Successfully sell a business
Here are some tips to successfully sell a 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 have questions about valuing, selling your business or simply not sure where to start, you are welcome to schedule a time to talk with me.
Would you like to know the value of your business? If you would like to know the value of your business or would simply like more information, this link will allow you to get a free sample of a Brokers Opinion of Value – Sample business valuation