How to Sell Your Small Business
How to Sell Your Small Business
Copyright 2006
If you’re a small business owner, you know just how much of your blood, sweat, and tears go into making it a success. Even if you’ve moved into an area you know is lucrative, making a return on your investment is quite the challenge, and isn’t for someone who requires a lot of free time, or even necessarily fixed working hours.
For whatever reason, there comes a time that many small business owners must sell their businesses. The following are 10 things that you should consider when it comes time to turn your business over to a new owner.
1. Know your reason for selling – When a prospective buyer shows interest in buying your business, one of the first questions they’ll likely ask is why you’re selling it. Your answer should be truthful, since hiding the truth will only cause issues later when the buyer discovers the issue for themselves. This doesn’t mean that you shouldn’t find the best possible wording to state why you’re selling. Practice it on a colleague or friend before trying it on a client, to see how it sounds.
2. Know the best time to sell – the best time to sell is at the same time that the profits of the business are on the increase. This appears as a sign of success and provides buyers with a greater incentive to buy. It will also be the time that your business has the highest value. Therefore, it’s best to sell when your business is coming out of it’s low time and is on its way to its high time.
3. Know when to get a professional’s help - A buyer will almost certainly use assistance to help them buy a business and without the use of professionals, you could end up being on the wrong side of the deal. There are three main sources of professional assistance that you should consider using: accountant, solicitor and business broker.
4. Know the value of your business – if you are using a business broker or an accountant, they will likely suggest a value for you, however, it may be that you decide to value the business alone without the assistance of professionals although it is highly recommended that you use at least one of them.
5. Know how to prepare your business for sale – just like when you’re trying to sell a home, there are different things that you can do to help make your business look more attractive for sale. Furthermore, there are some legal requirements that you’ll need to take care of. Issues you’ll need to face include: financial statements and documentation, accounts, finance and taxation, contracts and trading arrangements, insurance, real property and assets, intellectual property, environmental, health/safety issues, employees/pensions documentation, litigation details of any existing, pending or threatened arbitration or litigation together with amounts involved, issues of insolvency.
6. Know how to write a Selling Memorandum…and write it – your selling memorandum is extremely important to making a sale, and should include the following: an executive summary, your company information, your asking price, the terms of sale, industry information, your products and services, your customers, personnel, major assets, any future plans, financial statements, and an appendix. This will give any prospective buyers an overall view of what your business is all about, and why they’d want to own it.
7. Know how to find potential buyers –It’s great to be prepared to sell, but without any buyers, it’s all for naught. Fortunately, there are many great ways to find prospective buyers. These include newspapers and magazines, business brokers, and, of course, the internet.
8. Know how to make the most of the Internet - The Internet is fast becoming one of the most popular ways to advertise a business for sale. The main advantage is that it can reach a wide audience, as it can be accessed by people all over the world. If it is a local small business then the Internet may not be a favored source to advertise, but for the larger small businesses, it is highly recommended.
Use a search engine to find a web site where you can register your business for sale. To get you started, we have picked out a few sites:
Forum Commercial: www.forumcommercial.com
Byabiz: www.byabiz.com
Biz Trader: www.biztrader.com/place-ad.html
Loot: www.loot.com
9. Know the Legal Stuff – Don’t go into the selling process if you have outstanding problems in the business. Your business should have tied up any issues before you begin, but make sure they are tied and not pending.
10. Cross-Marketing – Along the road to success you meet a lot of people, many of them small business owners just like you trying to meet a niche need and make ends meet. You can both be more successful when you join forces and take advantage of each other.
Knowing what you’re doing makes all the difference in a successful sale for a business. Take advantage of these tips, use your resources, and some common sense, and the right buyer is sure to come.
Robert Moment, business strategist and author of “It Only Takes a Moment to Score”. His next book , “Invisible Profits: The Power of Exceptional Customer Service” will be published Fall 2006. Visit his website www.howtostartyoursmallbusiness.com and download the FREE Special Report , “17 Profitable Ways to Turn Your Ideas into Wealth”.
How to Sell Your Small Business - To learn more about this author, visit Robert Moment's Website.
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How to Sell Your Small Business
Copyright 2006
If you’re a small business owner, you know just how much of your blood, sweat, and tears go into making it a success. Even if you’ve moved into an area you know is lucrative, making a return on your investment is quite the challenge, and isn’t for someone who requires a lot of free time, or even necessarily fixed working hours.
For whatever reason, there comes a time that many small business owners must sell their businesses. The following are 10 things that you should consider when it comes time to turn your business over to a new owner.
1. Know your reason for selling – When a prospective buyer shows interest in buying your business, one of the first questions they’ll likely ask is why you’re selling it. Your answer should be truthful, since hiding the truth will only cause issues later when the buyer discovers the issue for themselves. This doesn’t mean that you shouldn’t find the best possible wording to state why you’re selling. Practice it on a colleague or friend before trying it on a client, to see how it sounds.
2. Know the best time to sell – the best time to sell is at the same time that the profits of the business are on the increase. This appears as a sign of success and provides buyers with a greater incentive to buy. It will also be the time that your business has the highest value. Therefore, it’s best to sell when your business is coming out of it’s low time and is on its way to its high time.
3. Know when to get a professional’s help - A buyer will almost certainly use assistance to help them buy a business and without the use of professionals, you could end up being on the wrong side of the deal. There are three main sources of professional assistance that you should consider using: accountant, solicitor and business broker.
4. Know the value of your business – if you are using a business broker or an accountant, they will likely suggest a value for you, however, it may be that you decide to value the business alone without the assistance of professionals although it is highly recommended that you use at least one of them.
5. Know how to prepare your business for sale – just like when you’re trying to sell a home, there are different things that you can do to help make your business look more attractive for sale. Furthermore, there are some legal requirements that you’ll need to take care of. Issues you’ll need to face include: financial statements and documentation, accounts, finance and taxation, contracts and trading arrangements, insurance, real property and assets, intellectual property, environmental, health/safety issues, employees/pensions documentation, litigation details of any existing, pending or threatened arbitration or litigation together with amounts involved, issues of insolvency.
6. Know how to write a Selling Memorandum…and write it – your selling memorandum is extremely important to making a sale, and should include the following: an executive summary, your company information, your asking price, the terms of sale, industry information, your products and services, your customers, personnel, major assets, any future plans, financial statements, and an appendix. This will give any prospective buyers an overall view of what your business is all about, and why they’d want to own it.
7. Know how to find potential buyers –It’s great to be prepared to sell, but without any buyers, it’s all for naught. Fortunately, there are many great ways to find prospective buyers. These include newspapers and magazines, business brokers, and, of course, the internet.
8. Know how to make the most of the Internet - The Internet is fast becoming one of the most popular ways to advertise a business for sale. The main advantage is that it can reach a wide audience, as it can be accessed by people all over the world. If it is a local small business then the Internet may not be a favored source to advertise, but for the larger small businesses, it is highly recommended.
Use a search engine to find a web site where you can register your business for sale. To get you started, we have picked out a few sites:
Forum Commercial: www.forumcommercial.com
Byabiz: www.byabiz.com
Biz Trader: www.biztrader.com/place-ad.html
Loot: www.loot.com
9. Know the Legal Stuff – Don’t go into the selling process if you have outstanding problems in the business. Your business should have tied up any issues before you begin, but make sure they are tied and not pending.
10. Cross-Marketing – Along the road to success you meet a lot of people, many of them small business owners just like you trying to meet a niche need and make ends meet. You can both be more successful when you join forces and take advantage of each other.
Knowing what you’re doing makes all the difference in a successful sale for a business. Take advantage of these tips, use your resources, and some common sense, and the right buyer is sure to come.
Robert Moment, business strategist and author of “It Only Takes a Moment to Score”. His next book , “Invisible Profits: The Power of Exceptional Customer Service” will be published Fall 2006. Visit his website www.howtostartyoursmallbusiness.com and download the FREE Special Report , “17 Profitable Ways to Turn Your Ideas into Wealth”.
How to Sell Your Small Business - To learn more about this author, visit Robert Moment's Website.
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Cheryl MatthynssensCheryl is a life skills coach, licensed Chemical Dependency Counselor and a 20 year entrepreneur. Cheryl's dedication to achieving a life of balance led to her expanding her teaching from the simple managing of life's daily challenges to adding financial well being as well. A direct marketer with DrinkACT, she is gaining ground in the online community with her concepts of making sure business owners, entreprenuers and employees have well rounded life styles. She opened up a small affiliate site - The Balance Guide- to help others find resources for mental and emotional well being. Visit Cheryl's blog to see more of the diversity beyond business she has began offering online at www.thebalanceguide.blogspot.com - Visit Cheryl Matthynssens's Website |
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