require tons of paperwork, all the merchant cash advance provider would require from you is your basic business information and credit/debit card history.  The financing company will use this information to determine the allowable loan amount and payment terms.

·         Your credit score is not a consideration for approval.  The chance for approval is usually at 95% because credit scores are not taken into consideration. Your approval will be based on your actual earnings and the perceived future earnings along with a few requirements that you may already have.

·         Very minimal qualification requirement. Yes, there are requirements but most small businesses have the requirements already.  The following requirements are a must Merchant Cash Advance applicants: A credit card/EFTPOS (electronic fund transfer at point of sale). Depending on the MCA provider there is a minimum debit/credit card sale per month.  The minimum requirement is usually between monthly sales of around $7000 to $10,000.

·         No collaterals needed.  There is no need to tie your assets with a loan and placed in jeopardy especially if the sum you need is not substantial. 

·         There are no interest rates and no monthly due dates.  The most stressful thing about small business loans from banks are the monthly payment and due dates that small business owners need to adhere to.  Not being able to keep up with the payment due dates means more cost for the business because of the accrued surcharges and penalties.  This is particularly stressful for seasonal businesses such gift shops, tourist shops and specialty stores, services and establishments.   With Merchant Cash Advance, this stress is avoided because the payment scheme is based on how much the business is making.

·         Payment is made daily but is in proportion to your actual sales.  Payment is set at a certain percentage of the daily sales usually at 10% to 20%. So even if it’s a slow month, you need not fear a default on the loan. Payment is automatically transferred to the MCA provider’s account by the credit/debit card processing company.  No need to rush anywhere to make payments. 

The Merchant Cash Advance financing model has recently risen in popularity and there is good reason that for it.  If you feel that your business needs financial assistance for whatever reason without the stress, this service may just be the right one for you.