Many small business owners want to sell their businesses quickly and at a fair price. Once you have decided to sell your business, few things are more frustrating than waiting for the market to respond or receiving very low offers. You can sell your business much faster if you understand the selling process.
These are the 9 steps to help you sell your business quickly.
Step 1. Establish a Fair Market Price
This is the most crucial part of selling your company. The business’s value is not just equipment, furniture, and fixtures. To determine a fair price, you must thoroughly understand your business and the market.
It would help if you contacted a business broker/valuation specialist who regularly values businesses to get a fair market price.
Your professional valuation will require the following documents to estimate the fair market price.
- Tax returns for the last 3 years
- Current Profit and Loss Statement
- Current Balance Sheet
- Copy of the Lease
Small things like Daily Deal Coupons can cause buyers to walk away. It is, therefore, important to be honest about your business to determine the Fair Market Value.
Step 2. Prepare a Confidential Memorandum
The Confidential Memorandum summarizes your business and answers key questions buyers might ask. Only buyers are allowed to see this document after they have been prequalified and signed a confidentiality agreement. This document greatly reduces the time spent dealing with non-qualified buyers. Because it is time-consuming and detailed, many business brokers will only prepare this document for small businesses. This document will help you sell your small business faster if you are the owner. This document is the basis of your marketing plan and the foundation upon which buyers will evaluate your company. Selling fast is essential.
Step 3. Step 3.
Once you have identified the buyer profile, you can create a marketing strategy to attract them. This could be done via direct marketing, paper advertising, or the internet. You can sell your business quickly by using the internet to reach over 90% of buyers.
While some brokers market to only 30 sites, others will market to more than 300 sites. Consider their experience with online marketing to help you sell quickly when choosing a business broker. Without a broker, you might have to pay more than $1000 per month to promote your business on these websites. Your business will sell out. A business broker who understands marketing is a great way to find the perfect buyer quickly and cheaply.
Step 4. Step 4.
This is often the most difficult and time-consuming part of selling your business. A business can receive 20-30-50 phone calls. Each buyer must go through a thorough screening process to ensure they are the right buyer. The screening process includes a phone interview, a financial background check, and often a criminal record check. It is easy to find buyers, but it takes time and profile skills to find the right buyer.
Business owners attempting to sell their businesses themselves must protect properly potential screen buyers. This can have devastating financial and legal consequences.
Step 5. Step 5.
After a potential buyer has been qualified, and if necessary, the seller has authorized the buyer to view the confidential memorandum of sale, it’s time to share the details about the business.
The next step after the presentation is to qualify the buyer to determine if they are serious about purchasing the business. This will happen before they meet you as the seller. You can save time and only meet pre-approved, qualified buyers who are familiar with the details of your business.
Step 6. Step 6.
Once you have found a buyer who meets your criteria, can finance the purchase, has enough down payment, and is interested in your business, it’s time to start working with them.
You, the seller, meet the buyer and discover their style, attitude, and personality. The buyer can ask questions and get more information. A letter or purchase agreement (LOI) will be signed if the buyer is serious.
Step 7. Step 7.
Everything can be negotiated when selling a business. You can be as creative or conservative as possible to find the best deal to satisfy the buyer’s and seller’s needs. You can negotiate these terms: price, seller financing (downpayment and interest), and how long the seller will stay with the company. What is the commission? A business broker with the right training can help structure the deal, so everyone wins. This is one of the best benefits of using a broker.
Step 8. Due Diligence
Once the buyer has accepted the offer, the due diligence period starts. Due diligence refers to verifying all business information relevant to the sale.
It would help if you asked these questions during due diligence:
Do I need to buy it?
What should I spend on it?
What will I pay?
The buyer must conduct due diligence. This process can take from a few weeks up to several months. This is the time when seller financing is offered. With proper authorization, this often involves checking their credit history, financial situation, and background.
Step 9. Step 9.
Closing deals is a routine for professionals who sell businesses exclusively. Your business broker should be present at the closing to ensure that all paperwork is in order. It is important to take your time with the process. There have been many deals that fell apart at the final table. Your business could be sold with a representative to help you put it back together.
Selling a business quickly and at a fair price can be challenging. There are also many pitfalls. This could be the biggest expense you make in retirement. A professional will help you sell your business quickly and get the best deal possible.