In my home, the holiday season provides a six-week window for great conversations with friends, families and co-workers. It is usually an upbeat and positive time. Conversations with lasting meaning take place – about the future, the upcoming year, what’s next.

And, if you are a business owner, especially one approaching retirement age, caring family members may bring up whether or not you are thinking about keeping your business in the year ahead or taking more time for other important things.

The holidays can be a good time for business owners to talk to family and think through selling a business and how that sale can maximize positive impact for themselves, their families, and their future.

It’s really important to get the facts about the business-for-sale market for the after-dinner conversations. And, there are several reasons why this is a really important time to think through this.

First, there is a SURPLUS of QUALIFIED BUSINESS BUYERS lined up that are interested in purchasing businesses right now. It is a seller’s market – sellers can expect multiple offers for the right opportunity!

Second, Solid Businesses are SELLING QUICKLY – there is an extraordinary amount of pent-up capital waiting for the right opportunity. Sellers will be the beneficiaries of this situation.

Third, Businesses are SELLING at a PREMIUM – COVID 19 has created the backlog of capital and buyers that is driving demand in most industries. Owners should understand the demand.

Every business owner should have all the facts so if and when the conversations start, they are the one with the real numbers and the options.

A business broker can do the homework – which facilitates better decisions. They know that sometimes the more successful an owner is now, the more difficult it is to imagine ever selling the business – even though better things lie ahead. It’s important to have the facts either way.

Remember: the best time to sell a good business is when it is still a good business, and right now the market is really much better than anyone could have predicted. A business valuation would be a good thing to have completed going into the holiday.

Thanksgiving is just around the corner. I hope you enjoy your family time and are ready for any family discussions you may have about the future of your business.

Aaron Thom

Sunbelt Business Advisors

Elections have consequences.

Trouble is, for busy business owners, many of those consequences don’t become evident until after the fact; when it’s too late. Take tax policy and how it might affect a small business.

Capital gains, income earned from appreciating assets—rather than wages—constitutes a large portion of income for taxpayers in the highest income brackets; many, successful small business owners who are in the process of selling their successful businesses.

The Tax Foundation has completed analysis on the following:

  • This year, Democratic presidential candidates have suggested that long-term capital gains and dividends income earned by the wealthiest Americans should be taxed at ordinary income tax rates rather than the preferential rates.

  • Raising capital gains rates for the highest income taxpayers makes the tax code more progressive but reduces economic output and national income. The potential revenue of each plan varies by how the plans address deferral treatment of capital gains.

  • One recommendation is to tax capital gains at ordinary income tax rates on those with incomes over $1 million.

If you are a business owner and considering the sale of your business, any recommendation that will impact capital gains should be researched – get familiar with what is being recommended.

Some capital gains tax increase recommendations take the rate from just over 20% to over 40%. A business owner would need to increase the price of the sale of a business by a significant percentage (upwards of 30%) to make up for the increase in capital gains.

Is this realistic?

All the more reason to work with an experienced business broker when you are considering the sale of your business; and, if you are ready to sell, the time to do might be now, before any changes in capital gains tax take place.

Despite the impact of COVID-19, business sales are starting to pick up across many vertical industry sectors, and there is a lot of pent-up capital in the hunt for the best opportunities.

Sometimes we get so busy in the day-to-day aspects of running a business, we can’t stop and take a look at what might be ahead. However, election season is a great time to do so.

This blog post is not intended as political commentary.

Aaron Thom

Sunbelt Business Advisors

During these stressful times and disruptions caused by COVID-19, small businesses everywhere took on the challenge of adapting to survive. The unique nature of Coronavirus means that some of the typical business practices went out the window. Former business procedures and attitudes had to be reimagined in the face of a global pandemic. Businesses had to reshape customer interaction through change in processes, technology, and added safety measures to best accommodate for customer satisfaction and compliance with ever-evolving state/local guidelines.

There are two areas that businesses should focus on: connecting with customers and understanding how to serve them better. 

The success of business is directly tied to the ability to connect with customers. The unique and ever-evolving landscape of Covid-19 has caused business to adjust traditional protocol. Businesses need to demonstrate their commitment to meeting their customers’ needs. We recommend starting by brainstorming all the ways that your business could connect to its customers. Some examples include:

  • Advertising: One of the most important ways to gain market share is figuring out ways to stand out. Increasing advertising during a period where many businesses reduce their advertising can give your business a competitive edge. Additionally, due to the decrease in advertising spend, your dollars will likely go further. Examining low-cost communications of marketing (blogs, weekly emails, newsletters) can also help target your key audience. 

  • Social Media: Utilizing social media is an inexpensive strategy to connect with customers. It is an underused tool for small and mid-size businesses during chaotic times. Small businesses can be creative and inexpensive. For example, hire an intern to help focus on building your business’ presence. Businesses should consider utilizing marketing automation tools such as Constant Contact and HubSpot to produce consistent targeted messages, to keep your business top of mind. 

  • Understanding the unique needs of each customer: Every customer is different in how they are approaching COVID-19. Understanding how comfortable each customer is in this era of uncertainty determines how you interact/serve them. Some may be comfortable with socially distanced meetings, while others would wish to solely be remote. Connect with your customers through surveys or phone calls to better understand how they would like to engage with your business.   

Once you understand how to better connect with customers, then you can embark on the mission of better serving them. Changing service models to be safe, effective, and low-cost can greatly benefit your business. Adapting to a delivery/pick-up model can result in better safety and better access during times of restriction. Figuring out how to create a more streamlined website can mean easier access for your customers and ultimately result in long-term lower cost of serving customers. A final measure is increasing the safety of your business overall. Instituting company-wide measures to ensure careful attention to customer safety can have a beneficial result.

After making these adjustments, let’s make your business ready to sell. Our business brokers hold the knowledge on how to maximize sale prices during the COVID Era. A broker is a key player in understanding and preparing your business to sell in its best condition. Added attention to better business practices during COVID-19, coupled with a broker, your business can appeal to a broader audience and mean a better deal for you. With services such as business valuation, financing, and business planning, a business broker has the tools to help your business result in the most successful sale.

Aaron Thom Sunbelt Business Advisors

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