What if I've only been in business a short time, barely breaking even and want to sell?

We are receiving many calls from companies that have been in business for fewer than two years, and they would like help selling their companies. One of the first questions we ask is, “Is your business profitable?” The response is typically, ”We are breaking even.” or "We are getting there."

Not only is it difficult to find a buyer for a company that has a history of fewer than three years, but by not being profitable or not having at least $100,000 adjusted net makes it close to impossible. The owners of these young struggling companies typically also want to recoop their entire investment including working capital.

Think about it. If a buyer could get into a business that is making $100,000, and they are asking $265,000 versus one that is asking $265,000 and breaking even, which one would you choose?

It is too soon for that business owner to expect to be able to recuperate their investment. Our advice is to either raise more capital so that you can grow the company to a place where it is saleable or possibly bring on a partner who can do what the owner is obviously not doing well. If the owner decides to close their doors, they will still be on the hook for the property lease and any equipment leases that have been signed.

There is help out there. The Service Corp of Retired Executives (SCORE) or the Small Business Development Center (SBDC) offer free advice to business owners. They have offices in most major metro areas.

Be careful before jumping into business. It is safer to invest in an existing business with a history, customers, employees and cash flow versus starting from scratch. If there is nothing available on the market that interest you...WAIT. Be patient for the right one that will utilize your skills, interest and that will be able to help you reach your goals for your next career.