Do you want to sell your business and sell t quickly? According to the California Association of Business Brokers it is taking about 8 months to sell a business. That is the good news. The bad news is that only about 25% of businesses actually sell. If you want to sell your business and do it quickly consider the following suggestions.

1. Have a reasonable listing price.
2. Be prepared to negotiate.
3. Have a folder of information readily available for a qualified buyer.
4. Run the business as usual.
5. Make sure the business presents well; give it a “spit and polish.”
6. Get the business financial statements such as Profit and Loss up to date and keep them up-to-date.
7. Put together a current list of Fixtures, Furniture, and Equipment (FF&E).
8. Count all inventory so you know the value before you list the business for sale. This helps the buyer understand the final purchase price and reduces one of the many areas of negotiating a deal.

Motivation to sell a business

If your motivation is to sell your business quickly, be careful how you handle each buyer inquiry. If you disclose too much information too quickly it may result in a lower offer from the buyer. Additionally, the buyer may sense your urgency, also contributing to a lower offer or in some cases, frightening the buyer away as they may have a concern you are trying to hide something.

According to the California Association of Business Brokers, it takes about 7 1/2 months to sell a business; if it sells. Once you receive a written offer from the buyer and start the negotiation process, it will take anywhere from 6 to 8 weeks to close escrow if the sale includes inventory. It may take longer if a special license is necessary such as selling alcohol, selling firearms, a contractor’s license or some other specialty.

Selling a business comes with complexities

There are many complexities to sell a business. You have to deal with landlords, keep things confidential from customers and suppliers, franchisors, lenders, creditors, family, friends, attorneys, accountants and more. Using the services of a qualified business broker can protect you and your business and achieve your goal of successfully selling your business in the shortest time possible for the highest purchase price.

Owning and operating your own business is very much a part of the American Dream.  Not everyone is qualified to live this dream but to help qualified buyers, the US Congress through the Small Business Administration (SBA) has put together a third party lending program.  The SBA itself does not lend money direct to would be entrepreneurs, rather they allow qualified banks to manage and execute loan programs that meet criteria set by the SBA who will in return, underwrite a portion of the loan to lessen the risk of the banks.  The rules are complex and change in reaction to the economy.  However, a prospective borrower needs to put their best foot forward or their loan will not be successful.  Here are 10 reasons your request for an SBA loan more than likely will be declined.
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Hopefully you will make a New Year’s resolution which includes building a business plan and in it, your personal and business goals.  You will also do a budget to make sure you can afford to execute what is in your plans.  Hopefully you are rested and as they say, “all dressed up and ready to go.”  You are also saying “Bring it on.”  My question is therefore, you know WHAT you want to do but HOW are you going to do it?

Chances are you have a list of projects and tasks you want and need to do.  It probably does not include answering phones, sending and receiving emails, reading articles and newsletters, attending conferences, staying on top of compliance items that affect your industry but numerous day to day activities that lead most entrepreneurs at the end of the day to say “Where did the day go?”  That’s the point of a Productivity plan.

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The sales and marketing plan is a document that most entrepreneurs don’t have time to put together.  I’m not sure why that is as it’s just as important as the business plan and indeed complements it.

The business plan outlines the vision, strategic direction and business and financial goals of the business.  The sales and marketing plan breaks down the business plan to show how you are going to get there and the tactics to use to attract the right customers.

The sales and marketing plan can be as complex and as detailed as you wish to make it.  It can include a list of tactics you could deploy, it can list and detail only specific tactics you plan to use or a combination of both.  It’s important, though, that you understand how each idea is to be used but you have some idea of the expected results each tactic should bring to the business.  There is an old adage in business management: If you cannot measure it you cannot manage it.  There is also a famous quote that says “I’m convinced that 50% of my marketing is effective, I just can’t tell which 50%.”
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Whether we are a business or an individual we need to understand ‘our tax position.’ Perhaps you are a business owner who is thinking about selling your business?  You have been doing this for many years and you have made the decision to sell and move to something new.  You are probably burned out, have a concern about your health and decided to move to a bigger and better idea.  Congratulations!

So step one is the decision to sell.

What should step two be?
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When talking about good strategies to limit the amount of tax the owners or the business has to pay, there are three issues to consider.

The first issue, which tends to be the most obvious but also the most difficult, is to encourage business owners to take advantage of solid tax planning.  The demands of owning and operating a business especially during a difficult economy does not seem to provide a good Return On Investment for the time or money it may cost to find out the best direction to go.  By avoiding good tax planning can in turn mean the business pays more than its fair share of tax at both the business and personal level and that does not make a lot of sense.
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The obvious question to ask when you plan to sell your business is “How much of the final purchase will I get to keep?”  That seems a very fair and reasonable question.

Unfortunately, it is not a quick and simple answer.  The buyer of your business will make a final decision to buy the business based on the maximum operational cash flow they can get from the deal.  The seller has a different agenda which is to maximize the amount of the purchase they get to keep after paying all taxes.
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How do I minimize the tax I pay when I sell my business? You have made the decision to sell your business.  You have decided what you will move to once the business is sold.  You have a valuation so you know what your business is worth.  You’ve looked at the business with fresh eyes and have it looking good so when a buyer comes along they will like what they see.  As they say in the Classics, you are all dressed up and ready to go or as I like to call it, you are seller strong.  That is, you know where you are going and how you want to get there.

However, there is a final piece you need to know so you can maximize the value from selling your business and this is to understand how much tax you will have to pay.  This may seem like a waste of time and money but in fact it is the opposite; and here’s why.
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If you are thinking of selling your small business, one of your first questions to answer is more than likely; where do I start?

One of your first starting points is to be clear exactly what you are selling.  This may seem obvious but many sellers think they will deal with it when they get an offer.  So let’s break this down and look a little more closely at it.

In simple terms, the two most important things to a buyer when looking to buy a business are current cash flow and potential.  From the buyer’s perspective, the cash flow is the fuel that feeds the business to pay the suppliers, employees, landlord, tax man, lenders and to keep the business going.  In addition, they need cash flow to feed their family, pay the mortgage, pay any loans and have something left over after all their work and capital investment in the business with a little in reserve in case something unexpected happens.
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Not everyone will agree but I am sure it’s close to the truth that buying or selling a business is unlike anything else.  Here are four reasons.

First, the price to list a business for sale generally comes from a valuation.  The rules of a valuation come from the law and legal cases as well as the Internal Revenue Code and custom.  The price for most other items of value come from market comparables (for example, when valuing a house), looking up a book or some online site such as Kelly Blue Book (for cars) or results from eBay or some other online service (for any item.)  That is, there is no legal interference with the value of any of these items except a business.
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Over the years, the sale of many businesses includes a component of seller finance.  Since August 2008, a component of seller finance for privately held companies has become much more the norm as banks and third party lenders have been reluctant to lend.  It’s become important not only because the banks have reduced their amount of lending but also because the banks are now reluctant to loan as much of the purchase price.  For example, in previous years, if the buyer brought a down payment of 20 per cent the bank was willing to lend the remaining 80 per cent.

So the good old days are now behind us with the banks now preferring the buyer to bring a down payment of 20 per cent, the seller to carry a note of 20 per cent and the banks will then fund 60 per cent as long as the seller moves into second position.
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How do I know the value of my business?  The main starting point for business owners thinking of selling their business is a valuation.  Almost without exception, business owners think their business is worth much more than it really is, so a Brokers Opinion of Value helps the business owner understand the price at which the business will likely sell.

Just as importantly, it also gives me, the broker, a chance to look at the financial statements of the business to know what’s going on and ask questions a buyer will ask.  That is, the question I try to answer when putting together a valuation is “What will the buyer see?”  By asking this question, I can isolate the strengths and weaknesses of the business and provide an impartial view of the chances of the business actually selling as well as point out any potential deal killers a seller may not see.
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The law requires us to put on a seat belt when we get into our car and drive. The law also requires us to have car insurance in case we have an accident. Perhaps we do not like the government telling us what we can and cannot do but one thing the government does not tell us to do is put together a sound personal financial plan.

For those of us closer to retirement than the early stages of our career, if we do not have a sound personal financial plan then our chances of enjoying our retirement are becoming less by the day; or as now seems more and more likely, the date we start our retirement will be pushed out further.
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There is a US Court of Appeals judge by the name of Judge Learned Hand and he lived from 1872 to 1961 or until he was almost 90 years old. Originally from upstate New York, Hand graduated from Harvard Law School and became a lawyer. At 37 years of age he became a judge appointed to the Federal District of Manhattan and he became well known and respected for the quality of his judgments.

What caught my attention was one of the best quotes I’ve read regarding the paying of taxes. His quote is “…over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do it right, for nobody owes any public duty to pay more than the law demands.”
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If you embrace the saying “Two things in life are certain: death and taxes” and you own a business, it is a good idea to put a plan in place to protect the business. You protect the business not only when you own and operate it but just as importantly when you decide it is either time to sell so you get the best and highest price possible or if you decide to transfer it to your children or employees, it is in the best condition possible.

If the plan is to transition the business to a new owner and do it over a one to three year time period, the best way to do everything correctly is by using an Exit Plan. So what’s an Exit Plan?
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