Selling a business is a massive undertaking. Whether the reason for selling is due to retirement or lack of interest, you hope to gain a profit from the sale of a business that you have worked long hours to grow. With brokers’ fees, however, you can see your profits rapidly dwindle. This might lead you to wonder if you should even bother. How can you avoid losing too much of your hard work when selling a business? Here a few strategies to act as your own broker and save money selling your business.
Prepare Your Business for Sale
The first thing any broker will say is that you need to make your business as attractive as possible to buyers. This may mean doing repairs on your store front location or finding ways to boost your profits so that potential buyers feel like they are investing in a business that will perform solidly. The earlier you begin this process, the more stable your business will look to buyers.
You will also want to gather up any paperwork related to your business well ahead of when you place your business on the market. Items like leases for company property, inventory lists and tax statements for the previous several years should be gathered early so that you are not scrambling to find this information when a sale is imminent. You will also want to procure copies of our profit and loss statements and balance sheets for the last three years including the current year for your presentation to potential buyers. They will want to see hard facts about the profitability of your business before they make any offers.
Do Your Research
Everyone has an ideal price in mind when they plan to sell their business but due to market expectations or other factors that price might not be realistic. The next step you will want to take is to hire a qualified appraiser to give you a realistic value for your business. You can then adjust your asking price based on that information so you don’t accept too little for your hard work and so that your business does not languish unsold for years on the market.
Once you have an asking price in mind, it is time to find places to list your business for sale. Many potential buyers are turning more and more to the Internet to scope out businesses that they might be interested in. You can list your business on various websites that attract buyers. You will want to prepare a short document, called a blind profile, for these browsers to look over. Those potential purchasers that contact you based on the blind profile will then want to see a more in-depth prospectus that you will want to have on hand once these more serious potential buyers have signed a confidentiality agreement.
Don’t Waste Your Time
The process of negotiating the sale of a business can be a long one. The last thing you want to do is devote weeks to hammering out a deal with a prospective buyer only to have it fall through in the end. Not only does this take time away from your business and other selling efforts, but you can potentially lose other buyers if you take your business off the market in anticipation of a sale. In order to avoid wasting your time, you need to vet any potential buyers and gauge if they are a good match for your business and are serious about buying.
Once a buyer expresses a more serious interest in purchasing your business and requests more comprehensive information based on your blind profile, you should be able to ask this buyer questions of your own. You will want to know what their expectations for the business are, how much they look to earn and whether they have the financial resources to purchase your business. You don’t want to waste time and effort trying to sell your business to someone who expects more than what your business can deliver or is not in the financial position to purchase your business.
Closing the Deal
Once you have a serious offer from a potential buyer, you may think that the hardest work in selling your business is finished. The process of working out how the business will change hands as well as the final purchase price of the business can be complicated. Your buyer will need to present you with an offer to work from, often in the form of a letter of intent. Once you examine the offer on the table, you can negotiate from there to reach a final deal. While there may be a temptation to go with the offer that promises the most money for your business, you will want to keep other goals in mind as well. Sometimes, the highest offer isn’t necessarily the best one.
Many people thinking about selling their business believe hiring a broker is necessary to get the best price and terms of sale, but, in reality, you can work as your own broker with research and effort. Not only will you have the satisfaction of knowing that the business you worked so hard to build is going into the right hands, but you will also pocket the full amount of the selling price without needing to pay a broker for work you can do for yourself.
See Also:
- 5 Tips for Managing Your Personal and Small Business Finances at the Same Time
- A Tax Guide for the Self-Employed
- Open Your Own Restaurant
- 10 Ways to Make Money Online
- Five Reasons Your Business Needs a Virtual Data Room
Want more info on selling your business? Check out these resources from Amazon:
- Selling Your Business For Dummies
- Sell Your Business for the Max!
- Sell Your Business Your Way: Getting Out, Getting Rich, and Getting on with Your Life
- Etsy 101: Sell Your Crafts on Etsy, the DIY Marketplace for Handmade, Vintage and Crafting Supplies
Photo credit: Roseberry Buildings, John Bright Street by Elliott Brown on flickr.com