Businesses in the marine industry are in high demand, especially in the Southeast. Many investors looking to buy a marine business look to places like Southwest Florida, where the industry thrives year-round, instead of seasonally. If you are thinking about selling a marina, charter company, boat dealership, boat repair company or any other business within the industry, do not take this for granted. You must be proactive in preparing your business for sale to maximize your profit potential. Preparing to sell any company can take time, and you want to be able sell while things are going well, not when you have to.
Find Out How Much Your Marine Business is Worth
Numerous factors go into valuing a company. Every business is unique and has its own strengths and weaknesses. To demand a higher asking price, you must be able to emphasize your strengths and growth potential. Since there are many different kinds of marine businesses, your uniqueness in the market will help you stand out above others and boost your value. To get the most accurate valuation for your business, you should consult with a business broker. Brokers are experienced at appraising businesses from every industry, and can help find hidden value that will increase your sale price.
Some significant value indicators for marine businesses include hard assets, location and diverse revenue streams. These factors can carry different weight, depending on your primary niche. For fishing charters, tours, cruises and boat rentals, the vessels and their condition are going to represent a significant portion of the company’s value. Boats don’t just represent hard assets; they also make the business run. If you depend on a single boat to run your business, it will be less desirable and riskier to buyers. Not only are you limited in your growth and the volume of business you can do, but if something happens to the boat, you risk losing revenue. Marine retail and equipment businesses will depend more on inventory and sales. Begin able to pull in revenue from multiple services will provide a big boost to the value of your business. For example, a company that does fishing charters, sunset cruises, rents dock space and has an equipment shop is robust and can better survive a dip in revenue in one part of the business.
Enhancing the Curb Appeal of Your Marine Business
Just like selling a home, curb appeal is important when selling a business. Making a great first impression with the buyer is crucial. You may have a profitable business, but many buyers will begin to scrutinize everything else and lose their enthusiasm if the appearance is not well kept. For marine businesses, this means keeping the entrance and parking lot clean, having clear signage, addressing cosmetic issues and making sure the property is clear of derelict boats or equipment. Pressure wash and paint where necessary, organize inventory, reduce clutter, and do anything else you can to spruce up the place. Some of these things may seem superficial, but they can add up and make a huge difference in how your business is perceived.
If your business has impending repairs that you are holding off on, it will be valued lower. Weathered docks, damaged boats or repair equipment, and safety issues are just a few things that can have an adverse affect on the value of your business. Buyers are already making a substantial investment when they purchase your business. Most will be reluctant to take on additional capital improvements after the acquisition.
Organize Financial Data
While the appearance of your business can go a long way, most buyers will want to see financial data before visiting it in person. Regardless of whether you are selling your business, your books should always be current and complete. When preparing to sell, you at least need to review them and make sure they are ready to go, and in an industry standard format. You do not want to wait until a buyer asks to start putting together financial statements. Many deals lose momentum when a buyer has to wait too long for financials. Not only do they lose interest, but it gives the impression that the business is not organized and well-run. Being prepared makes a good impression and keeps a potential deal going.
There are specific documents buyers are going to request, including tax returns, profit & loss statements, balance sheets and year-to-year comparisons for at least the last 3 years. You can even go back further to emphasize growth or peak season activity. Prepare inventory and equipment lists, licenses, contracts, environmental impact statements, permits, asset lists, payroll information and service agreements. If you own the real estate where the business operates, supply a survey and property tax records. If it is leased, provide a copy of your current lease. Last, but not least, try to pay off any high interest debt before listing the business for sale.
It is important to have all your financial data ready, but it is also important to know when to hand it over. Not all inquiries about your business will come from serious buyers and you need to be able to distinguish between them to protect sensitive information about your company. Working with a business broker who understands confidential marketing will help. A broker can filter out casual inquiries and provide financials to serious buyers and only at the right time.
Preparing Staff for Your Exit
Your business should be able to run smoothly without you. While potential buyers seeking a marine business are usually familiar with the industry, most of them are looking to invest, not work full-time. If your company is too reliant on your constant presence, it will represent a big risk factor for buyers. Make sure your management and staff can run the business without you. If not, it’s time to prepare them. For example, if you are a captain, but do not have another one on staff, you may want to pick out an employee or two who you can help get their license. Make sure all of your staff is current with safety certifications and you have a complete operations manual for the business. Consider salary incentives for key employees so that they can remain with the company. If a buyer starts suspecting that several employees may leave when the business sells, it may scare them off.
Considering the amount of time it takes to prepare to sell a business and how long it takes to find a buyer, you need to prepare for the long haul. If you are toying with the idea of selling, start working towards it now, because the process is time consuming. In the meantime, all of your prep work will not only go towards making your business attractive to buyers, but also making it more valuable and successful while you own it. If you chose to work with a broker, they can help you cut the amount of time it takes to sell by allowing you to focus on running the business while they advise you and focus on negotiating with buyers.
If you own a marine business in Southwest Florida that you are considering selling, contact Corporate Investment Business Brokers (CIBB). We have been selling local marine businesses for over 35 years and have the experience and expertise needed to help you get the highest possible return on your investment. Start with a free, no obligation business valuation estimate and find out what your business is worth.
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