Predictions are that as baby-boomers begin reaching retirement age in greater numbers, more small businesses will hit the market and a business selling plan becomes more urgent. Despite the forecast, there are plenty of prospective business owners looking for small enterprises with good cash flow who will be drawn to a business selling strategy that makes sense.
As competition for business sellers grows, it becomes more important than ever to follow a savvy game plan that puts your business selling efforts ahead of the pack.
Offer A Business Selling Plan That Holds Part Of The Loan
With tighter credit and a struggling economy, a business selling offer that comes with financing will have a better chance of closing. As a seller, you can create liquidity by accepting terms that require the buyer to put only 50 percent down while you lend the rest. Do a thorough credit check on your prospective buyer. If everything pans out, you will earn interest on your loan on top of the profit from the sale of your business.
Diversify Your Customer Base Before Writing A Business Selling Offer
The more customers your business has, the greater its value. Expand your business through customer referrals, keeping your business website up to date and dynamic, rent a booth at a trade show and display your products (if applicable), and network with professionals at your local Chamber of Commerce.
Hire An Advisory Team To Manage The Selling Details
If you aren’t qualified to deal with the negotiations of a business selling plan, hire an accountant, a lawyer, and perhaps a financial adviser who can manage all the negotiation details. This makes even more sense if you run your own business -- a business selling adventure can be stressful, and your business shouldn’t suffer because of it.
Use Non-Disclosure Agreements With Employees
Few things can put the crimp on business than putting it up for sale. If your business employs executives or other workers, have them sign a non-disclosure agreement to keep all the details of your business selling plan private, including any stipulations about employees who may be let go after the transaction is complete. Start with the managers. Meet with them privately outside of the office so your conversation will not be overheard by other staff.
Draft A Business Selling Plan That Includes Accurate Valuation
Find an independent auditor to go over all of your business financial statements. If you don’t know a qualified individual to do this, ask your accountant for help, preferably someone with a strong background and proven track record in valuation. This is especially important because serious buyers will want to see about three years’ worth of financial documents prepared by an independent auditor. This may cost upwards of $15,000, but it will be worth every penny if it means you close the deal without leaving any money on the table.
Take the time to button up everything in a business selling plan ahead of time, and hire experienced professionals to prepare your documentation. A business selling plan that is accurate and complete will go a long way toward moving a serious buyer through the endgame.
About The Author: A nationally recognized consultant and author, Peter Siegel, MBA, has more than 25 years experience on selling, buying, and niche financing (the purchase of), small to mid-sized California businesses. Through his experience, Peter helps both buyers and sellers maximize their transactions by offering invaluable "real world" industry advice, including tips on how to effectively put together a business selling plan. Contact Peter by phone at 866-270-6278.