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On Selling A Small Business
Selling A Small Business
The
Keys To Successfully Selling A Small Business
Selling
a small business may seem like a hopelessly complicated and
difficult process. But in truth, if each task involved in selling
a business is looked at separately and handled one
at a time, the challenge of selling a small business 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 small business, you might be pleasantly
surprised.
Here
are 4 key elements to successfully selling a small business:
1.
Put It On Paper - Nothing harms the sales process
of selling a small business 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 business
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 a small business
is a business appraisal prepared by a certified small
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 business
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
a small 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 a small 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 small 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 when selling a
small business, 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 On Selling Your Small Business:
3
Questions You Must Ask Before You Sell Your Business
What
Business Buyers Want
Selling
A Business - Why Confidentiality Is Important
Why
It Is So Hard To Sell Your Business
Do
You Need A Business Broker To Help Sell Your Business
How
To Choose A Business Appraiser
If you're selling a
small business then TheBizSeller.com can help. Read how you
can get pre-qualified business buyers, guaranteed confidentiality
and all without paying a business broker commission go to:
Selling
A Small Business
