Successfully Sell Your Business in 10 Steps
Pinpoint Motive to Sell
Have a good reason to sell your business. A bad day or employee absenteeism is not good reasons. Also, don’t decide to “test the waters” to see what sort of price your business will bring. Focus on your true objectives. The first item a prospective buyer will want to know is your reason for selling. The more valid and reasonable the reason, the more serious the buyer will be.
Don’t wait until you have to sell, for either economic or emotional reasons. You do not want anxiety to force you into accepting a deal that’s not good for you. Don’t make the mistake of trying to wait until after your busy season. This delay can be an unfortunate one. The best time to sell is when you are busy and the buyer can see activity.
Hire a Broker
Engage an outside professional to insulate you from the selling process. A Sunbelt Business Broker will separate emotions from sound business decisions, this process will often get you a higher price than you might obtain on your own. Your Sunbelt Broker will also insist on confidentiality to protect you and your business. Your Sunbelt Business Broker will help you in the following:
- Establishing a Fair Market Value.
- Prepare marketing strategies to present your business properly.
- Screen and educate buyers.
- Show your business discretely and confidentially.
- Represent you in negotiations.
- See the transaction through to closing.
Once you have decided to sell, and after talking with your Sunbelt Broker, gather the information needed to market and show your business. Don’t be intimidated by your numbers, just pull together what you have and are willing to disclose. The following are the key items:
- Copies of any equipment leases.
- Copy of the real estate lease or appraisal.
- Three year’s profit & loss statements.
- List the furniture, fixtures & equipment.
- Federal income tax returns for the business.
- Approximate value of normal inventory levels.
- Copy of franchise agreement (if applicable).
- List of loans against the business, balances and payments.
Remember that you are part of the marketing team. Support your Sunbelt Broker by promptly answering questions and discussing your day-to-day operation. No one knows your business better than you, please help in physically showing your operation.
Confidentiality works both ways. Your Sunbelt Broker will always stress a highest level of confidentiality to the prospective buyers. However, as the seller, you must also maintain confidentiality to aid your broker in building the image value of your business to the prospect.
Think Like a Buyer
You, as the seller, should put yourself in the prospective buyer’s position. Every time you go into your place of business, pretend that you are an interested buyer looking at this operation for the first time. How impressed are you? What can be improved in your presentation? The first impression is your most important selling opportunity.
Sell, but Don’t Neglect
There is a tendency for some sellers to “let down” when they put their business up for sale. It’s important for your prospect to see your business at its best and showing no sign of neglect. Here are a few areas to focus on:
- Keep normal operating hours.
- Repair non-operating equipment or remove it.
- Repair signs, replace lights, clean the premises, dress up your presentation.
- Remove items that are not to be included in the sale, if possible.
- Maintain your inventory at a consistent level, Keep it fresh and properly displayed.
Your broker has an obligation to bring you any and all offers, no matter the price or terms. Astute buyers will usually make low initial offers to attempt to get the best possible price and terms. Do not be insulted by low offers, this is just the starting point. You need to keep the ball rolling once an offer has been presented. Study it closely. Just because you didn’t get your asking price, the offer may have other points that will offset it in some of the terms. The right buyer may be better than a higher price. If you counter the offer, do so only on the points that are really important to you. The prospect that makes a low offer is usually the prospect that eventually buys your business.
Select Your Perfect Fit
Remember that most successful transactions are successful because they create a Win-Win situation for everyone involved. Both parties must be satisfied with the deal.