Massage & Bodywork

January/February 2010

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they [want] to see if the owner has a track record of successful businesses and may factor in whether the owner will continue to be active in the daily operations of the business." Simmons says the number of financials you need to provide for this process is enough to get the job done. "Many will say three to five years of records and this is a good estimate to use," he says. "But in providing these documents, the borrower is not simply trying to show the business is 'for real.' What the lender really wants to see, in addition to the reality of the business performance, is the trend of business performance, because the trend shows whether the business is growing or fading. And that is more of a basis for making a loan than many realize. So, offer the lender as many years of records as you need to show the trend you want to illustrate." ASSEMBLE THE EXPERTS So who will you need to help you get through this process? "The business owner needs to think of assembling a team around themselves to perform certain mission-critical functions," Simmons says. This will include a broker, a banker, a lawyer, etc., and all for different reasons. "A banker is helpful to qualify the business sale proposition before it is made available so you know it can be financed to the right buyer at the asking price. You need a broker to create inquiries for the business and handle negotiations with professional objectivity. A lawyer is needed to make sure you can get a contract written that effectively communicates your interests to a buyer." Ducoff says the importance of a business valuation professional is to provide unbiased opinions of a business' value. "An expert appraisal can save time, money, and stress by ensuring your goals are realistic from the outset. The final sale price of your massage and bodywork business will depend on how badly the buyer wants to buy, and how badly you want to sell. Additionally, the objectivity of a third- party valuation will be crucial if the results are examined by others." The main reason to use a business broker, Ducoff says, is the protection of your bottom line. "Fundamentally, they are similar to residential real estate brokers and using one will result in more potential buyers, which will generate more competition in bidding. A business broker will also know how to identify the right buyer—one who truly understands the value of your business. [This way] you will leave the transaction confident that you got the best price and terms possible." FINAL WORDS OF WISDOM As mentioned, a sole practice is dependant of the massage therapist and that can be problematic for the sale. "If the owner does things to prove the business can run without them, the value will be better," Simmons says. "This would be a good strategy for any business owner who thinks they might sell in a few years to put in place now." Selling a business is a big decision. The cost of good advice will be well worth it and can have a profound effect on whether or not the business will be successful. Being flexible, however, may bring you more money, Farrell says. "Many times with service businesses, sales contracts are flexible. The selling price is paid over time and is dependent on the number of clients that remain and the amount of revenue generated by the new owners." Contracts will probably contain a covenant not to compete. "A covenant not to compete bars the seller from opening a competing business for a certain amount of time in a particular geographic area. This is standard and serves to protect the buyer," Farrell says. Whether or not you're considering selling your MT business, buying out a partner, or obtaining a small business loan, it may still be in your best interest to know its value. Having this knowledge today means you'll most likely reap a much better return tomorrow. in the Chicagoland area. Her areas of expertise include business how-tos, health/exercise, and profile pieces. She believes everyone has a story to tell and something unique to teach us. Contact her at www.writerlisabakewell.com. Lisa Bakewell is a full-time freelance writer connect with your colleagues on massageprofessionals.com 71

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