In my non-scientific estimate every one month delay after you have put the business up for sale reduces the price you will get by about 0.5%. For a business worth $100,000 this translates to a loss of approx $500 every month! In addition, the delay in completing the sale can not only result in deterioration of the business, but you can start losing important employees and customers if they get a hint that you are planning to sell the business. That’s why it is imperative for the business owners to complete the sale as quickly as possible after you have decided to sell it.
Now, selling the business is an inherently complex and time consuming process. It is not uncommon to find businesses that have been on the market for 6 months before the sale is complete. However, with little planning and preparation it is possible to reduce this time. Read on to find out how.
I believe the most efficient way of selling the business needs to include these three steps:
- Advertise your business to as many potential buyers as you can. This is common sense! The more people know about your business the better your chances of finding a good match. Hiring a good broker can make a world of difference in finding eligible potential buyers. Look at this article on how to find and work with good business broker.
- Make potential buyers comfortable with your business. The buyers are stepping into unknown territory when they exploring the business for purchase. Your goal as a seller is to overcome their fears by giving them all the answers and explaining any seeming inconsistencies they may uncover. Read this article to understand how to overcome buyers’ fears when selling your business.
- Nudge buyers to make faster decisions. Because of uncertainty and fear the buyers will take their sweet time to evaluate the business and make final decision. It is your job to prompt them to make decision faster by providing information they are asking for and answering their questions quickly.
To expedite this process I have a set of best practice rules assembled from personal experience.
- Prepare your business for sale in advance. This is a key to accomplishing your goal of faster business sale. The preparation has to start at least several months in advance and involves many facets of the business. Any time and effort spent beforehand will help you in the later part of the process when you do officially put the business for sale. Look at this article to understand what you need to prepare before selling your business.
- Prepare answers to the questions the buyers are likely to ask. As mentioned earlier the buyers will have number of questions they want answers to before they are able to make final decision. You should think ahead and prepare the questions they are likely to ask as well as their answers. I have a list of 10 critical questions that every buyer is likely to ask in the first meeting.
- Price the business right. Coming up with the asking price is a challenge. It involves art as well as science. Price it too low and you will leave money on the table. Price it too high and you will not get enough interested buyers. The best strategy is to have in mind minimum price you are willing to accept and set the asking price at somewhat higher level so that you have some wiggle room during negotiation.
- Offer to help after the sale is complete. As part of making potential buyers comfortable with their decision be sure to offer them help with the financing as well as operations. In many situations the sellers offer to stay on for few weeks to provide consulting to ensure the buyer is prepared to take on the business as a new owner.
Selling a business is a complex and time consuming process. Following these guidelines will help alleviate some of the pains associated and expedite it. Do you agree?
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