The
Details
1. Pricing Your Business
Pricing is a main reason why businesses don’t sell.
Most sellers tend to overprice their business. If you
do this, potentially good buyers will be overlooked. To
avoid this pitfall, consider a professional valuation.
A third party, valuations can cost from $2,500 to upwards
of $10,000 for larger companies. If your business has
revenues in excess of $400,000, a valuation is a beneficial
option for you. Moreover, it will help expedite the sale
by showing the buyer that you are serious and have done
your due diligence. There are several common valuation
methods that brokers and intermediaries like to use, they
include: excess earnings method, a multiple of discretionary
earnings model, and comparable values are just a few.
2.
Preparation for Your Business
When presenting a business to a potential buyer it is
important to be able to be responsive to their needs.
A delay in this will slow the process, thus creating new
hurdles for you. When you sell your business, comprehensive
documentation is essential. You need a compelling package
to present your business to potential buyers; ask yourself
‘what would a buyer need to know about the business?’
You will want to include this information in a brief summary
about the business: include an overview of the business
with the products or services that you offer. Do this,
even if you are a very small business such as a dry cleaners
or deli. It will give the buyer a chance to think about
what they could do, thus bringing them closer to buying.
Also, have the sellers checklist of items ready for review.
You want to be prepared for the buyers. Get Helpful Tips
on Selling Your Business.
3. Marketing Your Business
Once you have priced and prepared the business for sale,
it is time to put it on the market. But where do you find
those buyers? There are different ways of marketing that
include: print media and internet websites like this one.
Brokers usually will pitch your business to a database
of buyers they have collected over the years, then they
begin to utilize local papers and the internet. In today’s
world, most buyers come from the internet. The internet
has become and incredible tool for the buyer because of
the ability to search businesses for sale across the country
in local cities. It has made it easier for a buyer that
wishes to relocate to another area. The buyer is able
to receive a business’s information on the website
to help them decide whether to move forward or not, thus
saving time. In addition, the seller benefits because
of the reach the worldwide web produces. MyBizMarket.com
focuses on getting business buyers to the website so that
sellers ads will be viewed by real buyers. Learn more
about selling your business on MyBizMarket.com .
4.
Handling Buyers
In today’s business market, time is the enemy. Presenting
the business to qualified and interested buyers is crucial.
Without a process to qualify prospects, you may find yourself
spending your precious time and resources dealing with
"no money down" tire-kickers who have dreams
of ownership, without the capability of buying. Your screening
process should include a few things such as: a buyer questionnaire
or profile. You will want to know their background and
ability to operate the business with your training. You
will also want to know their financial stability and ability
to buy. Don’t be afraid to ask for such information...
they are also going to be asking for proprietary information
about your business. You may also want to ask the buyer
to sign a non-disclosure agreement, which requires them
to keep the sale and any provided information confidential.
You usually do not want the knowledge of a sale out to
your employees for they may fear losing their job and
begin looking for another or they not care any longer
a give the house away, or steal. You can find out more
on handling buyers in the ‘how to’ section
for subscribers. Learn more about handling potential buyers.
5. The Art of Negotiating
Once you have an interested and qualified prospect, plan
your negotiation strategy carefully. Your goal is to sell,
not to beat the buyer at a negotiation game. You and the
buyer should work as a team to get to close-of-escrow
quickly and successfully. The first step after the buyer
makes a commitment to buy is to get it in writing, with
a reasonable deposit. Make sure the contract spells out
all the contingencies and the time frame to complete them.
Then, after the initial agreement is signed, close as
soon as possible.
6. The Closing Process
Throughout escrow you and the buyer will have many tasks
to complete prior to closing. Inventory will have to be
taken, an allocation of purchase price will be needed
if it hasn’t be been done, a UCC filing will need
to take place, financing procured, leases or assignment
of leases completed, and much more. Your Alliante Broker
will help coordinate to ensure the necessary items are
completed. Remember, your business is not sold until escrow
closes and you have the check in hand.
The 6 Steps to Selling Your Business