The overriding concern of buyers today is how much RISK is involved in the business.
Risk can be looked at several ways, and as a business seller you'll want to consider how you manage these issues.
Risk can be perceived as reduced for a company with a long track record, long term employees and long term customers.
Risk can also be perceived as reduced when there is relative stability in sales- hopefully growing, but if not shrinking too much in this economy, that will be a good thing.
Risk can also be perceived as reduced if the company has better than average gross margins and/or net margins than the industry.
The industry forecasts should also be level or growing to encourage buyers.
There shouldn't be any changes in zoning, lease, laws, regulations, or nearby development that will change the dynamics of the business.
What can sellers do to offset the less than perfect business (which is all of them)? In today's market seller financing is a strongly encouraged way to facilitate the transfer of the business.
Seller financing shows confidence by the seller for the buyer which is a great way to reduce the perceived risk on the buyer's part.
Most businesses have had a significant downturn in sales and profits lately, and having a strong plan on how to return to previous sales will help guide the buyer.
There might be other deal structure approaches that would help the buyer deal with their risk concerns.
Specifically, buyers are looking for: o What physical assets are included in the business? o What does the current lease look like, and how flexible is the landlord? o Documentation of your sales and profitability.
o Financial return that makes sense.
o Training for someone new in the business.
o Non-compete from the current owner.
o They want to know why you want to sell.
o Are there any franchise agreements or exclusive vendor agreements or special licenses or permits required for this business? o Finally, what makes your business different from the others? Why would I want to buy this business? The road to selling a business is difficult.
Managing buyer expectations and providing the information they need to make a decision is challenging.
Most businesses for sale don't sell, they just close their doors.
You need to make the extra effort to get your business sold, and consider what buyers need to make the one of the biggest decision of their lives.
Risk can be looked at several ways, and as a business seller you'll want to consider how you manage these issues.
Risk can be perceived as reduced for a company with a long track record, long term employees and long term customers.
Risk can also be perceived as reduced when there is relative stability in sales- hopefully growing, but if not shrinking too much in this economy, that will be a good thing.
Risk can also be perceived as reduced if the company has better than average gross margins and/or net margins than the industry.
The industry forecasts should also be level or growing to encourage buyers.
There shouldn't be any changes in zoning, lease, laws, regulations, or nearby development that will change the dynamics of the business.
What can sellers do to offset the less than perfect business (which is all of them)? In today's market seller financing is a strongly encouraged way to facilitate the transfer of the business.
Seller financing shows confidence by the seller for the buyer which is a great way to reduce the perceived risk on the buyer's part.
Most businesses have had a significant downturn in sales and profits lately, and having a strong plan on how to return to previous sales will help guide the buyer.
There might be other deal structure approaches that would help the buyer deal with their risk concerns.
Specifically, buyers are looking for: o What physical assets are included in the business? o What does the current lease look like, and how flexible is the landlord? o Documentation of your sales and profitability.
o Financial return that makes sense.
o Training for someone new in the business.
o Non-compete from the current owner.
o They want to know why you want to sell.
o Are there any franchise agreements or exclusive vendor agreements or special licenses or permits required for this business? o Finally, what makes your business different from the others? Why would I want to buy this business? The road to selling a business is difficult.
Managing buyer expectations and providing the information they need to make a decision is challenging.
Most businesses for sale don't sell, they just close their doors.
You need to make the extra effort to get your business sold, and consider what buyers need to make the one of the biggest decision of their lives.
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