A Listing Agreement is More than Just a Piece of Paper

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In order to sell one’s business using the services of a business broker, a listing agreement is almost always required.

For the owner of the business, signing the agreement legally authorizes the sale of the business. This simple act of signing represents the end of ownership. For some business owners, it means heading into uncharted territory after the business is sold. For many it also signifies the end of a dream. The business owner may have started the business from scratch and/or taken it to the next level. A little of the business owner may always be in that business. The business, in many cases, has been like a part of the family.

For buyers, the signed listing agreement is the beginning of a dream, an opportunity for independence and the start of business ownership. The buyer looks at the business as the next phase in his or her life. Pride of ownership builds.

So, that simple piece of paper – the listing agreement – is the bridge for both the seller and the buyer. The business broker looks at that piece of paper through the eyes of both the buyer and the seller, working to help both parties progress through the business transaction process into the new phase of their lives.

Women Business Owners: Coming on Strong

If there were any doubt that women owners are an ever-growing force on the independent business scene, new studies of leading female entrepreneurs around the world supplies incontrovertible proof. The National Foundation for Women Business Owners (NFWBO) has been hard at work, researching the small business climate for women and identifying strong trends.

Fifty Top Women Show Trends

In one study done jointly with IBM, the NFWBO used as its subjects 50 top women business owners (plus 10 more up-and-coming) to compile these findings:

  • These women owners cover a wide range of industry categories, for example: 27 percent in manufacturing, 25 percent in retail trade, and 10 percent in real estate.
  • Slightly less than half (46 percent) of these women inherited their businesses, and more than half began their own: 34 percent by themselves, and 17 percent with others.
  • As a group, the study subjects generate $139 billion in revenue and employ more than 150,000 workers. And, the numbers keep increasing.

The Majority of Women Owners Prefer “Small”

More research from the NFWBO shows another picture: that women owners, taken as a whole, prefer pared-down operations — the very smallest, in fact.  Among the approximately eight million women-owned businesses in the U.S., 75 percent of these are one-person operations with no employees. Ownership of such a small business gives women maximum flexibility with work schedules and offers a better chance of keeping their home lives healthy as well.

Ignoring the big-business gurus who claim that small does not equal successful, women owners continue to prefer keeping their businesses small. Although the NFWBO research reveals that fewer than one percent of these businesses have more than $1 million in sales, women owners are showing strength in numbers and gaining respect from many quarters necessary for their support and growth. The Small Business Administration, for example, offers a number of free counseling and assistance programs, as well as its loan guarantee program–all helping the woman-owned business to flourish.

Women Owners Triumph over Bank Loan Inequities

Another NFWBO study shows that women business owners, for the first time ever, are experiencing access to business loans from banks nearly equal to that of male owners. A number of U.S. banks, among them BankAmerica and Wells Fargo, offer special loan programs for women business owners. Partly thanks to the rise of women to high bank positions, the woman-owned business is being seen for its untapped potential.

With easier access to loans, women owners can now be less dependent on high-cost credit card loans for financing, and they have more leeway to reinvest earnings. According to the NFWBO, all this means that women-owned businesses have developed into more sophisticated operations.

Although male and female entrepreneurs may have equal access to loans, a related NFWBO finding shows that the sexes still approach the use of credit differently. Men owners tend to use this money to help out with cash flow or to consolidate debt; women put the dollars towards business growth.

In addition to these specific discoveries, NFWBO studies also showed that, on an international scale, women owners come from similar backgrounds and voice the same concerns about important business issues. They constitute between one-fourth and one-third of the world’s independent business owners. They are also vocal, as was evidenced at an international conference in Paris sponsored by the Organization for Economic Cooperation and Development (OECD). Approximately 350 delegates from 35 countries attended the multilingual sessions and workshops.

Saying “Hello” — More Important than You Think

The telephone rings, the caller receives a message welcoming them, then she is asked to dial the extension of the person she wants to talk to. Since she doesn’t know the extension, she has to wait and listen to the office directory; then presses the extension number only to discover that the person being called is not there.

Most Americans have called a credit card company, their bank or any other large company only to get lost in the maze with no way of talking to an actual person. Then there is the “hold music,” the commercial while you wait, with more “amusements” popping up all the time. Who knows what the future holds in telephone communication.

While it used to be that the telephone was a visitor’s first contact with your business, that tradition is changing. Now it is your Web site. Today’s busy buyer now goes to the Internet to look for whatever he or she is considering purchasing. It is even easier for potential clients or customers to find your telephone number from your Web site rather than the telephone book. They can even get directions to your place of business.

In business every call or Web site visitor is a potential customer or client. You can’t afford to lose even one. After all, if someone goes to the trouble of finding your telephone number or locating you on the Web, they must be at least half-serious.

Make sure your telephone system is as user-friendly as you can make it. If it isn’t, change it. One sale or new client will more than pay for this improvement.  What is the status of your Web site? Pay a little extra to insure that it is also user-friendly. Your Web site should provide interesting and useful information on your company, your products or services, your personnel (including contact information), and anything else that will make you look like the well-established professional that you are. The more user-friendly and informative the site, the more business you will get.

Understand that the first contact potential customers or clients have with your business is either the telephone or your Web site – and probably both.

Lessons Learned: Comments from Those Who Failed

The following appeared in a study, Financial Difficulties of Small Businesses and Reasons for Their Failure, prepared for the Small Business Administration (SBA). They are statements made by individuals whose business was in financial difficulty and subsequently failed. Their comments are listed under the stated reason for failure.

Tax Troubles

  • IRS stepped in and took over the bank account.
  • The IRS threatened to repossess [our] tools of trade if [we] did not pay the $20,000 back taxes immediately.
  • When the IRS agent told us that they will put padlocks on our doors if we can’t come up with the money in one month.
  • Pressure from IRS. The IRS is “merciless.”
  • IRS was attempting to reach the non-debtors wife’s income (i.e., levy) for the tax liabilities, which all preceded her marriage to the debtor.
  • The IRS changed the locks on the business, and the business had to declare bankruptcy in order for the owners to be able to even get into the building.

Personal Profiles

  • Bank was not going to refinance her business because of divorce settlement.
  • Inability to control blood glucose level, cholesterol, etc. due to stress of dealing with creditors.
  • His wife has a nervous breakdown. He just knew they couldn’t handle their bills.
  • The injury to his arm.
  • She could not pay her medical bills. She had filed bankruptcy as soon as she couldn’t pay her bills, rather than get behind in payments.
  • Creditors were hounding him to pay his wife’s credit card. He had not canceled the cards after the divorce. He returned his but never closed the accounts.
  • “I had lost court case in trying to settle child support but lost. Was given 48 hours to settle $36,000 of debt which was impossible.”
  • And, finally, some comments regarding those who suffered a calamity that pushed them into failure, and subsequent bankruptcy.
  • The engine blew in the truck and they couldn’t afford to buy another one.
  • His van was stolen and he could no longer transport the equipment necessary to carry on his business.
  • The organization they were linked with sold out and was taken over by another organization that was hard to work with.
  • The gas explosion.
  • Death of foreman.
  • The State came in and tore up the road.

Despite the above comments, the study also suggests that entrepreneurs are often not the callow amateurs they are portrayed as being, but business veterans who have the gumption to take the risks inherent in starting a new enterprise. They are people who are often prepared to shrug off the effects of a business failure and try again; a process made possible by the “fresh start” philosophy of U.S. bankruptcy laws. Failure does not always have to be viewed negatively. It can offer an opportunity for the entrepreneur to learn and gain from the experience in order to do a better job next time.

Why Use a Business Broker

A professional business broker can be helpful in many ways. They can provide you with a selection of different and, in many cases, unique businesses, including many that you would not be able to find on your own. Approximately 90 percent of those who buy businesses end up with something completely different from the business that they first inquired about.

Business brokers are also an excellent source of information about small business and the business buying process. They are familiar with the market and can advise you about trends, pricing and what is happening locally. Your business broker will handle all of the details of the business sale and will do everything possible to guide you in the right direction, including, if necessary, consulting other professionals who may be able to assist you.

Your local professional business broker is the best person to talk to about your business needs and requirements.

Seize the Moment — Tips for Sellers (Option B)

If you have made the decision to sell your business, the wisest first move is to contact a qualified business broker professional, who can . . .

  • Advise you on pricing and structuring the sale of your business.
  • Prepare the marketing strategy, using professional resources.
  • Determine the right buyer for your particular business.
  • Educate buyers in the business-buying process.
  • Keep you informed about market reaction.
  • Present offers and point out strengths and weaknesses.

When it comes time to sell, one of the best decisions a business owner can make is to continue managing his or her business efficiently (and profitably), while depending on the services of a business broker to forge the steps of the sale. The business broker professional is an invaluable advisor during the entire process, offering both objectivity and negotiation skills honed through years of experience in the buying and selling of businesses.