6 Facts About Listing Your Business For Sale By Owner
April 18, 2016 Selling Your Business
“Selling Your Business Through A Professional Can Be Challenging, Listing Your Business For Sale By Owner Can Be Down Right Crazy!”
Selling any business is a major undertaking and should not be taken lightly. I would recommend hiring or at minimum consulting with a professional if you have not been through the process before. If you are still reading, this means that you are willing to enter uncharted waters and get the most dollars out of your business possible. There is no fast track way to sell your business. Its very time consuming and takes a lot of hard work. Their is a lot to learn in a short period of time. You will have to be able to tell the tire kickers from the buyers. Most aspects of selling your business is common sense but, it’s always nice to have a refresher before getting the process going. That is what this article is all about. We want to help you navigate the busy and at time hostel waters of listing your business for sale by owner.
Just like in any business deal it’s best to know what your buyer is looking for and to hand that to them on a silver platter. Listing your business for sale by owner is no different. Below I have listed some key things that buyers are looking for in a quality business. These tips will make your life easier and help you get your business sold.
Don’t over evaluate your concept, effort and business as a whole!
Most entrepreneurs put in countless hours into perfecting their concept and all round some serious sweat equity in to their businesses. There is value in your concept and seat equity but, it may shock you to find out it’s not worth as much as you would think.
So What’s it worth?
It’s only worth what someone is willing to pay you for it. The truth is most people don’t know how to put a value on these assets. It will always come back to the bottom line. Profit! The value of your business will come down to your tangible assets such as property, money, relationships and propriety info. It’s that simple.
Qualify your potential buyers!
Your time is valuable you want to make sure that you are dealing with someone is not only serious but, able to afford your business. It’s one thing to want to buy a business, it’s a total another to be able to get financed. The best way to qualify a buyer is to ask the right questions.
How do you plan on financing the deal?
If they are unsure provide them with a list of options:
Private Equity Fund
Or what every you are willing to except for your business.
The more fixable you are with the financing options the easier you can come to an agreement.
Transparency is a must!
They say honesty is the best policy and that is very true when they are talking about business. It will pay dividends to be 100% honest about the short comings of your business. If a qualified buyer asks you a question such as:
Why are you selling?
Why are sells down?
Dose your business have any debt?
Is there anything else I should know?
This is the time to bring up any issues the business may have. This will do 2 things for you. One it will give you the upper hand in the deal as you will come across as trust worthy and two by being honest you will most likely be give the ability to down play the Issue later on in the deal. Because why would you bring it up if it was that bad.
Stream Line the profit centers of your business.
As a business owner you should already know what the most profitable portion of your business is. No matter what you are selling you should look at ways to decrease waste and increase profit in that potions of the business.
Let’s say you sell 2 widgets.
Widget 1 earns 100k with 50% gross profit = $50k profit per year
Widget 2 earns 100K with 10% gross profit = $10k profit per year
Get your margins up on widget 2 by raising the cost or decreasing cost associated with the widget. Buyers are always looking for a way to increase a business’s profit why not do it for them.
Provide them a path to the promise land!
I don’t recommend selling your business on “potential Profits” as any buyer worth dealing with, will not take you seriously. This is a strategy I like to use when you are getting close to closing a deal and the person I’m talking to has shown Interest in purchasing the business. I will mention things that I had planned to do with the business and I just never had time to implement. If they are interested in buying they are already thinking of way to improve the business. You leading them down this path allow you to frame them as owners and get them even more interested in buying the business.
This will also show that you care about your business and you really spent time on planning for the future. I know this seems like a no brainier but, if you spent time planning for the future it’s likely that you have taken care of your business and customer. This one is simple and great way to get the buyer in the mood for closing a deal for your business.
People, product and profit!
The three main things that every business needs to be successful People, Product and Profit. When you are getting your business ready for sale you should look to see the health of your people, product and profit. Buyers will love that you have answers about these three core principles as they are your business.
Are you selling your employees with the business?
Dose your business rely on key or skilled people to run? (Artist, Tradesmen, ect.)
Do you have process in place for your people?
Is your product selling?
Is it selling more then it was last year?
Do you get “Honest” feedback about your customer?
Is your company making money?
If you have been running your business you should be able to answer any of these questions with out to much effort and if you can’t I would recommend learning more about your business before selling. If you can’t answer these for a buyer how is he going to pull the trigger and close with you?
Now, this is not an exact science and every deal is different. If you can only take away a few points from this article, I would have to say you must know your business you are trying to sell and be genuine as people can see through you if you are not. I hope this wasn’t a shock to the system but, these are the main things you will need to know when listing business for sale by owner. We are always looking for more insight one buying and selling businesses, if you have any questions or recommendations please feel free to reach out in a comment below.
Here is a of other great article we found when researching this article: Click Here
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