“Things You Consider if You Want to Sell the Business Yourself”

The independent business owner who decides to sell is at the threshold of a major process involving the emotions as well as the marketplace. In many cases, the business for sale represents the seller’s life work. Being the independent type to begin with–as well as someone who knows about deals and sales–the tempting notion sometimes arises: Why don’t I handle the sale of my business myself? Those sellers with similar temptations should first take a look at the steps necessary for the successful business sale–and at the advantages of taking those steps alongside the best possible professional assistance, Southwest Business Advisors.

Preparing the Business for Sale

What might appear to be in good enough condition to the seller could make a very different and costly impression on a prospective buyer, during his initial visit to the business. On the other hand, improvements planned by the seller may be either unnecessary or poorly conceived. In either case, sellers would be wise to rely on the advice of a professional intermediary with experience in dealing with buyers, and with the objectivity required to recommend improvements to the appearance of the business in order to present it in its best light.

Of course, preparing a business for sale goes beyond outward appearances. Ultimately, a business will sell based on its financial condition. A key contribution of the intermediary can be assisting the seller provide financial records that are accurate, complete and current.

Establishing a Fair Market price

While Sellers understandable want the best possible price for their business, they also need to be realistic about its true value, which more than anything else, is determined by the marketplace. An intermediary is best prepared to determine and recommend the most reason price range for the business, using industry-tested valuation techniques, as well as recent sale prices for similar type and size of businesses.

Presenting the Business

Next to a reasonable asking price, the preparation of a professional selling memorandum which is credible and presents the business in its best light, is vital. The ability and experience to anticipate and handle the typical objections many buyers will raise is crucial to the successful sale of the business. Balancing negatives with positives and pointing out that what appears to be a disadvantage is not always the case is part of the job.

Further, Sellers often fail to appreciate the number of buyer calls they will have to field during the twelve months, or so, that it may require to sell the business. This can easily lead the seller to lose focus from operating the business at peak efficiency, which is what is required especially during the sale period. A drop in sales or profits is never easy to explain to prospective buyer.

Marketing the Business

Experience and resources are key in setting forth and implementing a successful marketing strategy for the sale of the business. Timing is important. The longer the business stays on the market, the more difficult it is to sell. The process requires having all of the essential marketing tools. These include everything from knowledge on how to prepare a business description, subscriptions to industry websites for listing the sale, current data bases of prospective buyers, and memberships in professional associations which can get the word out about the business effectively and confidentially. 

Negotiating the Sale Transaction

Regular follow-up with the buyer(s) who is considering making an offer is vital in order to keep the deal running smoothly. One of the key task in the process is to keep communications flowing and keep emotions (and people) in check. Failure to do so will surely jeopardize the sale. Sellers working alone can lose bargaining effectiveness by doing the follow-up themselves.  Experience negotiating price, terms, and other key aspects of the business sale when dealing with an experienced buyer can be a challenge.

Qualifying Buyers

The process of separating “tire kickers” from serious and financially qualified buyers can be a difficult, frustrating and time consuming one, which disheartens many sellers, and consumes their precious time needed to operate the business during this important period.

Assuring Proper Documentation

Familiarity with the numerous specialized contracts and forms required for the successful sale of a business will help prevent delays, problems, and possibly even wrecked the deal.

Maintaining Privacy and Confidentiality

For entirely valid reasons, Sellers do not want word of a pending business sale to reach their customers, competitors, employees, or even their bankers, until a purchase-and-sale agreement has been signed. Multiple confidential telephone conversations, requiring signatures on strict confidentiality agreements, carefully screening all prospects, and sometimes phasing the release of information to match the growing evidence of buyer sincerity and trustworthiness can be a daunting challenge for any Seller working alone. This is one phase of the sale process where a seller’s “do-it-yourself” approach should be seriously reconsidered, in terms of money, time, and the risk to sale of the business.

Southwest Business Advisors, LLC

104 Elm Crest Drive, Rockwall, TX 75087

Ph: 972-740-3184 ◦ Fax: 972-692-8858

Email:Lupe@sbasellbiz.com