10 Steps to a Successful Business Sale

List from BDC - Closing or Selling Your Business - A Succession Plan Info-Guide

1. Have a valid reason to sell
2. Do not wait until you have to sell for economic or emotional reasons
3. Gather the information needed
4. Be a part of the marketing team
5. Maintain confidentiality
6. Think like a potential buyer
7. Do not let things slip because you are selling
8. Engage professionals who understand the sales process
9. Be patient and study carefully every offer
10. Help create a win-win situation

I came across this little list today and thought I’d expand on some of the ideas. While this isn’t an exhaustive list, it is a great starting point.

Have a valid reason to sell: Because you’re going out of business is NOT a valid reason and any potential buyers will smell your fear. Because you think some bonehead from *insert big city name here* will come along and just pay you an unwholesome amount of money is NOT a valid reason. Don’t waste your time or mine! If you’re selling to retire, or move on to other bigger and better things, however, THAT’S a valid reason!

Do not wait until you have to sell: Great advice! If you have a valid reason to sell AND you have a going concern (a business that is profitable and not in decline), then start thinking about how and when you’ll sell at least a year in advance and preferably 3-5 years in advance of putting it up for sale. If you wait until its too late, you’ll be in for a bumpy ride – and some lunatic will be driving!

Be a part of the marketing team: You really need to be active in the process. Just dropping a few papers off at your broker’s office and expecting miracles is not helpful. Expect to be called upon to meet with prospective buyers after they’ve been qualified by your broker as you are the only one who has all of the answers.

Think like a buyer: This is a big one; if you let greed get the better of you, you’ll get nowhere. Buyers are too savvy to be taken! If you were the buyer of your business, what information would you need to make a buying decision? What would you be willing to pay for that particular business? What kinds of concessions would you insist on? The answers to these questions will help immensely when you and your broker sit down to discuss any potential offers.

Do not let things slip because you are selling: If the shop needs painting, then paint it. If you need to order new inventory, do so. Selling a going concern means that it needs to actually be a going concern. That means a well stocked and well maintained business and its premises. See above: Think like a buyer!

Be patient: Finding the right buyer for your custom lure manufacturing plant is not as easy as you make it out to be, otherwise you’d have a line up of buyers salivating over the opportunity to purchase your business at any price! Selling a business, even a wildly successful one, takes time. A lack of an offer within the first four months, even nine months of an engagement with a broker does not mean that he/she hasn’t been working on your file. Be patient and insist on a communication plan that you devise in cooperation with your broker.

Engage professionals: Granted, you probably know more about your business than just about anyone else; but devising a marketing plan to sell the whole business and being able to follow up with that plan to find qualified buyers is not part of your regular business. Hire a professional(s) who are in the business of selling businesses and you’ll be glad you did.

Note: We rarely take on business listings anymore. This kind of engagement is very time consuming and very specialized. We’ve found over the years that most businesses that end up listed with REALTOR®s should have been sold long ago. See: Number 2 in the list above!