Ready to sell your business?
Are you ready to sell your business?
Does your action list include selling your business?
With the economy being so difficult for such a long period of time, many business owners who were thinking of selling their business made the choice to put the decision onto the back-burner. With good reason, their thinking was that they would not get the best price for their business. As time stands still for no one, business lending is becoming more available, the Great Financial Crisis is behind us and there is more appetite for risk by buyers, sellers are now moving forward with their plans to sell their business.
If this applies to you, the first question you will probably be asking is “Where do I start?”
The first place is to start with what you plan to do once you sell your business. Many business owners have the focus to sell their business so they can slow down and spend more time with the grand kids, play those rounds of golf they are missing out on or do some “traveling.” While there is nothing wrong with these ideas, they are things that could be done while you own the business. Just as importantly, once you have spent some time with the grand kids or played some rounds of golf or done some traveling what’s next? It’s therefore important to have a clear vision of what you will do when you sell the business. If you do not, chances are you will change your mind either just before you sell and not only waste time but have customers, employees, landlords or suppliers find out the business is for sale and result in a negative impact on the business as I have seen happen on too many occasions. The other outcome is for you to sell the business and then regret making that decision after it is all too late.
Once you know what you will do once you sell the business, the next step is to get a business valuation so you know your expectations on what you will get from selling the business are reasonable. Without exception, most business owners think their business is worth way more than it is. Each industry has its own set of characteristics that influences the value of a business. To help business owners with this step, I put together a 19 page Brokers Opinion of Value looking at the financial performance from tax returns and profit and loss statements from the business for the last 3 years and data with sales from the business in the same industry. If you want to see a sample report, click the following link: Sample Business Valuation To Sell A Business
Once the price to list the business for sale makes sense, the next step is to build the marketing material to provide potential buyers. My approach is to create two separate documents. The first document is a one page Executive Summary to share with possible buyers that provides enough basic information to either continue to inquire about the business or stop their inquiry.
If you want to see a sample Executive Summary, click the following link: Sample Executive Summary
The second document is a detailed Confidential Business Summary that discloses important information so the buyer gets a true understanding of the business but only after they sign a Non Disclosure Agreement. It does not include commercially sensitive information a buyer could use to take customers away from the business.
If you want to see a sample report, click the following link: Sample Confidential Business Summary
The many steps to sell a business
There are many steps to sell a business. It is a complicated process with many ups and downs. If you want to see a one page summary of the steps to sell a business, click the following link: The many steps to sell a business
The key to selling your business is to do it from a position of strength. This means having all material organized and ready to go so a buyer is not left waiting and distracted by other businesses they may be considering buying. It also means knowing and having finance options in place such as an SBA loan so if a suitable buyer comes along, the transaction can close without the buyer having to look for different sources of finance. As a business broker, this is part of the service I provide, that is, to approach different third party lenders to see who are willing to lend and have this available to a prospective buyer from the moment they inquire.
If you are thinking of selling your business, let me help you get the business pre-qualified by a SBA lender. Not all SBA lenders wish to lend for each business in each industry. Just recently I closed a transaction with an SBA loan that included finance for the business and real estate. It took 8 lenders to finally find one comfortable with the deal.
Finally, in today’s market it is also highly likely the seller will need to carry a note on some part of the business purchase price as it reassures both the buyer and lender that the seller believes in their business and doing a deal.
Still need more information? If you would like to know more, you can buy a copy of my book, Successfully Sell Your Business by clicking the following link to my website: Successfully sell your business
There are many steps to sell a business and they need to be organized in the right order. If you have questions or need additional information, use the following link – Send Email or give me a call on 916 570-2674.