“Independent business owner” means being the owner of an independent business. Another way to look at “independent business owner” is to let it define the personality of the person in charge – independent, strong willed, confident, self-assured. These are vital entrepreneurial qualities, but they can sometimes work against the business owner when it comes time to sell. Sellers who have spent years building a business are often unaware of how completely different the process of selling a business is.
Savvy sellers will depend on the guidance of a business intermediary. With an intermediary’s guidance, sellers can benefit from their personal strengths instead of letting them get in the way of the selling process. Here are some selling points that will help guide you to a successful transaction.
Sellers are naturally after the best possible price for their business. Perhaps the most important factor in selling is realistic pricing. The key is understanding the marketplace, up-to-the-minute and not some high mark just past or in the possible future.
The pricing of a business depends on industry-tested valuation techniques, with intangibles incorporated to ensure that the business will not be underpriced. This is different from the simpler means of valuing based on goods or services. The price of a business is arrived at by a variety of factors, one of the chief of which is the intensity of a buyers interest in a particular business.
The seller may not be adept at sizing up potential buyers. Locating and qualifying buyers is a key function of business brokers. In order to sell a business at top value, business brokers will use computerized databases, professional associations and other networks nationally and internationally.
The business broker will determine the right buyer for the right business, focusing on those prospects who are financially qualified as well as genuinely interested in the business for sale. As part of qualifying buyers, the business broker will assess the ability of a particular buyer to run a business successfully. This invaluable work by the broker not only locates the best buyers, it also frees the seller to concentrate on his role in the selling process.
There are important steps the seller must take in advance of putting the business on the market, in addition for the need of the business to appear clean and cared-for. A business will sell based on the numbers in most cases. Your business broker will help you create a clear financial picture and to prepare statements suitable for presentation to a prospective buyer. Remember that buyers may be willing to buy potential, but they don’t want to pay for it. Sellers should be open to about all aspects of the business that might affect the sale; otherwise, the deal may self-destruct.
Business owners are accustomed to coping with paperwork, but few have had exposure to the specialized contracts and forms required both before and during the selling process. The business broker, an expert at transaction details, will help guard against delays, problems, and premature or inappropriate disclosure of information.
Keep on top of the day-to-day running of the business. With a business intermediary on hand to focus on the marketing of the business, the seller can focus on keeping daily operations on-target. Sellers are “people” people, and may have visions of wooing buyers with their great presentation of the business. Even if this were to happen, these sellers fail to visualize the number of buyers they would have to “woo-and-win” if handling the sale on their own.
In addition to maintaining the day-to-day running of the business is the important task of maintaining confidentiality. Until a purchase-and-sale agreement has been signed, most sellers do not want to disturb (or jeopardize) the normal interaction with customers and employees; nor do they want to alert the competition. A business broker helps by using nonspecific descriptions of the business, requiring signed confidentiality agreements, and performing a careful screening of all prospects.
To keep the sale of your business on firm ground, be sure that your “strengths” as an independent business owner aren’t actually weakening the sale. Use these key selling points along with a business intermediary’s knowledge to keep the process going strong.