According to the SBA, 52% of small businesses are operating from a home based office. If you own a home based business this high percentage rate is good news for you. It means that owning this type of business has become a popular choice for many entrepreneurs and as a result, if you want to sell your home business, there is a market looking to buy it!
Unlike a traditional brick and mortar business, selling a home business requires a little more finesse on the part of the seller. You really need to do your due diligence and prepare the business to be sold in order to make it attractive to a potential buyer. Selling a profitable home based business can lead to a nice return for an owner so here are my tips to achieving a successful sale.
1. Make Sure The Business Operates Like A Business
As an entrepreneur running a home business, in most cases, you don't have a boss or anyone holding you accountable. For some people, this lack of accountability leads to sloppy operations. It can be easy to get wrapped up in the day to day operations and let back end work slide. The same is true for any small business, home based or not.
When you are planning to sell you need to make sure that your business is operating as a business should. Ideally someone should be able to step in and pick up right where you left off without missing a beat and grow the business. To prepare for a sale, make sure you can compile clear financial reports that project the financial state of your company. Also be sure that you have all your important paperwork in one place because just like the sale of a traditional business, you'll need to present buyers with a packet of information about your company.
2. Document As Much As You Can
Along with your financials and other company information, I would also suggest compiling some sort of procedure or operations manual. Depending on the nature of your business this may not be a big undertaking just put something on paper that details to potential buyers how your company is operating. Tell them information like how you are finding clients and what the process is once you have one. Do you enter them in a database? Then what? Talk about accounting procedures and detail your billing process. The idea behind a document like this is to provide a set of instructions that would help a new owner step in and take over in your absence.
3. Consult With A Professional Business Broker Or Agent
If you are considering selling your home business, I highly recommend you consult with a professional business broker prior to listing the business for sale. As I said earlier, selling a home business is a little more difficult than selling a traditional brick and mortar business especially if it is a one-person operation. In a situation like this, finding a buyer that has the skill set to take over as well as the ability to run the business side of things is crucial.
Additionally, pricing a home based small business appropriately is going to take some expertise. A professional business broker will be critical in helping you determine a fair asking price that will get your business sold in a timely manner. This is not a task you should try to take on yourself.
4. Offer Business Purchase Financing
In addition to all I've mentioned above, also consider offering some sort of business purchase financing to buyers. Not only is this becoming more common place among businesses that are being sold but many lending institutions are looking for it as a part of a sales agreement. They want to see that the owner has some skin in the game and by offering to hold a portion of the note you are telling lenders that you believe the new owner has what it takes to successfully run the business. Doing this can help the buyer secure financing through a lender and ensure that your sale makes it to closing.
5. Look To Your Colleagues
Because selling a home business is going to require just the right buyer, I recommend you take an active role in the sales process by not only working with a professional business broker but also by reaching out to your colleagues. They may know someone interested in your business or if your industries are related, they may be interested in buying it themselves. If you do discuss the opportunity with anyone, be sure to get them to sign an NDA to protect the confidentiality of your sale.
#photo#About The Author: Peter Siegel, MBA is the Founder (of BizBen.com) & the Director Of the BizBen California Network (founded in 1994!) consisting of business buyers, owner/sellers, business brokers, agents, intermediaries, and advisors (there are over 90,000 users, and 8,000+ listings posted on BizBen.com). To join (FREE) the BizBen California Network, phone Peter Siegel direct at 925-785-3118 - get signed up for business for sale listings (Email Alerts) before they hit the market, view requests from serious business buyers - wanted notices, notices about upcoming FREE online webinars on the topic of buying and selling California small and mid-sized businesses and much more! Call 925-785-3118 to get info about small businesses for sale in your area.
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Laundry consulting, due diligence, buyer representation: We preview laundries for you and evaluate them. 28 years laundry industry experience: buying, selling, valuing, retooling, analyzing, consulting services for laundry buyers and entrepreneurs in California. Contact us today about our services.
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Laundry consulting, due diligence, buyer representation: We preview laundries for you and evaluate them. 28 years laundry industry experience: buying, selling, valuing, retooling, analyzing, consulting services for laundry buyers and entrepreneurs in California. Contact us today about our services.
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