Since business owners are the type who know about selling — either products or services– and about making deals — haven’t they had to cope with suppliers, customers, and competitors throughout their business careers? — it’s not surprising that owners approach selling their businesses with these tried-and-true tactics and ideas. Sellers who have spent years building a business are often unaware of how completely different the process of selling a business can be.
Savvy sellers, realizing the importance of a selling approach equal to this very important task, will depend on the guidance of a Certified Business Broker. With professional guidance, sellers can benefit from their personal strengths instead of letting them get in the way of the selling process. The following “strong” selling points are signposts on the road leading to a successful transaction.
Price Your Business To Sell
Sellers are good “business people;” they naturally are after the best possible price for their business. Realistic pricing is perhaps the most important factor in selling from a point of strength. Understanding the marketplace, up-to-the-minute and not some high mark just past or in the possible future, is key.
The pricing of a business, different from the simpler means of valuing based on goods or services, depends on industry-tested valuation techniques, with intangibles incorporated to ensure that the business will not be underpriced. The price of a business is arrived at by a variety of factors, one of the chief of which is the intensity of a buyer’s interest or the marketplace in a particular business.
Know Your Buyer
The seller, although good at “psyching out” customers and vendors, may not be as adept at sizing up potential buyers to determine what makes them tic. Some buyers are professional window-shoppers; talking a good game but never really ready to play. There are also the buyers who would play ball — if they only knew where the action was! First locating and then vetting buyers is a key function of a Certified Business Brokers. A Certified Business Brokers will use custom databases, well thought out advertising, professional associations and networking groups, nationally and internationally, to only name a few, all to increase the chances of selling a business for the best price and terms.
In addition, a Certified Business Broker will determine the right buyer for the business, focusing on those prospects who are financially qualified, have the proper background as well as genuinely interested in the business for sale. As part of the process, the Business Broker will also explore various financing options as well as address many of the necessary tasks related to selling a business. This invaluable work by a Certified Business Broker not only increases the chances of finding the best buyers, it also frees up the seller so the seller can concentrate on running the business.
Prepare Your Business for Sale
In addition to the obvious need for the business to appear clean and cared-for, there are important steps the seller must take in advance of putting the business on the market. In most situations, a business will sell based on the numbers or cash flow. Your Business Broker will create a clear financial analysis showing the historical cash flow and prepare statements suitable for presentation to a prospective buyer. Remember that buyers may be willing to buy potential, but they don’t want to pay for it since they are the ones that will need to put in the capital and time.
Business owners are accustomed to coping with paperwork, but few have had exposure to the specialized contracts and forms required both before and during the selling process. A Certified Business Broker is an expert at transaction details and will help guard against delays, problems, and premature (or inappropriate) disclosure of information. Not understanding the process can jeopardize momentum which may kill the deal. Buyers expect the process to move forward and typically don’t like delays.
Maintain Normal Operations
Another vital activity for the seller is to keep on top of the day-to-day running of the business. When a Certified Business Broker is on hand to focus on the marketing of the business, the seller can focus on keeping daily operations on-target. Sellers are “people people,” and may have visions of wooing buyers with their great presentation of the business. Even if this were to happen, these sellers fail to visualize the number of buyers they would have to “woo-and-win” if handling the sale on their own. A Certified Business Broker knows how to flush out the real buyers from the tire kickers and provide buyers with the details they need to quickly evaluate the business.
An adjunct to maintaining the status quo is the important task of maintaining confidentiality. Until a purchase-and-sale agreement has been signed and an escrow with a deposit is in place, most sellers do not want to disturb (or jeopardize) the business. A Certified Business Broker helps by using a nonspecific “blind ad” descriptions of the business when marketing. They will also require any prospective buyer to sign a confidentiality agreements, provide a resume and show their financial capabilities to purchase the business.
To keep the sale of your business on firm ground, be sure that your “strengths” as an independent business owner aren’t actually weakening the sale. Using these key selling points along with the expertise of a Certified Business Broker to keep the process going strong and increase the probability of selling your business for the price and terms you are looking for.