Find a buyer for your business
Once you’ve decided to sell your business, it’s crucial to market the sale in order to find a buyer. Although you may think this is a one step process, there’s a lot more involved in the marketing strategy to find a buyer. The process includes: finding a business broker that’s qualified, preparing the selling memorandum, and deciding how you will structure the sale. These are all important steps to take when finding a buyer.
Find a qualified business broker
You might think that you’re a great salesperson and that you can sell the business yourself. However, selling a business is a job in itself. Also, you could create negative effects when yu try to sell your business. Trying to sell your business yourself will take time away from managing the business. Advertising that your business is for sale can also create confusion with your customers, suppliers, and employees. This is because your customers could decide to go somewhere else for the same products, which results from the uncertainty created by your business being for sale. Your suppliers may think that you’re having financial difficulties and won’t want to continue supplying. Your employees can become unproductive or key employees might leave for another employment opportunity. When you try to sell your business yourself, you put the essential factors in your business at risk.
If you hire a business broker, the broker will advertise the sale of your business under his name. The business broker also has more marketing resources available to him. In addition, there are various online platforms available specifically to the broker for marketing the sale of your business.
A selling memorandum is quite similar to a business plan, but instead of starting a business, the goal is to sell your business. There are three reasons why you should prepare a selling memorandum. Number one, it will help you understand what you’re going to sell. Number two, it will give the business broker a better understanding of your goals. And number three, it will give the buyer a clear picture of what he is buying.
Elements of a selling memorandum
- executive summary
- reason for selling
- the company’s history, structure, and operations
- asking price and terms
- industry, market, and products
- employees and assets
- financial statements (past and forecasted)
- additional information that may support who you are and why you’re business is a great opportunity
Defining the terms of the sale
By including a list of your requirements in the selling memorandum, you will prevent buyers from wasting your time. The terms will specify the assets that you’re selling and whether your key contracts are transferable to a buyer. For corporations, the terms will also include whether you’re selling assets or stock.
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