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Selling Your Business
Your
Four Keys To Success
Selling
your business may seem like a hopelessly complicated and difficult
process. But in truth, if each task involved is looked at separately
and handled one at a time, the challenge becomes
much more manageable. Building a successful, profitable business
is the hard part. Selling a business is no more complicated
or mysterious. If you apply the same work ethic, salesmanship
and concentration to selling a business as you have to building
your business, you might be pleasantly surprised.
Here
are 4 key elements to successfully selling a business:
1.
Put It On Paper - Nothing harms the sales process
more than sloppy, incomplete or unavailable financial information.
Qualified business buyers have an unlimited number of business
opportunities to choose from. Few will be interested in buying
a business with financial statements that are incomplete or
otherwise not trustworthy.
Once
you've decided to sell, your first step should be to
sit down with your accountant and prepare a full set of financial
reports.
Another
written item you may want to have when selling your business
is a business appraisal prepared by a certified business
appraiser. This step may not be necessary if you're a small
service business with few assets. But many times, having a professionally
prepared appraisal comes in handy when setting a reasonable
asking price as well as when you are negotiating price with
your buyer.
Next,
you'll want to prepare a prospectus
or overview of the business. A written document detailing all
the positives of your company as well as relevant details
like a description of the facilities, a brief history of the
company, a review of the competition etc. In other words, things
you know any buyer will be interested in.
2.
Keep It Confidential - The key to successfully selling
your business is maintaining control throughout. You can't do
that if your employees, suppliers, banker and even your competition
know you are selling. Employees
tend to get nervous and distracted when their company
is up for sale. Vendors too can get edgy wondering if they are
going to get paid. Competitors may use this information to scare
off or steal your customers. The result of all this can
mean more pressure on you to sell quickly and it may make your
company less attractive.
3.
Set The Right Price - Whatever you initial asking
price, always leave room to negotiate. Any buyer qualified enough
to buy the business will have enough savvy to negotiate - so
prepare for the inevitable. When setting your initial
asking price set a range from the best case scenario to the
lowest possible price you can accept. Then, start the negotiations
at the top.
Many
buyers won't have a good grasp of
pricing formulas. Often times they'll make up their mind that
a price is fair not because of some sophisticated calculations
but simply because you've come down from your original
asking price a satisfactory amount.
4.
Negotiate Effectively - When selling a business,
everything is negotiable, not just price. If your financing
the sale you'll have to negotiate down payment, interest rate
and other terms. Apply the same
approach as discussed with price: know in advance how
much down payment you'll ask for, add some cushion and then
you can look like the good guy when you come down a little.
Then do the same for interest rate, length of financing etc.
The
bottom line is that everything is negotiable, if a buyer asks
for a certain item, don't just give it away, always seek
some kind of concession from him in exchange.
More
Articles About Selling Your Business
3
Questions You Must Ask Before Selling Your Business
Why
Confidentiality Is Important
What
Business Buyers Want
Do
You Need A Business Broker To Help Sell Your Business
How
To Choose A Business Appraiser
If you're selling a business then TheBizSeller.com
can help. To read how you can get pre-qualified business buyers,
guaranteed confidentiality and all without paying a business
broker commission go to:
Selling A Business
