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Tips to successfully buy or sell your next business

Guest post by: Andrew Rogerson

Article Overview: Whether you’re buying or selling a business it is never a neither simple nor straightforward process. Not only are there disclosures and laws to follow, but both parties are working with known other parties such as a lender, landlord, franchisor, accountant, financial planner or attorney to name a few and so it’s unknown how each of these parties will respond. The Golden Rule is to put your feet in the shoes of the other party. It won’t solve everything but hopefully it will allow you to understand “their view of the world.”

Tips to successfully buy or sell your next business

Selling and buying a business is rarely a simple and straightforward process. When I sit down and try to categorize each of those experiences, be it from my own personal experience as a Business Broker in Sacramento or the experiences I've heard from the 14 Business Brokers that are part of my office, the different experiences tend to fit into one of the categories below.

The seller expects to:

1. Receive all cash up front;
2. Provide one week of training;
3. Provide the buyer with one day to do their due diligence;
4. Close the offer the day after the completion of due diligence;
5. Be paid five to six times the business earnings or discretionary earnings.

The buyer expects to:

1. Buy a business with 10% down payment;
2. Receive two months of training free of charge from the seller;
3. Have four weeks to complete their due diligence;
4. Work in the business for 30 days to "test drive" it;
5. Pay no more than one year's worth of business earnings or discretionary earnings.

About where the seller and the buyer meet:

1. The down payment from the buyer is about equal to the business earnings or discretionary earnings;
2. Seller provides some financing;
3. Seller provides two to three weeks of training;
4. Buyer receives two weeks to complete their due diligence;
5. It takes 45 to 60 days to close the transaction if things go smoothly;
6. The business is sold between one to three times earnings with many factors affecting whether it's one or three times earnings or something in between.

A Golden Rule that I stress to both buyers and sellers is that the best way to get a deal done is to put yourself in the shoes of the other party. If you think about how the transaction impacts your side of the deal you will more than likely convince yourself that the other party is not offering enough. If this happens you are not ready to buy or sell. For a transaction to occur, there has to be a willing buyer AND a willing seller.

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Article Tags: Andrew Rogerson, business, Business broker Sacramento, business escrow, business for sale, business opportunity, business plan, Buy a business, buy a franchise, due diligence, franchise, Murphy Business and Financial Sacramento, Sacramento business brokers, Sacramento business ownership, sell a business, start a business



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Business Tips - How about: Tips for managers to handle employees more effectively? Tips on how to deal with difficult customers? Tips on how to deal more effectively with suppliers? The only three I have in mind right now, but will try to come up with something else. Chris
Selling my business.... - I am looking to sell my business. It is a profitable business but I want to get out because I am burnt out after 7 years(since I was 17)......... I am almost ready to sell(making the proper preparations)..But I'm unsure about my lease with the landlord. He doesnt seem to want to resign.. I am worried about how marketable my business is with only 2.5 years on the lease... When I sell my business, does my landlord have to resign with whoever my buyer is? Thanks in advance... G.
Finding a technical person to work with - Hi Barbara, I would suggest tapping your network to see who knows who. It's amazing how small the world is. Your situation reminds me of many entrepreneurs who are afraid to go for venture capital because they feel the venture capitalists will take the idea and use it themselves or with another company. It takes a team to build a successful company and most engineers are just that - engineers. To make the business fly they would need to have their own vision as well as the experience of being a mother with infant / toddlers with strollers and the knowhow to successfully sell and market a product. This is a highly unlikely scenario and chances are if that person existed your product would already be on the market. I've always found that be telling people what I'm up to I've received far more help than harm.
Re: Domains - Hey David, Why do you want to sell your domains? You can give them on lease for a couple of years. The reason why I suggest you this is that the two sites you want to sell can do business for you. You are already into SEO and hence you can run a website. You may have personal reasons for selling them off, like you are too occupied with other work, but still, why to slay the goose that gives golden eggs? It just needs a few minutes of your precious time. However, if you have made up your mind, try to find out some organization into ipods and make a deal. Alternatively, use the site for Blogging (it looks like a blog at the first go), do some Adsense and earn revenue. Ups and downs are a part of business and you should not plan to sell off when things don't go your way. Be a fighter. Good Luck.
Business Plans - Hey Brandon, I do agree that there is a link to a sound business plan and a successful business. When you think about it, one of the purposes of a business plan is to give the owners some direction. When you have a good "plan" to follow, odds are you won't end up in 100 different directions. And yes, I would love to look at some good and successfully complete business plans. -Kai


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