Selling a Business: Do’s and Don’ts

It’s quite a challenge in a business of sale to come up with a marketing plan that doesn’t disclose too much detail about the business for acquisition. Usually, sellers of small companies just work with whatever resources they have to target buyers for their businesses. Common means used are print ads like flyers and word of mouth, deemed not too effective for the sale. One must engage in a transaction without disclosing much about it to the customers, suppliers, employees, and even the competitors (unless you’re eyeing one of them to buy the business from you). It’s still safe to take the more careful route with the help of brokers or blind advertisements. Here are some tips to entice potential buyers effectively:

  • Determine the potential buyers of the business

These questions may be helpful in the buyer definition process:

  • Is there someone who is specifically looking for a business like yours?
  • Do you only require financial capacity when considering a buyer or do you also have other specific parameters?
  • Will your business be better if sold to another entrepreneur, another business or a group of investors?

Prepare a chart that specifically defines your prospect buyers in terms of geographical restrictions, preferred business type, qualifications. This will then help you how to reach them effectively.

  • Customize your advertisements.

It pays to have a grasp on where buyers usually seek for businesses, whether you’re hiring a broker who’ll be responsible for the marketing aspect for this business of sale or if you’re doing the sale on your own. The following descriptions may help you identify your potential buyers further:

  • Buyers eyeing businesses under a determined industry – They most likely do their search online in websites where they can deduce the selections in terms of the size, location, and/or type. These buyers also consult trade publications and sites. They also form affiliations with executives or professionals working in the specific industry where their targeted businesses fall under.

  • Buyers looking for businesses located in a specific area – Usually, these buyers hire local brokers to help them in their search. They also consult other professionals like bankers, lawyers, or accountants and make them a part of their network in order to get details on possible business for sale in the targeted location. They also visit websites and restrict the search using the location filter.

In the earlier mentioned website, buyers can limit their search in terms of country (i.e. Canada) or as specific as province

  • Buyers considering a very wide assortment of businesses found in far-flung areas – This type of buyers also do their search online and browse from the feed to search for a potential business to purchase.

On the average, nine out of ten buyers seek for business based on their preference and interests online, whether they work with or without a broker, or if they’re searching in a specific industry or location or not.

On the flip side, here are some of the things that a seller must NOT do:

  • Over-assess your capability to manage the transaction on your own

In order to lessen the stress and maximize the valuation of your business, a professional whose expertise is selling transactions, like a broker might be needed. Handling the sale yourself might lead to disclosure of vital details early in the transaction and inappropriate asking price set for the business being offered.

  • Disclose the details of the sale to certain people

As mentioned, it’s best to do the transaction discreetly because once your staff, clients, and/or competitors get information about it, your business may be put in a shaky situation. These particular sets of people may take advantage of the situation or use a reason to cut off ties with you.

  • Disregard the needed time and effort for the sale

When dealing with small business for sale, attention and time are highly required. Seller must need to be hands-on in order to answer certain inquiries from potential buyers and to pool specific buyers fit for the turn-over. Buyers might notice that there’s something wrong if you don’t focus on the transaction, leading to the delay of non-closure of the sale.

  • Set unfeasible price calculations

When it comes to the valuation of the business, a broker might be able to provide different possible asking amounts, without putting any biases or laying any interests on your business.

  • Assert your personal efforts on the business

Buyers pay for the considered largest asset of the business. If they discover that the business rely on a certain individual in terms of its growth, the business will be deemed more risky. Greater risk equates to lower value, which we do not want to happen for your business.

  • Pay attention to the processing of legal documents

Certain documents are crucial when it comes to the transition of the business to the new buyer so processing them shouldn’t be taken for granted.

Selling a business is not an easy task but if you take note of the identified do’s and don’ts, you’ll do it just right.