Most entrepreneurs readily embrace new tasks and roles and are used to being in charge of everything relating to their companies.
However, before rushing in to market and sell their small businesses, business owners will want to keep the following tips in mind. The dance between buyer and seller is a delicate one, and it is very easy for one small misstep to ruin the entire deal.
Prepare in advance – General housekeeping should be scheduled well in advance of marketing the business. This includes a physical clean-up of the premises, making needed repairs on equipment and perhaps enhancing the curb appeal of the company with a new coat of paint or adding plants and shrubs to welcome guests through the front door. Housekeeping also includes getting files — particularly those relating to accounting — in order. Buyers will expect to review financials dating back at least a few years during due diligence.
Plan for due diligence – In addition to reviewing recent financials, buyers typically will want to see the lease agreement, customer lists, an accounting of inventory, information on FF&E and other similar items. Anticipating what the buyer may request and planning ahead saves time and helps make the seller appear organized.
Be realistic in pricing – You may wish to engage the services of a business broker to determine a reasonable selling price for your company. Businesses that are not priced correctly (particularly those priced too high) will not interest most buyers initially and generally do not sell at all.
Ensure confidentiality is maintained – Business owners must avoid a breach of confidentiality at all costs. Buyers should be qualified in advance and be willing to sign a non-disclosure agreement. A business broker is experienced in how to handle this situation while keeping the process moving along.
Don’t neglect the daily routines – The business transfer process rarely happens overnight, so it is important that the seller continue to focus on his business, keeping it running smoothly and successfully.
Stay flexible – Negotiation involves give-and-take. Realize the buyer is probably also an entrepreneur and may be used to being in charge of situations as well. The willingness for both parties to compromise on some issues will keep the process moving to the closing table.
These suggestions are the top recommendations from experienced business brokers around the country.