Selling your small business is one of the most important as well as the last financial decisions you'll make about your business. Hence, you may feel troubled at first, especially if you're not seeing any prospective buyer for the first few weeks. Moreover, you still need to continue business operations while the selling process is ongoing and this can go on for several months.
If that's what you're worried about, it's worth noting there are ways to speed up the selling process of your company. Just continue reading.
1. Make Sure The Building Is Presentable
While the appearance of your commercial property is typically not the main focus of buyers, it's still a good idea to spruce things up to make it more presentable. After all, buyers wouldn't want to clean up the place right after the arduous buying procedure. In that regard, here's how you can make your commercial property more presentable:
- Eliminate eyesores: You can start by getting rid of obvious eyesores within the property, such as blemishes in the walls and torn ceiling. It might be best to commission a cleaning agency like Pur Cleaning and other companies. By doing so, you can focus on other important matters.
- Update your lighting: It's also a good idea to replace your existing lighting fixtures with energy-efficient lighting instead. This will give you something to brag about during site visits.
- Upgrade the parking lot: If you have a parking lot, consider expanding it since it's most likely going to be one of the main focuses of prospective buyers during their visit.
- Make sure the roof is intact: The roof has a lot to do with the aesthetics and utility of a commercial property. It can reduce energy consumption and it's highly visible from the outside. Hence, buyers are most likely going to look at the property's roof.
- Spruce up your flooring: The flooring makes up the majority of the business and is the most visible part of the property. For this reason, you should spruce up your flooring by either replacing them or cleaning and turning it anew. Again, you might want to consider hiring an agency like Epic Epoxy Floors and other firms for this particular tip.
This is an excellent first step if you want to quickly sell your small business. You may have to spend a bit of money, but you can leverage this to increase the value of your company.
2. Create The CIM For Your Business
The Confidential Information Memorandum (CIM) or Sales Memorandum (SM) typically consists of 25 to 50 pages that highlight the information potential buyers need about the business. It provides buyers a first impression and is often used by sellers to highlight the positive aspects of the business. With this document, you can explain why your business is an investment prospect worth considering. Additionally, the CIM is also one of the first things prospective buyers would ask for when looking into your business.
Before listing your small business anywhere and looking for buyers, you must make sure you already have the CIM prepared. Here's a closer look at what it should contain:
- A brief overview of the organization's history.
- The details concerning the products and services of the business.
- An explanation of how the business obtains raw materials and how it creates its products.
- Deliberation of the business's competitors.
- The details about the agreements with your existing employees and suppliers.
- An outline of what your customer base is and the characteristics of a typical customer.
- Your reasons for selling your business.
While it's true that a CIM is your chance to shout praises to your business, you must remember not to exaggerate its positive aspects and instead give an accurate representation. The exact contents, complexity, and length of the document may vary from business to business. If you want to create a CIM, it would be best if you hire or consult with a professional. Moreover, you should consider hiring a business broker to help you throughout this entire process.
Related: Sales Memorandum Template
3. Find Yourself A Reliable Business Broker
A business broker is a professional that assists clients in buying, or for your case, selling a company or small business. In return, they’re paid per commission and are based on the percentage of the sale price. They're particularly useful for small businesses since you may not have someone to stand in for you while looking for buyers and preparing the necessary paperwork.
Business brokers typically have specialized knowledge that can help with a smooth sale process. For your reference, here's a look at some of the responsibilities of a business broker:
- Find prospective buyers.
- Allows the business owner to continue running the business.
- Prepare the necessary paperwork for the sale process.
- Help evaluate a fair price for your business.
- Prepare the CIM.
- Assist in screening buyers and negotiations.
Take note that not all business brokers have the necessary skills and knowledge to provide you with satisfactory services. If you want to find a reliable broker, here's what you can do:
- Rely on newspaper ads in the business section.
- Seek brokers by asking for trusted contacts in your business network.
- Ask the broker about their track record.
- Choose a broker that has had experiences with businesses similar to yours.
- Make sure the broker is a part of the International Business Broker's Association as the members are typically reputable brokers and have gone through specialized training.
- Refrain from hiring brokers that charge you upfront.
With these tips, you should be able to find a broker that can help you with the sale process.
4. List The Business For Sale On As Many Platforms
Some experts argue that listing your business on as many business-selling platforms and websites as possible is a bad practice, especially now that scammers are rampant.
On the other hand, it's could be a good idea if your main goal is to sell the business quickly. After all, you can screen your buyers to filter those with decent deals and could carry your business’s goals from those who only have profit in mind. It may require more effort but it should speed up the sale process considerably.
5. Arrange A Meeting With Buyers As Soon As Possible
As stated earlier, you should screen your buyers before you close the deal. This is one of the many steps involved in the sale process.
Once you have a list of prospective buyers, you should arrange a meeting with each one as soon as possible. Ideally, you'd want to do it face-to-face and not online. Doing so will allow you to narrow down your choices more quickly. If you're lucky, you may end up closing the deal there and then. But remember, don't let them notice your eagerness to close the deal immediately as they may leverage this to negotiate for a lower price.
6. Offer Financing Options For The Buyers
Much like customers, you can attract more buyers if you offer incentives as part of the sale of your business. To start with, you'll find that some of your buyers don't have sufficient funds to purchase your small business. Offering financing options is providing them with another option to pay. Here's a closer look at some financing options you can offer:
Seller financing: This is when you, the seller, allow the buyer to pay only a portion of the business and the rest must be paid over an agreed period.
Bank financing: This is when you partner with a bank that then provides the funding for the buyer. Unfortunately, you only receive a portion, typically 90% to 95%, of the purchase price with this option. On the bright side, you immediately receive the payment unlike with the previous option where you have to wait until the end of the term.
7. Consider Selling The Businesses To Employees
This is ideal if you have a rather close relationship with your employees. You may even ensure that your business is in safe hands. Of course, the process would be a lot more tedious, as you’ll have to set up an Employee Stock Ownership Plan (ESOP). However, you would technically have sold the business in a flash with this option. Moreover, an ESOP is a plan wherein employees are given the right to own shares of a company, or in this case, your small business.
Employees can buy shares by deducting a part of their salary over time. Not only does this give your employees motivation to work harder, but you can also earn profits by keeping your shares. Moreover, if an employee exceeds the stocks or shares you own in the company, they practically already own the business.
Related: Selling a Business to Employees
Wrapping Up
With these tips, you should be able to sell your small business quickly or at least faster than you would normally have. However, make sure you don't appear as desperate to your buyers when selling the business, especially since they may take this as a sign that you're a pushover. Even with these tips, you must remain calm to get a decent deal.
Robert Hagan is an entrepreneur within four businesses in three different states. His work mainly involves managing these businesses, but he often goes out of his way to share his experience and knowledge with young and aspiring entrepreneurs. His hobbies include traveling, skiing, and camping, but you’ll often see him in various business activities as well. He’s been in the industry for over 10 years, and he shows no signs of stopping any time soon.
