Selling a business is something many people will do only once in their life and is so monumental it will probably be the biggest determiner or your wealth in retirement or whatever you do next.
Seeing as you’re unlikely to have previous experience, then, heeding the advice of those who've been through the process themselves is invaluable. BusinessesForSale.com spoke to several business owners who have gone through the selling process.
Think Like a buyer
Former business owner, Fred Katja, encourages sellers to "think like a buyer. Be honest about what you sell and don't spend too much time on people who seem to be interested but can't afford to pay the asking price."
In our experience buyers are usually focused on several key areas:
Management: Buyers will most likely assess the competence of your management team before they decide how they will involve them after the sale. If your plans involve your existing management team then it is important to communicate this to the buyer to help them manage their expectations.
Customers and suppliers: Buyers will be interested in what they will inherit alongside the business itself. Companies with a solid customer base and a reliable relationship with their suppliers will be more attractive, giving them that added confidence that sales are steady.
Valuation: As a seller it’s all too easy to focus on the hard finances of it all. Ultimately a business is worth what the buyer is willing to pay, so if you can see it through their eyes it will make it easier for you to identify the areas that need attention and improve them.
Be wary of time-wasters
Learning how to spot a time waster is a crucial step in the sales process. You need to know how to weed them out and focus on the genuine interest. Emma Scobbie, owner of a French ski chalet, told us: "The biggest pitfall in selling a small business, from my own personal experience, is time-wasters.
"We have dealt with numerous would-be buyers, three of whom actually made an offer and signed initial paperwork, only to then pull out as they were unable to finance the project.
"There are many people out there who want to buy a business, but with the current difficulties in borrowing and the lower maximum percentages the banks are willing to lend, for many, buying a small business remains a dream.
"Whilst sellers are left in the frustrating position of reducing their sale price well below value, to bring it in line with what banks are willing to lend."
Don’t sell in desperation
Finally, you should never sell your business on a whim just because you need a bit of extra cash in the bank. As a business owner it is likely that you will have lived and breathed your business, so it’s worth putting some careful consideration into the sale.
South African entrepreneur Perine Pretorius believes: "You should never sell a business when you are desperate for money; if you do you are bound to make mistakes."
Instead, he says, your planning should be thorough and patiently approached. "My advice is to have a clear vision of the future as bad planning can result in disappointment."
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