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.

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.

Only negotiate when selling or buying a business.  This may seem an unusual heading to an article but it now keeps happening too many times and I feel compelled to write about it.

There is no question that selling a business is difficult as there are so many items to consider.  Equally, buying a business is extremely difficult not the least because the buyer may not know the seller but more importantly to the buyer, because they are yet to fully understand how the business works and what has made it successful.

When you put these basic unknowns together and add the imprecise art of valuing a business, both the seller and the buyer understand there will be a negotiation on the final purchase price of the business.  What is intriguing from my perspective is that sellers and buyers can spend a lot of time and negotiating energy to purely focus on the purchase price, which is important as the seller does not want to take less than they think the business is worth and the buyer does not want to pay any more.
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Successfully sell your business

Have you thought of using a transition plan when selling your business?  The process to sell a business is not quick and easy.  At the moment it is taking about 8 months to sell a business, if it sells.  This means the business is available for about 6 months.  The buyer and seller then complete negotiations on the purchase price including the terms of the deal.  The next main step is to start the due diligence and if both buyer and seller are still in agreement, escrow opens and then hopefully about 3 to 4 weeks later, escrow closes and the business moves from the seller to the buyer.

Even if the business closes escrow, almost without exception the buyer wants the seller to continue in an active role in the business in some capacity for a period of time.  The buyer wants time to meet and get to know the employees, set up arrangements with suppliers, put basic items in place like bank accounts, and a myriad of other items.  At the end of the day, however, it all needs to make sense for both the seller and the buyer and the best way to do that is to build a transition plan.
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To sell a business with an exit plan is simply good business.  A business is a ball of energy, never sitting still but reacting and moving in different directions as the economy changes, new tools and innovations come to market, the stress and strain from competition and the ever changing demands of customers.  The challenge to succeed, feed their family, help and create happy customers and other individual motivations are what gets a business owner out of bed every morning.  It also includes the chance to do something different, learn something new, to see the rewards of hard work, to plant new ideas and watch them grow or to help someone do something they thought they may not be able to do.

If the business owner loses the hunger to learn, be the vision and leader of the business, it’s time for a change.  Because a business is so dynamic, it requires leadership.  If this doesn’t happen it will shrivel and die.  Capital, time and energy must keep moving otherwise it will slowly die and fade away.
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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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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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One of the hardest aspects of being an entrepreneur is staying on top of some things you may not like to do because you either don’t enjoy them or simply aren’t good at them…or both.  Doing math back in school just wasn’t fun for me.  I enjoyed almost every other subject except anything to do with numbers as there seemed too many rules and exceptions to remember.

Most entrepreneurs do not enjoy numbers.  They are happy to delegate the task of debits and credits or journal entries or double entry book-keeping to someone who enjoys it.  Define your core competencies and what you do well and then delegate to other people who have the right skill set and aptitude to do the things they do well.  In simple business terms it is called ‘outsourcing.’
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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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Intellectual Property can sneak up on some businesses as it may start from a “good idea” that helps the business survive then gradually become an integral part of the business and later become a critical part of its existence. Interestingly, Intellectual Property also comes in many shapes and sizes. A business owner therefore needs to recognize these different shapes and sizes so if they choose to sell their business, they have the right legal protection in place that protects an intellectual property asset and therefore rightly earns the owner the amount it is worth.

So what are the different types of intellectual property? The IRS recognizes the following when they are part of a business transaction.
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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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In most business transactions it is standard to include a Covenant Not To Compete. The logic is simple. The current owner of the business decides they want to sell and a buyer wishes to buy the business. As one of the conditions of buying the business, the buyer stipulates that the seller cannot open the same type of business that the seller currently operates as the buyer is concerned the existing customers will want to do business with the seller rather than transfer their loyalty to the buyer.

When used as a part of a change of ownership on a business between a buyer and a seller, the seller agrees not to engage in the same business or a similar business in a particular area for a period of time. Both these items form part of the negotiations. Generally the buyer wants the geographic area to be as large as possible while the seller as small as possible. Additionally, the buyer wants the time period to be as long as possible while the seller wants it to be as short as possible. Obviously, if the seller is retiring and no longer wishes to be active in a business, the time and geographic area may be of little concern and so they are willing to accept whatever the buyer wants.
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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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