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How do i sell a business

how do i sell a business


"Sell your business when you want to and not when you have to" SM

That means, if your exit strategy is to sell your small business, franchise or restaurant - then think, plan and learn about selling your business at your convenience and sell it on your terms, sell it when you want to sell and not when you have to sell it or when you are forced to sell it. Most business owners assume that they can just advertise it when they are ready to sell the business and they will find a buyer. On average it takes 4-6 months or more regardless of where you advertise and since many businesses listed for sale are not sold, for a variety of reasons including incorrect pricing and insufficient information provided by sellers, it is always a good idea to think about selling your business when you can.

Most small business owners who want to sell their established business, have the same question - how do I sell my small business? These days, the question is: how do I sell my business ONLINE? The answer depends upon what or how much or how little you know about selling a business, the advertising process and what it takes. Hence, it is important that you spend some time understaing the process. Knowing a few things such as, the value (or asking price) of your business, the advertising process, the amount of time a business will take on average to sell and your involvement in the process are the most important aspects. If you are serious about selling your business or franchise then consider INVESTING (time and money) in the PROCESS and make a comitment to follow through, once you decide to sell.

Learn Some Simple Things, to Sell a Business as Fast as you Can :

Investing in the process and getting invloved: Many sellers, once they list their business or restaurant, do not follow through, do not track or check emails (many list with one email and then don't use that account and forget what they used it for or have spam filters on their email that blocks leads from getting through). The most important thing to remember is that your business doesn't sell (just because you advertise/list it for sale - here or elsewhere) but you must work with the interested buyer in providing them the necessary information so they are convinced that investing in what you are offering is worth their money and time. Firstly, you should know how much your business or franchise is worth or more importantly what is the amount that someone else might pay for your business or restaurant and consider it a fair trade. Secondly, you must provide all the necessary information regarding your business to potential buyers and then advertise it as many places as you can and follow through. On the otherhand, like many small business owners if you are busy and/or don't mind paying a brokerage commission then you must find a professional business broker who can help you in the process. In any case, you must determine whether to sell your business and for what price - if your exit strategy calls for selling the business.

For most small business structures, however, selling a business is a multi-step process that can take from weeks to years depending on the size of the organization and the reasons for exiting. In most cases, the end goal is to maximize the value of the company and convert that value to cash. It is more than just important to know how, when, and how much to sell your business for. There is a big difference between properly preparing your assets to be sold and putting a for sale sign on the front door. Knowing the difference can pay big dividends. Getting professionals to guide you through the process is highly recommended. Depending on the size and field of your business, some of the professionals you may want to consult include: lawyers, accountants, business brokers, auctioneers, tax experts, bankers, and the IRS. Seek referrals from satisfied customers and trusted business associates. Some information in this article is obtained from the US small business administration website.

  • Making Sure The Price Is Right - Find out what your business is worth before entertaining any offers - price it high, and you might lose and price it low, you will lose. However, for most people pricing it right can just be

    the amount that makes you satisfied with the sale and doesn't mean it has to be the right price based on a valuation (also know that if you use different professionals to value a business, you will get different prices). Statistically, most businesses once they are advertised for sale, never sell for a variety of reasons and most importantly because they are not priced right.

  • Seller Financing: With as much as 90% of the sales of small businesses involving at least some seller financing, it may be unrealistic to expect to receive a lump sum payment. Yet financing can be tricky, as agreeing to a long period of payments entails the same type of risk as owning the business and depends on the business' future success. Alternatives may include getting the buyer to use non-business assets as security for the loan.
  • Employee Stock Ownership Plans (ESOP): One way to sell the business to your employees is through an Employee Stock Ownership Plan (ESOP). ESOPs are tax-qualified employee benefit plans that invest primarily in stock of the employer. Significant tax advantages may be available to both an individual selling the business to an ESOP and the employees participating in the plan. The many tax incentives and benefits of employees having ownership in the business make such plans attractive even when business owners wish to sell only part of their businesses.
  • Sales Agreement - Checklist of items that must be on the written sales agreement and it is important that you have a good attorney who has experience with selling your business type.
  • Finding A Buyer: Once you've decided how much your business is worth, the next step is to find a buyer. Consider advertising it in as many places as you can. As mentioned above, you can never know where the most important lead (one gets you the eventual buyer) will come from. Alternatively, it is a good idea to find a professional business brokerage in your area, but first do make sure they know what they are doing and know where to advertise and how to find a buyer. If you do find a broker, make sure you go through with the agreement with your attorney. Also, if your business is a specialty or trade related business where the business owner needs to have sufficient knowledge of the business aspects, then it also comes down to finding the right buyer who knows about your business and what it takes to run it successfully.
  • Knowing when It's A Seller's Market: You must be aware of external factors such as the economic conditions and availability of financing/loans and know when it is the seller's market.
  • Making Adjustments: After you list it, depending upon the time frame that you have in mind you must be prepared to make some price adjustments along the way (usually pricing it lower) and perhaps in some cases adjustments to the sales agreement, if necessary (if that was stopping you from selling to a previous potential buyer).
  • Patience: Last but not least, be aware that selling a business can and will take time and perhaps it takes even more time to find the right buyer for your asking price. Statistically, it takes at least 4-6 months on average but more in many cases and depending upon several factors such as location, location, pricing, the type of business, availability of financing, etc. some of which have been discussed above.

    Consider advertising your business in as many places as you can. You never know where your MOST IMPORTANT LEAD (the one that generates/closes the sale) will come from and regardless of where or how many places you advertise, (and to be successful you will need to advertise in several places ie. web sites, publications, etc.,) it is important to remember that selling a business or a franchise can and will take time in some cases and it depends on several variables such as the type of business, price, location, etc. Just like selling anything else - for whatever it is that you are selling, there must be a buyer and selling a business, a restaurant or a franchise is no different. Also, selling a specialty business can take more time than selling a business in some of the most sought after categories such as - retail, restaurant and some service businesses, since more specialized the business is the harder it is to find a buyer who is knowledgeable enough to buy and run that business.

    Category: Personal Finance

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