Thanks to the power of the internet, business owners looking to sell, now have the ability to do so themselves without the aid of a business broker. Simply uploading your business to a reputable business for sale website is having fantastic results, while saving the vendor up to 15% of the sale price in agent fees and commissions. Customize your listing to suit your needs at a price that meets your budget. Who better to sell your business than YOU!………the owner.
Buying a business privately is a booming trend and continues to be very popular among the small business community.
Statistics indicate approximately 97% people looking to buy a business are now conducted on the internet, and the volume of available businesses is enormous. However, regardless of the road you take, you should be able to locate what you are looking for in about six months. The trick in narrowing down the search is concentrating on the industry that is right for you, based on your personal choices, your skills and your weaknesses.
Determine how much you can afford to invest in a business and be realistic in your search. In some cases more than 90% of business sales include funding by the owner, which is around about 40% to 50% of the sale price. Also, at some point during the buying process, you will be asked to prove your financial status. It should include your assets and liabilities, along with an outline of your net worth and verification of your credit rating.
Once you have decided to purchase a business, you will want to weigh the pros and cons before you sign on the dotted line. The process includes analyzing the business, evaluating it and negotiating to buy it.
At the very least, this includes analyzing the company’s audited balance sheets, profit-and-loss statements and income tax returns for the past three years. It should include reconciling the taxable income with the profits for every year, and you will also want to assess their resources such as product, land, equipment and staff.
What is the businesses current status, does it have potential for future growth, the competition, and the method and expense of delivering merchandise and services to your customers? Above all, base you decision on whether the business is part of a growing industry or one that is is declining. Also, as an important safeguard, you will want to have your accountant and lawyer assist you in these areas.
In this phase, you should focus on the potential of the business, which will help you to make cash-flow, sales and profit projections for at least the following year, before you go forward with the acquisition.
As a rule, a business isn’t sold for the asking price. Instead, negotiation between the buyer and seller is needed to determine the sale price (and the associated terms) to ensure that the buyer and seller will feel they have been dealt with in the right manner. Customer goodwill is important factor in buying a business, and make sure that you are presented with data to support the seller’s claim of their asking price.
Selling your business privately
Whether you are selling your business privately or with a broker, it can be for several reasons, such as planning to retire, and you will want to proceed carefully and take the following steps:
- Be sure that your financial records are correct and updated, and be ready to provide pertinent information to your potential buyers. At the very least, they will want proof your company’s audited balance sheets and profit-and-loss statements for the past three years. Providing your lease statements and tax returns will also be helpful, along with current balance and payment schedule if you are paying off a business loan.
- Once you have assembled the documents mentioned above, this will give you some idea of what your businesses value is. In addition, you will probably want to consult with a financial analyst to determine its fair market value.
- If you want to sell your business within a relatively short amount of time, make sure that the deposit you ask for is very affordable. You might also want to provide seller financing in this situation to facilitate the sale, and if you do, the buyer will agree to pay an agreed amount over an agreed-upon time period.
- While your business is on the market, try to grow your accounts with special promotions and discounts, and be ready to provide potential buyers with required paperwork related to your employees and suppliers. Avoid any significant interruption in your day to day business operations as well.
- Resolve to treat the acquisition of your business as a confidential matter. If they discover your plans, your customers and suppliers might think that you are in serious financial difficulty, which could reduce your sales volume. In addition, your employees may begin looking for another job and leave without waiting to see if the new owner is willing to hire them.
- Develop a good report with all potential purchasers, but remember to screen each one as well to minimize issues and complications. A competitor might even assume the role of a potential buyer to try and find out useful or private information about your business. In anticipation of this, ask your legal team to create a confidentiality agreement that you can use with interested parties who inquire about the sale.
Remember that selling a business privately can save you quite a large amount in agent commissions, it really isn’t hard to do and potential buyers usually prefer this method. To sell a business privately, advertise on commercial websites and in your local newspaper.
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