These strategies and top tips when selling a business in California will increase your chances of success. Successfully selling a business requires a great deal 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 approximately ten buyer inquiries to reach a potential buyer who has the necessary qualifications to purchase the business.
There is not a shortage of buyers; instead, there is a shortage of buyers who possess the right industry and management experience, a down payment, a good credit score, and, most importantly, the motivation to navigate the business buying process.
So if you find the right buyer, you need to have you’re “A” game ready.
Here are 5 tips to use when selling a business. Do not forget to prepare and be ready.
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 whether the business meets their needs.
Assuming you know what the buyer wants is entirely different from clearly understanding what the buyer wants to know from you and whether 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.
3. Improper pre-sale planning and lack of organization.
There are numerous steps involved in successfully selling a business. Being organized and having all the right processes in place is a crucial starting point for achieving success. This includes the legal forms and processes that you want a buyer to sign, such as a confidentiality agreement, the buyer’s financial statement, and the buyer’s disclosure.
4. Answering the question before the buyer asks.
Be careful to understand the question and then provide the correct 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 all questions as clearly and honestly as possible. Too much information provides more questions; not enough information suggests something is being hidden.
5. Allow the buyer to feel a sense of control in the decision-making process.
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 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 most complex components to create.
Selling a business requires a lot of patience, ensuring it’s clear what you are selling, and organization, so you can respond to questions and requests for information while being alert to answer questions at the appropriate time.
Are you thinking about selling your business? Would you like to know the value of your business? For more information, please visit my website, Business Valuation.
For more immediate help, you are welcome to send an email to Andrew Rogerson or give me a call at (Toll-Free): (844) 414-9700
Further reading
Buyer Traits to Look for When Selling a Business in California