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8 Questions You Most Likely Will Be Asked When Selling Your Business


Question You Will Be Asked When Selling

When selling your small business, you'll be bombarded with questions - from the brilliant to the ridiculous.

You need to be prepared for them all. The more you're prepared the better experience you'll have with potential business buyers.

Tim Cunha (SF Bay Area Business Broker at 650-600-3751) reviews many of these possible questions. Here are some questions you can expect to be asked:



1. Why would you want to sell your business?

Although, as a business broker, I tell business owners that the "best time to sell is when you're doing well," buyers always want to know the "real reason. My response usually is simple: it's the right time for the seller because of retirement, a move to another locale, or another business opportunity they want to pursue. And then I ask the buyer a simple question: "Would you want to buy a business that isn't doing well?"

2. What does it cost you to acquire a new customer?

The buyer wants to know if you have an economical, practical, scalable, and sustainable system and process for getting new customers.

3. What is the extent of your market penetration?

The buyer, being interested in future growth, needs to understand how big the current market is and what percentage of it you already own. And, how can that market be expanded, vertically and horizontally?

4. Who are the buyers of what you're selling?

Strategic buyers - those already in your industry - are looking for potential synergies between what you sell and what they sell. Knowing the details of your customers' demographics, you will be better equipped to help a buyer assess a strategic fit.

5. How do you produce, acquire, or process what you're selling?

By asking this question, potential buyers can assess the uniqueness and distinctiveness of your method of creating whatever product or service you make or deliver. Prospective buyers need to learn if you have proprietary systems or procedures that make you stand apart and would be difficult for a competitor to replicate. The more unique you are, the more valuable you may be. For obvious reasons, they will want to know if any of this unique or proprietary value depends on any one (or more) specific persons.

6. What (if anything) makes your product or service unique or special?

Knowing if there are aspects of your business that will protect the buyer from current and potential future competitors is vital to their assessment of your value. What, if anything, have you done to distinguish yourself from and protect yourself from the competition?

7. What are your operations and management processes?

Depending on the type of buyer, they are going to want to know how easily they can take over day-to-day and strategic management, or integrate it into their existing operations. They will want to know how you manage your bookkeeping and finances, marketing and sales, purchasing procedures and vendor relations, procedures for managing materials and inventory, and methods for producing and delivering the product or service.

8. What employees are essential to your team? ... to future success?

Any potential acquirer needs to understand the dynamics of your team—how deep is "the bench?" They need to know who are the key players, what motivates them, and how they will be incentivized to stay with your business once you are no longer the owner.

This list is not exhaustive, but it is a good insight into the kinds of questions you, and your broker, need to be prepared to answer to properly represent your business to prospective purchasers.

Tim CunhaAbout The Author: Tim Cunha is a Business Broker in the San Francisco Bay Area. Having managed and sold several businesses of his own, Tim offers business sellers extensive personal experience and professional expertise in building business value, planning a successful exit strategy, "packaging" and promoting the sale, and coordinating a successful and profitable transition. Tim can be reached direct at 650-600-3751.


Categories: How To Sell A Business, Selling A Business


Comments Regarding This Blog Post


I have buyers who often ask, "How long have they been there?" The buyers want to know, both how long has the business been established and how long the current owner has been there. If the business has only been around for a short period of time or if they still have a "grand opening" banner in front of the location, that is a topic of concern for a buyer.


As someone who specializes in restaurants, bars, etc...many of the buyers who I work with are interested in specifically as to why the seller is selling the business. The buyers are also interested in how long the business has been established, because this determines the goodwill of the business in the eyes of the buyer. Many buyers who buy restaurants are also focused on what type of training is involved and how long it will last, because they want to keep the business as it is. If the buyer is interested in changing the style of food, they may also be interested in seeing from the seller if they can do that, and if any other businesses in the shopping center have exclusivity clauses in their lease.


  Helpful Resources To Assist In Selling And Buying California Businesses
Elizabeth McGovern: Escrow Services - SF Bay Area

McGovern Escrow Services, Inc., is a leading independent escrow company. We are a trusted partner with our clients, assisting them through the tangled bulk sale & liquor license transfer process. We provide attentive, quality & innovative customer service. Phone Elizabeth McGovern at 415-735-3645.

Janet Carrera - Escrow & Bulk Sale Services - SF Bay Area

Redwood Escrow Services, Inc. is a full service, licensed independent escrow company. We are EAFC Fidelity bonded, fully insured & licensed with the Department of Corporations. Committed to offering our clients the most comprehensive variety of escrow services available. Phone Janet at 510-247-0741.

Diane Boudreau-Tschetter: Escrow And Bulk Sale Services

California Business Escrow, Inc. is a full service independent escrow company serving all of California and has expertise in a wide range of escrows. Our team prides itself on providing an exceptional escrow experience. For more info phone Diane Boudreau-Tschetter at 888-383-3331 or 209-838-1100.

Chuck Post: Laundry Buyer Representation, Consulting, Due Diligence

Chuck Post has 32 years experience in the laundry industry, specializing in assisting laundry buyers (and entrepreneurs) with buying or starting up, building, re-tooling, laundries throughout California. Laundry buyer representation, consulting, due-diligence, lease negotiations, laundry valuations.

Jeff Back, Broker: Restaurant Specialist - SF Bay Area

J. Back & Associates Restaurant Real Estate was founded in 1988 as the first bay area real estate company to specialize exclusively in restaurant real estate. I am the past President of Charley Browns restaurants and have been involved in the restaurant business for over 35 years. 925-736-8200.

Matt Weiler, Business Broker: Gas Station Specialist

Business Broker Specializing in primarily gas stations. Geographic area of focus: San Francisco Bay Area to Sacramento and as far South as Monterey, California. To sell or buy a small or large gas station phone Matt (gas station business broker specialist) direct at 408-623-0920.

Brad Steinberg, Broker - Laundromat Specialists

PWS is the leading laundromat broker in California. Since 1968 PWS has brokered over 2,500 laundromat sales. With over 90 employees dedicated to the coin laundry industry, PWS has 18 licensed agents, a 3 person in-house finance department, 10 service technicians and a 20 person parts department.

AJ Rana - Business Broker, San Francisco Bay Area

Professionals who understand the importance of world class business brokerage service and the value it can create. Specializing in assisting sellers and buyers with retail stores, restaurants, hospitality & lodging, manufacturing operations, distribution companies, e-commerce and service businesses.


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