Buying or Selling a Business

Every week we get the same handful of questions from buyers and sellers across the country. Most of them trace back to three ideas we built this firm on: passion, timing, and cash flow. Here are the questions and the straight answers we give.

What's the Most Important Thing to Look at When Buying a Business?

Cash flow. Not revenue, not the brand, not the building. You are not buying what the business sells. You are buying what it keeps after every real bill is paid.

A business doing two million in sales that keeps fifty thousand is a job with extra steps. One doing eight hundred thousand that keeps three hundred thousand is a machine. Learn to find the real number underneath the top-line noise, and you will be ahead of most buyers out there.

When Is the Best Time to Sell My Business?

When you are doing well, and that is the answer nobody wants. The instinct is to sell when you are tired or the business is slipping. That is when buyers run, and your price collapses.

Buyers pay for the future, not the past. A growing business tells a story a buyer wants to finish, and they will compete to pay a premium for it. Sell on the way up, while the story is still being written, not on the way down while you are explaining what went wrong.

The best time to sell is when you don't have to.

Does Passion Matter, or Is That Motivational Talk?

It matters as much as anything, and it is the opposite of soft. Owning a business is hard. On the brutal days, money will not get you out of bed. Only caring about what you are building will.

Where there is no passion, there is no profit, because passion is what gets you through the years while the profit is still being built. Remember the other half: passion without discipline is a hobby. You need both.

Why Do You Say Cash Flow Three Times?

Because it is the first, second, and third most important thing in any deal. When you buy, you are buying cash flow. When you own, cash flow is your oxygen. Plenty of "profitable" businesses die because they run out of cash at the wrong moment.

When you sell, your price is a multiple of cash flow. Three stages, one number. Say it three times and it sticks.

My Business Is Profitable on Paper but Money's Always Tight. Why?

Because profit is an opinion and cash is a fact. You can show a profit and still miss payroll if your money is trapped in inventory or unpaid invoices. Profit tells you whether the business makes sense over time. Cash flow tells you whether you can pay your people on Friday.

Manage the timing of money (collect fast, pay smart, keep reserves) and the tightness eases. Ignore it, and profitability will not save you.

How Do I Get the Highest Price When I Sell?

Make your cash flow strong, clean, and provable, and sell while it is growing. Buyers and banks do not pay for cash you cannot document. They pay a multiple of the cash flow they can verify in your financials, tax returns, and bank statements.

Start running the business with the exit in mind years before you sell. Clean books, documented systems, and reduced owner dependence turn into real dollars at the closing table.

What If I'm Not Ready to Sell Yet?

Then at least know your number. The owners who get blindsided are the ones who never valued their business until they were forced to sell by death, divorce, disability, or a partner disagreement. Each of those forces a sale on someone else's timeline, and a forced sale is a discounted sale.

Knowing what your business is worth today, while you are thriving, is how you stay in control of the one decision that matters most.

Thinking about selling? Start with the number. See what your business is worth.