And How To Speed Up the Sale
The first thing that business owners want to know when selling their business is how long it is going to take. They may have debts that need to be paid or a pending retirement that they want to get to right away. The truth is there’s no simple answer to this question because there are a lot of variables involved. The hardest part is finding a buyer, which can go fast or slow depending on how the market is at the moment. But if you have a list of contacts who may become buyers, then you will speed up the sales process immensely.
Prospective buyers like to consider a variety of factors about the businesses that they are considering purchasing. They look at where the business is located, how much money it makes, what type of business it is, and what the selling price is. Most importantly, they look at how long the business has already been listed on the market for sale. If it has been listed for too long without a sale, buyers might not want to take the risk of purchasing the business because it proves there is not a high demand of buyers out there for the business. That is why it is important to know how to sell your business quickly so that you can gain a list of prospective buyers within the first few weeks of your sales listing and consider offers from them.
Most business brokers agree that it takes between 6 and 12 months to sell a company. This narrows down to roughly 9 months on average. According to AllBusiness.com, a series of business brokers were surveyed by BusinessesForSale.com and the results were staggering. Their information showed that 28% of all brokers have indicated it takes 6 months or less to sell a company. At the same time, 31% of all brokers have indicated it takes 9 months while 21% of all brokers say it takes 12 months. There were only 10.5% of them which said it takes over a year to sell a business.
BizBuySell, a business-for-sale platform, has been tracking information about sale times since 2007. What they discovered was that between the second quarter of 2012 and the fourth quarter of 2014, the median time it took for a seller to sell their business had dropped by 23%. This meant that sellers could see their sale completed in as little as 5 months. Now, this might sound like too long for some business owners, especially small business owners who want to get the sale over with quickly. If that is your case, then you should keep reading to learn about ways you can speed up the sales process. However, most business owners would find 5 months to be incredibly quick since the average wait time is between 6 and 12 months. It all depends on how anxious you are to see the sale completed.
Fast-tracking the Sale Process
The most aggravating thing for a business owner is to wait for the sales process to be completed. Owners tend to have very important reasons for selling their businesses in the first place and the longer they must wait, the longer their future plans are tied up. Fortunately, there are certain tips that you can follow to shorten the sales process as the owner of the business. The tips to fast-track the sale are as follows:
Sell Internally – One easy way to sell a business fast is to sell it to an employee of the company. This, of course, is more realistic for small business owners because the employee will have an easier time taking out a loan to purchase a small business versus a big business. Plus, if the business has already proven to make profits and has happy employees who understand how to run the organization, then it shouldn’t be hard finding an employee who will want to take over ownership of the company.
Sell to Contacts – If you have been in business for a while then you probably know a lot of companies that are similar to yours or individuals who would be interested in purchasing your business. They may want to purchase for financial reasons or for strategic reasons, like when a competitive company purchases your company to expand their own business operation or to shut yours down so that it doesn’t threaten their business any longer. All you must do is contact them and let them know that you’re selling. They may want to make you an offer right away after hearing about this.
Sell the Assets – If you are really in a hurry to sell your company and you don’t want to wait around to sell everything at once, then try selling the company’s assets first. This might be a viable option for those who are trying to sell a company that is not making any profits. Assets are at least something that any business may want and it won’t require them to take over control of your company either. Once you get rid of the assets, you could sell your brand and customer lists separately at a smaller price and increase your chances of finding a buyer quickly.
Seller Financing – Aside from simply lowering the asking price to attract more buyers, it may be better to offer seller financing instead. A lot of buyers, particularly new buyers, may take a lot of time trying to gather enough cash together to purchase the business or to secure traditional financing through a bank. The buyer could hold up the sale for months if you have to wait for them to do this and if for some reason they cannot, they’ll likely back out and then you’ll have to start all over again. Seller financing, on the other hand, is a shortcut way around all this because you are letting the buyer make payments to you.
Communication – When a seller and buyer agree on a deal, the buyer typically likes to take a lot of time to do their own due diligence on the company before the purchase it. To save time, you need to provide the buyer with as much information about your company as you can right away. That way, you won’t have to wait for the buyer to find out this information themselves. Be sure to include all your financial reports, business plan, and basic information about your customer lists without revealing their identities. Also, stay in constant contact with the buyer throughout the sales process and always be available to answer whatever questions they have. The more information they learn quickly, the faster the sales process will go.
Video: Aaron Muller at Advantage Commercial Brokers answers the million-dollar question: "How long does it take to sell my business?"
You should now be able to judge how long it will take to sell a business based on the particular actions that you take as a seller. Don’t expect to sell your business within a couple of weeks because that is unrealistic in most scenarios. Small businesses will typically be quicker to sell than bigger businesses, but if you implement the tips you’ve learned then you can speed up either one that you’re dealing with. Just remember to ask for a fair price, give prospective buyers all the information they need, and consider selling to employees and family members before third-party outsiders. Also, offer seller financing just to seal the deal and avoid having to wait for your buyer to come up with the funds on their own. With all these practices, you could fast-track your sales process to just a few months rather than 6 to 12+ months.
Related: Is Your Business Sellable?
Next: Check your status and get started with the sale