Here are some tips to successfully sell your business.  Bear in mind that to sell your business successfully requires a lot of preparation, attention to detail and organization.  Most sellers badly underestimate both what they need to do and what to do if a qualified buyer comes along.

A good rule of thumb is that it takes about ten buyer inquiries to reach a potential buyer who has the qualification to buy the business.  There is not a shortage of buyers; there is a shortage of buyers who have the right industry and management experience, a good down payment and credit score and the most important ingredient of all, the motivation to move through the process to buy a business.  So if you find the right buyer, you need to have your “A” game ready so your business sells in the shortest time possible.

Here are 5 tips to help you prepare and be ready to sell your business.

1.  Assuming you know what the buyer wants

Buying a business is a unique experience; every transaction is unique.  If you meet a buyer with the right qualifications and assume you understand their needs, wants and motivations it is a bad practice as a smart buyer will not reveal their true motivations.

2.     Failing to understand the buyer’s objectives and needs

There is a big difference between assuming you know what the buyer wants and clearly understanding what the buyer wants to know from you.  The buyer has questions and needs and it will be their final decision as to whether or not this is the right business for them to buy.  If you can meet the criteria the buyer gives you…you are on your way even though the criteria may not ultimately be what the buyer says to you.  So listen and understand what the buyer wants to know and decide if it is the right time in the transaction to share it with them.

3.     Improper pre-sale planning and a lack of organization

There are so many steps to successfully sell a business.  Being organized and having all the right processes in place is a starting point to try and be successful.  This includes the legal forms and processes you want a buyer to sign such as a confidentiality agreement, buyer’s financial statement and buyer disclosure.

4.     Answering the question before the buyer asks

Be careful to understand the question and then provide the right answer.  You may be answering a different question than the buyer is asking…and that can be bad or very bad.  When you sell a business there can be great value in listening and answering as clearly and honestly as possible all the questions.  Too much information provides more questions, not enough information suggests something is being hidden.

5.     Allow the buyer to feel a sense of control

The standard practice is for all parties to try to control the process.  After all, if a deal does not eventuate each party feels they lost something even if it’s only their time.  Most deals collapse and the business does not sell because one party doesn’t understand what or why a question or process needs to happen at different points in the transaction.  Trust is one of the hardest components to create.

Selling a business requires a lot of patience, making sure it’s clear what you are selling, organization so you can respond to questions and requests for information while at the same time being alert to only answer questions at the appropriate time.

If you’d like more information on how to sell your business, you are welcome to sign up for my free monthly newsletter by clicking the following link Free monthly newsletter.  When you sign up you also get access to over 25 free documents to use when selling your business.

Successfully sell your business

Why would you bother when selling your business to include a sales and marketing plan?  After all, the sales and marketing plan is a document that most business owners don’t have time to get around to put together.  I’m not sure why that is as it’s more important than the business plan and indeed complement it but more importantly, when the business owner wants to sell their business it can be the difference in the business selling or closing its doors.

Why is it more important than the business plan?  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 be used to attract the customers it needs.  Or more importantly, the sales and marketing plan is about growing the business and how to maximize the use of precious and limited resources including money, knowledge, expertise and most important of all; time.
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The life blood of what we do as human beings and the glue that keeps us all together as a society whether at a local, regional, national or indeed international level is the ability to communicate with one another.  Many times that communication breaks down and many times this leads to negative consequences.  All entrepreneurs are familiar with a Business Plan and a Sales and Marketing Plan but not everyone has heard of a Communication plan.  So what is a Communication plan?

A Communication plan is an attempt to standardize the message that goes out from the business to its customers.  It complements and dovetails with a Business Plan and Sales and Marketing Plan.  In some instances there can be an overlap but essentially it includes all written, spoken and electronic communications.
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Everyone is familiar with the Christmas song, The 12 Days of Christmas.  Without going into every verse of the song, the carol works forward with the first day of Christmas being a partridge in a pear tree, the second day of Christmas two turtle doves and so on.  The song is full of optimism and hope that the giver and receivers of the gifts will be thankful for life, the opportunity to share and hope for the future.

From researching the origins of the song, I came across something interesting.   One of the articles I read suggests the 12 days of Christmas is not about the 12 days prior to Christmas but in fact, the 12 days from Christmas until the beginning of Epiphany which begins on January 06.  When I thought further about this, it naturally combined with another favorite thing we do during the Holiday Season and that is to make New Year’s Resolutions.
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Owning, running, buying or selling a business is a major step for all entrepreneurs.  It comes with obvious financial risk which everyone understands and is one of the key focus and responsibilities all business owners.  It also prevents many would-be-entrepreneurs from starting their journey to own and operate their own business.  However, an element not all business owners understand or acknowledge is that the business ownership comes with many emotional risks that play just as an important role as the money itself.

Emotional risks constantly challenge all business owners.  The obvious one is success or failure.  For most entrepreneurs, once they come to terms with the financial risk, they must come to terms with the fact there is a possibility the business will fail.  The fear of failure links with the real concern about what to say to family and friends.
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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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One of the services I provide is a valuation to an owner that wants to sell their business. Almost without exception, the owner of the business overvalues their business. There are many reasons this happens but I think it mostly comes from business owners seeing shares trade on Wall Street based on the gross sales or gross revenue of the business. I have recently done valuations where the company value was just over $1,000,000 but the owner thought it was closer to $10,000,000.

Just as most business owners are unaware of the true market value of the business, most business owners are not sure how their business creates value or more importantly, how to calculate the value of the business or even the return on the investment made over the years of owning and operating the business.
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So many small business owners are buried in the minutiae of running their business they forget to step back, question where they have come from and why and then make sure they know where they are going. I am not talking about the direction of their business; I am talking about one of the most important assets of the business and that is, themselves. If something serious was to happen to them, what would that mean for the business? Can it continue? What steps are in place to replace themselves or any other key employees? If the business supports their immediate family what would happen to them and how would they survive? Perhaps the joy of running the business is declining and so it’s time to think about handing the business off to some fresh blood or find a new owner?

To help formulate an approach there are two key components to use. The first is an Estate Plan which can be a standalone process, or an Exit Plan which can include as one of its components an Estate Plan.
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For many small business owners, the single most important document for their business is the lease. Unfortunately a lease is generally a long and fairly complicated document. Because of its complexity, many small business owners either accept what they receive or do the bare minimum. Here are some suggestions for you, in no particular order.

• If your lease is coming up for renewal and you wish to continue operating your business, you have a choice. Stay in your current location or move. If you are seriously thinking about moving, do an analysis to weigh up the costs and lost time to move. Landlords are very motivated to find new tenants so it’s definitely the right time to review your options.

• If you plan to move, consider getting a qualified Commercial Real Estate Agent that specializes in negotiating leases to help you. I am a member of the Association of Commercial Real Estate Agents or ACRE and they have experts in different market segments.

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If you own a business and receive an unsolicited offer to buy your business please be careful. If your business is currently for sale be even more cautious. There are con artists that have developed a clever process of taking your business from you and leaving you not only with absolutely nothing, but totally destroying your business and leaving you in debt.

Here’s a basic breakdown of their process.
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When most business owners decide to sell and they wish to be the one to start the process, the first and obvious place to start is with a business valuation. A business valuation gives the owner a reference point as to whether the price they hope to get for the business will be reasonable and/or achievable.

Some business owners choose the selling price for the business based on what they want in order to sell. They may have a certain amount of debt they wish to retire, money they need for retirement plus an ache that makes them think there business is worth a certain amount of money. Not a good basis for trying to convince a buyer about the asking price for the business.

Valuing your business using the “rumor” method.

Other valuation techniques include the “rumor” method. The “rumor” method is the price an owner chooses to use based on what he heard his friend sell his business. Rather than a friend, it could have been a competitor two counties over or something they read in the local paper. Once again, not a good method to use to convince a buyer on the asking price for the business.

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Selling a business comes with many challenges.  The number one reason most transactions don’t close after a buyer and seller have “negotiated” a deal is that the landlord cannot come to terms with the seller and/or buyer.  The number two reason is that finance is not available.

Seller prefers cash

For obvious reasons, a seller prefers cash.  Tom West of Business Brokerage Press is a writer and analyst on small business transactions.  According to West, research shows that sellers receive a significantly higher purchase price if they decide to accept terms or carry a seller’s note.  Furthermore, on average, a seller who sells for all cash receives 69.9 percent of the asking price whereas if the seller is willing to carry some of the finance, the selling price will increase by 15.8%.  For example, if a business lists for $150,000, and the seller is willing to carry some finance, they will receive approximately $24,000 more than the seller who is asking for all cash.
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Are you trying to sell your business, and quickly? Check out these tips as they may help you achieve your goal.

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.

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The following article is requoted with permission from Jean Sifleet. Jean is a business attorney in Clifton, MA. for more information visit www.smartfast.com.

New business models are emerging that challenge the old assumptions about how to operate a business for profitability.

In the book “Firms of Endearment – How World Class Companies Profit from Passion and Purpose”(Wharton School Publishing), the authors, Sisodia, Sheth and Wolfe, provide many examples of how companies that take care of all the stakeholders – not just the shareholders – achieve significantly higher profits.

SPICE is their acronym for all the stakeholders:

S=Society
P=Partners
I=Investors
C=Customers
E=Employees
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One of the companies I use for SBA 504 loans in Sacramento called GSCDC dba Capital Funding, just sent through a messaging saying:

“SBA has released their guidelines for the “Refinancing Program.” We expect to have an influx of applications. Remember, this is only a two-year program. We have highlighted the guidelines for your review below:

• Federally guaranteed debt is not eligible for refinancing (7A, SBA-504, USDA).
• Existing loan(s) to mature on or before December 31, 2012.
• Project costs up to $18,000,000 are eligible.
• Loan to be refinanced must have been used for SBA-504 eligible fixed assets (real estate and/or equipment).
• Property must be owner occupied (51% or greater).

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