Is Your Business For Sale? How to Keep All of the Profits!

Does it seem like it is impossible to sell your business? Or, maybe hanging on to it just doesn’t sound like a good idea to you at the moment? After all, you can hold on to the business for another year, right? I was just like you. I had a small business that wouldn’t sell. So, I talked to as many brokers and read as much as possible about selling small business’s and this was my plan for a successful sale.

Preparing your business for sale takes more than putting an advert in the window. Follow these steps to get the best possible price for your company, and ensure that the sale goes through smoothly.

Step No 1 – Preparation

This is the most important step in the sequence, and perhaps the most difficult. After all, you need to view your business impartially, warts and all. If the shop floor or office is looking shabby, that is the first impression buyers will have of your business. Decorating and tidying up are duties that anyone with a business for sale should prioritise.

Next, look at the accounts. Is there anything that cannot be explained immediately? Writing off bad debts shows that you are being realistic about the true state of the business’ affairs, and getting shareholder loans repaid removes any suggestion of improper or unwise dealings with related parties.

Now may also be the time to seek professional advice on any outstanding legal or financial issues with your solicitor or accountant.

Step No 2 – Do you need help?

If you have a full book of contacts who are looking for a business for sale, you may not need a business broker. After all, why give away a percentage of the sales proceeds when you can find a buyer yourself? But if you do not have any buyers in mind, or if you would like to approach the market confidentially, a business broker could be worth considering.

Step No 3 – Surviving due diligence

The buyer needs to verify that all the details connected with your business are as they should be. He will ask questions and request copies of documents. This is a normal part of the due diligence that any prudent buyer should perform. As long as you have his undertaking to keep the information confidential, you should be as helpful as possible in providing documents, to push this stage of the deal along.

Step No 4 – Negotiation

Even if negotiation is a skill that comes easily to you, agreeing a satisfactory price will be stressful, and perhaps even emotional. The business for sale represents years of your hard work; so adopting a reasonable, approachable but firm demeanour will ensure that you get an acceptable deal.

Step No 5 – Completion!

So the ink’s dry on the documents and the money is in the bank. You no longer have a business for sale, so you can relax, right? Generally, yes; although make sure that you comply with any post-completion restrictions, like refraining from carrying out a business nearby with a similar name.

Listing a Business For Sale

Listing your business for sale is an experience that most business owners are unprepared for. Too many small business owners liken the experience of selling a business to that of selling a piece of property. Any experienced business broker can tell you differently though. This article will touch on some of the key factors that suggest a prudent move is to properly plan before you list your business for sale.

Business Performance Needs to Show Improvement
If your business has been stagnating and the profitability declining then a buyer may not be very interested in purchasing it. Spend the months (or years) it takes to show a prosperous and growing company. If sales are on the decline determine why. Perhaps you must refocus your sales efforts or add new products to your mix. If your margins are retreating then examine all of your expenses to determine if there are any savings that can be realized.

Get Your Financial Information in Order
Spend the time and money it takes to have accountant prepared financial statements. Do not look at this exercise as an added expense but, rather, an investment. When it comes time to sell your business then you will have better luck with the buyers and they will have greater traction with the bank when they go for the acquisition financing.

Documenting Processes Takes Time
A business where the success is dependent largely on one person has what is referred to as key person risk. These are businesses where the enterprise will suffer if the key person walks away from the company. These types of organizations sell at a discount since a buyer may have challenges to transferring the company goodwill to themselves after the sale. Try to eliminate this situation if it applies to your company. Document procedures and train your customers that there are other people and resources in the business that they can turn to.

Get Machinery Up to Date
Keep track of all of your equipment maintenance. Repair or replace broken or obsolete equipment. If you would not be interested in buying it ask yourself if a prospective purchaser would?

Clean Out Unsalable Inventory
Go through your inventory and so a thorough count to get an accurate amount. If you have obsolete or inventory that is damaged or unsalable then dispose of it.

Tax and Legal Planning
Talk to your professionals to get proper tax guidance before you list. The way you structure your business for sale may have a large impact on your net tax payable after the sale. Also work with your attorney. If you have any legal issues pending such as lawsuits or employee disputes then try to have them resolved before you list.

These are but a few factors to consider before you actually start the process of selling your company. There are certainly more, as every business is unique. Work with a business broker and other professionals to talk about the things you can do immediately that will help pave the way to a successful sale.

Take Care of Physical Assets Before Putting Business for Sale

No body wants to sell a business that he has nurtured with his time, money and hard work. However, many times, business owners are forced to sell their business due to certain unavoidable circumstances of financial issues. The even worse part is that the process of selling a business can sometimes be very difficult. The first difficulty you come across before putting your business for sale is evaluation of its fair value.

There is so much preparation to do before putting a business for sale that it is often hard to decide the starting point. Preparing a list of tangible assets and classifying the ones that can be included in the sale can be a good place to start.

Among the tangible assets, real estate being the most important physical property usually needs the maximum attention. In addition to real estate, other major tangible assets, include vehicles, office equipments, operating equipments, and inventories. All of these assets may or may not exist in every business, but making a clear list of assets for sale will make things transparent between you and the buyer. Buyer will also get a clear idea about the things he is getting in return of his investment.

Real estate, office building, and land are usually the most important parts of any business. The location of business plays a major role in deciding the value of any business and therefore you can choose to treat real estate as a part of the business or can sell it as a completely independent entity. You may also choose to sell only the business while keeping the office premises under your control. In such cases, the buyer has the option to move the business to a new location.

Having all the office equipments in a proper working condition means the business needs no immediate investments in terms of infrastructure. This brings in a positive response for your business. Equipments that need upgrades and maintenance should be taken care of before putting your business for sale. If everything looks nice at the first appearance, it will definitely add value to your business.

Calculating the value of inventories is also an inseparable part of any business. It is advisable to divide the inventories on the basis of their current state – raw materials, half-made products, and finished products. It is better to keep away goods that are damaged or expired.

Sorting out the tangible assets before you put your business for sale also helps you avoid any sort of discrepancies in the future. It will also help you identify what remains with you after the selling process is over. At the same time, it gives the buyer an idea about what he is getting in return of his hard-earned money.

Marketing Your Business For Sale

Selling your business is an arduous and very demanding task; it is time consuming, stressful and often emotionally draining. Naturally the sale will dominate the owners thoughts and resources during this period and it is very easy for an owner to take their eye of the ball. The key to a successful sale is planning and preparation. Founders should build an exit strategy into their initial business plans, and this strategy should contain information on how the business will be advertised and marketed once the time has come for it to be sold.

Owners who have not been through the process of selling a business before often underestimate how important it is to market, and package their business so that it appears attractive to potential buyers.

As with all things pre-sale, the marketing must be thoroughly planned and executed perfectly. The aim of the marketing period is to drum up enough interest among qualified and motivated buyers to increase the chances of you business being sold for a premium. As many owners, business brokers and intermediaries will testify this is easier said than done.

When attempting to market your business the first place you should start as an owner is your own market or industry. You will know your market better than any business broker or intermediary, and as a result you will know which individuals, companies or organizations will deem your business to be an attractive proposition. If you have decided to market and sell your business without the use of a professional you will have to find the balance between reaching the widest audience possible and keeping the fact you are selling away from those who do not need to know. Marketing your business is a delicate task, if you do not reach enough buyers you risk entering negotiations at a disadvantage, however if you market to aggressively you may end up alerting vendors, creditors, customers and key members of staff. The fact you are selling, may, in their eyes be an indication that something is wrong, and your business may turn south at the worst possible time. Therefore the marketing of your business must be carried out with the least possible disruption to the day to day running of the business. Once you have identified a list of suitable candidates you would be interested in speaking to you need to draw up a non-disclosure agreement, and following that the chief marketing tool which is the sales memorandum.

There are hundreds of businesses for sale at any given time. To make your business stand out, you need to provide potential buyers with information that will help them to make an informed decision. A descriptive and well-organized sales memorandum will help in the sale process. The sales memorandum is a document which is used to present your company in the best possible light and motivate prospective buyers into making a solid enquiry. The sales memorandum can be prepared by a business broker, an accountant or by the owner of the company. This document will highlight all the positive things about the business and will help whet the appetite of potential buyers.

The sales memorandum contains information on areas of possible growth and expansions, information on the unique value proposition of the business, its current assets, and key financial figures such as profit, cash flow, and total debt.

This document should be tailored to the individual or group you are in negotiations with as different aspects of your business will appeal to different types of buyers. If you are talking to a company that offers a similar product, or serves a similar customer base as your own, your marketing efforts should be tailored to present your company as one which has a large and loyal customer base, in doing so you will increase the appeal of your company in the eyes of the buyer, and this will help you achieve a better deal during negotiations. If the buyer is part of a large conglomerate which is more interested in acquiring the skills of your workforce or the technology your business runs on, then these are the things which will need to be stressed within any marketing material you produce and put before them.

During the sale process sellers must make sure that the business’ physical state is in good condition. The premises should be clean, the inventory current, and the equipment in good working order. It is very easy to overlook this during the marketing process, so you should ensure that your office, factory or shop is well kept, as a neglected workspace is often a red flag to many buyers. It is important to sell or dispose of any unused or outdated stock, apply a lick of paint to the premises, and check that all machinery and equipment is up to date and working, as many buyers will factor the cost of replacing or fixing damaged machinery into their offers. Doing this will create the impression of a well organized business and this inspires confidence in prospective buyers.

Many owner managers do little, if any marketing once they have decided to put their business up for sale and as a result they can end up leaving money on the table when they eventually sell their business. Marketing, when done effectively can increase the amount the owner finally receives as there is nothing which drives up the price of a business then a room full of motivated buyers bidding on the business.

How to Handle Small Business For Sale

When handling a small business for sale, as seller should work on understanding the needs of a buyer and learn how to make that buyer a prospect. This process is called the buyer behavior study, through this; the buyer can be approached and analyzed from differed angles and under different circumstances.

Know facts – what are the things that motivate the buyer, why does he shift interest from one shop to another or from one brand to the other, how does he react to new products introduced to the market or delivered to him? Such questions are essential in knowing the things that interest the buyer. And through the information gathered here, a seller would create and product and promotion strategies.

However, it should also be understood that there is no real defined and tested theory of buyer behavior. Some ideas came from economics, psychology and other theories on social sciences. Many business firms and companies are continually researching on the buyer behavior to increase the possibly of sales with buyers. Yet, any seller would agree that buyers really are some kind of riddles. Despite efforts on selling even small business for sale, one cannot guarantee that a buyer who has first taken interest on it would push through the sale.

Buyers have innumerable desires and needs; all these also vary according to their security and aesthetic needs. And buyers have their own incorruptible way of meeting their needs and desires, just as long as it is within his or her means. If a buyer thinks that what a seller is offering is way far beyond his reach, a sale is then impossible to realize.