How to Close a Business For Sale – Using a Small Business Broker to Effectively Sell Your Small Business

Every day, new businesses are being created and marketed in every part of the world. Some are successful, while others languish in obscurity, never to make much money. One of the biggest mistakes business owners can make is not hiring a business for sale professional. Although most business owners will debate over which way to sell a business, nearly all agree that using a business broker helps you identify potential buyers for the business while still maintaining the privacy of the possible sale of the business. Here are some tips on how to do it:

… Read The Financial Statements. In order to find out if you are selling the business for cash or are looking for financing, you must know the financial statements of your choice. All business for sale should have their financial statements prepared in order to show the current and previous months’ worth of cash flow…read those numbers! Include inventory sales, expense, gross and net profit and cash flow…most business for sale will have all of these items. If you can’t see them on paper, get someone who can…read his or her financial statement today!

… Go to Trade Assignments. A lot of brokers just don’t go to trade shows, conventions or fairs, etc. There are plenty of real estate professionals who would be glad to work with you on your cash flow issues…read their financials first. Look for the right buyer when you do…read their portfolio and/or portfolios when you do…get in touch with them.

Talk To Potential Buyers. Once you get the financials done and have identified potential buyers, talk to them and educate yourself on what the business is, the value, asking questions and getting answers. Find out the tax implications of the business and ask the right questions about their company’s solvency, etc. Be a good business broker and be knowledgeable. A great way to do this is to join a buyer’s club or affiliate programs that can provide valuable information to potential buyers.

Work With The Agent. You can do business with many brokers; however, not all are created equal. Find one that you get along well with and learn as much as you can from that broker. Many brokers don’t communicate with you or hold the business card of an attorney; so, be open to learning how to communicate with them. Ask lots of questions. And, once you know the basics, let the agent lead you through the process and have them work on marketing your business for sale.

Research Flowing Financials. Before you contact the seller, read and research flushing factors, which are lenders, closing costs, etc. Review your credit and work to improve your scores prior to making contact. Keep in mind that most sellers will not take on a mortgage until they have completed financing. That said, before you close on any deal, it is important to look at financing available.

Work On Selection Criteria. Prior to contacting business brokers, identify five or ten businesses for sale that match your criteria. Then call each business broker on your shortlist and have them prepare a business plan to present to potential buyers. When presenting your business plan, you want to include key business metrics such as profit, sales, market share, financial health, cash flow and competitive advantage.

Present Your Buyer’s A Plan. Even after working closely with your broker, the last step is to show your prospective buyers a comprehensive business plan. Use numbers to back up your statistics and use realistic but eye-catching language. One of the biggest mistakes small businesses make is not having a complete plan to follow when the time comes to close a deal. Most buyers are able to put together a compelling proposal once they understand the details of a transaction.