The most recent economic meltdown may well cause many small business owners to consider putting their businesses up for sale. With so many well-qualified individuals out of work, many are becoming aspiring entrepreneurs and looking to start or buy into a business. If you were planning to sell your business you need to know how to leverage the best deal in the current poor economic environment.
Following 10 steps will ensure you of getting the best possible price for your business:
1. Set a realistic price for your business. An inflated number either turns off or slows down potential business buyers. Use a qualified professional to evaluate your businessand avoid costly mistakes during the business sale.
2. Continue running the business as if you intended to keep it. Obsessing about selling business to such an extent that your attention wavers from day-to-day demands, affecting sales, costs, and profits is not a good idea. Remember selling a business takes time, and your business should appear vibrant and progressive to attract appropriate business buyers.
3. Hire reputable business brokers to ensure confidentiality. A confidentiality breach during the sale of a business can change the course of the transaction. A professional business broker will ensure all parties maintain complete confidentially till the dotted lines are signed.
4. Prepare for business sale well in advance of actually listing. Ensure business records are complete for at least several years back and do all pertinent legal or accounting “housecleaning”–as well as a literal sprucing-up of the plant or store. Get a third party business valuation from a credible, qualified source so you have a realistic idea of what your business is really worth.
5. Be prepared for business buyers questions. The buyer will need appraisals on all assets as well as all pertinent information to satisfy environmental regulations (when real estate is concerned). The buyer might request other information for sourcing additional financing.
6. Maximize leverage through competitive bidding. This is something you should let a professional business advisor handle as it can get tricky. A good business broker will create a competitive situation to position you to get most out of the deal.
7. Be flexible. Don’t be the kind of seller who wants all-cash at the closing, or who won’t accept any contingent payments or an asset transaction. Depend on the advice of an expert business broker – their knowledge of business financing and tax implications will ensure your deal is sweet instead of sour.
8. Learn to Negotiate not dominate! You’re used to being your own boss but remember the buyer also is used to having their way. Learn and follow your business broker’s counsel on when “to hold” and when “to fold.”
9. Don’t drag out the deal. To keep the momentum up, work with your broker to keep your potential buyers interested and complete the offer within a reasonable time. Don’t hold out for unreasonable demands.
10. Stay focused and involved. You might feel pressured and burnt-out. Realize that the buyer may want you to stay within arm’s reach for a while. Consult with business brokers to determine how you can help them to sell the business without unnecessary hitches.
AIM has had considerable experience with assisting clients in both evaluating their business and assisting with the sale. Because we are not traditional business brokers, you can be sure that we always have YOUR best interests at heart. If you wish simply to explore the potential value of your business, or you are ready to start the sale, contact us today for a no-cost, no-obligation exploratory consultation.
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