It seems simple enough to sell a business; place an ad, answer a few questions, find one or two good candidates and move on to a negotiation and closing.
More than likely though you'll get a number of calls and inquiries from interested candidates and have no idea who's qualified and with whom you should spend your limited time.
The problem is that most prospects, for whatever reason, will never buy a business and without a strategy you're going to give up a lot of your time and privacy as well as control and negotiating leverage not to mention carry a significant risk that the deal will simply fall apart for one of a dozen reasons.
The solution is to follow a time-tested process that allows you to manage multiple prospects simultaneously, have a fair give and take of information, maintain the momentum, and keep prospects on edge about potential competing offers.
And the way to do all of that is to prepare, just a little bit, by having the right documentation available before you begin the marketing process. Once you have your information and documents ready, the process should look something like this.
So how do you put this sales process to work? First if you haven't already, its time to get your house in order (clean up the books, create a short operations manual, review your contracts, negotiate an extension of the lease and its transferability, if needed, and clean up the business, etc.); there are plenty of articles on what to do is this regard, so I'll defer to them here.
Secondly, if you are going to want to maintain your confidentiality and privacy, get a new email account for communications, and get an on-line fax to email account or use the fax number of your local UPS or copy store for incoming NDA's.
Third, document the business and your offer. Only by documenting the business, its operations, products, markets, customers, industry, competition and the type, timing and amount of proceeds you want can you even begin to write a compelling description that will hold up over the duration of the deal. This is your chance to highlight your strengths, frame and position your weaknesses and thoughtfully prepare for the myriad of questions that are sure to be asked.
In terms of the type of documentation, you will need two levels, one to respond to that first wave of requests for more information, and one to respond to your real candidates' need for detailed information.
Generally, the first response, a Business Summary, should be one or two pages and cover the primary business, sales volume, growth, net income, general location, employees, a picture, any special highlights, or weaknesses (opportunities), the price and the proposed terms, but exclude the business' name and address.
The second report, a Confidential Business Profile or Review, typically incorporates outside data resources and usually some sophisticated analyses even for small businesses. However, it should include further details on the above as well as industry comparisons and trends, a SWOT analysis, market maps, some simple customer demographics, a study of the competitive environment and a post-sale cash flow proposal with buyer investment returns, among other areas, and all depending upon the size and type of business.
With these documents in hand, you will be ready to use and control the process, protect your confidentiality and select the best buyer. Your business will look more valuable, your offer more professional and buyers will be less prone to try and work down your Asking Price.
When your prospects request more information, let your documents do the work while you focus on the business.
Download a Free Confidential Business Profile Template to help you get started.
About the Author: Mr. Moncreiff is the President of Main Street Profiles™, a leading data processing and advisory firm providing brokers and "For Sale by Owner" business sellers low cost small enterprise Confidential Business Profile and mid-market Confidential Business Review document preparation services. www.mainstreetprofiles.com.