If you are a business owner in California and wondering how to sell a business, here are five tips to follow.
To successfully sell a business requires a lot of preparation, attention to detail, and organization. Most sellers badly underestimate both what needs to be done and what to do if a Buyer comes along. A good rule of thumb is that it takes 10 buyer inquiries to reach the potential and qualified buyers. There is no shortage of buyers; there is a shortage of competent and motivated buyers, so if you find one, you need to have you’re “A” game ready.
Here are five tips to help you prepare and get organized.
1. Assuming you know what the Buyer wants.
Buying a business is a unique experience, with each transaction being distinct. Assuming you understand the needs, wants, and motivations of a Buyer is a bad practice. This is because 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 different. You must clearly understand what the Buyer wants to see from you. Also, consider 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 requirements may not ultimately be what the Buyer says to you.
3. Improper pre-sale planning and failing to be organized.
There are so many steps in 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 methods you want the Buyer to sign. Examples are the confidentiality agreement, the Buyer’s financial statement, and the Buyer’s disclosure.
4. Answering the question before it is asked.
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 good or bad.
5. Not allowing the Buyer to feel some sense of control in the decision-making process.
The standard practice is for all parties to try to control the process. Most deals collapse because one party doesn’t understand what or why a question or process is being followed at this point in the transaction. Trust is one of the most complex components to create.
Selling a business requires a lot of patience, making sure it’s clear what you are selling, and is organized 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.
Are you thinking about selling your business? Would you like to know the value of your business? If you would like more information, please visit this page to learn more about Business valuation.
For more immediate help, you are welcome to send an email to Andrew Rogerson or give me a call toll-free at (844) 414-9700.