Selling a business can be difficult. According to a recent study, only 20 to 30 percent of companies that go to market sell. This might make you despair if you're dreaming of selling a business quickly but no need to fret, there are ways to sell your business fast. In fact we routinely help businesses sell within 6 months or less.
In this guide, we're going to show you how to sell a business quickly. Whatever your industry, you'll be able to put these tips into action and get your company on the path to get sold in short order.
Ready to learn more about the essential steps that you need to take to sell your business? Then keep reading and find out more.
Don't have time to read, watch the short video instead.
1. Accounting Records & Processes
If someone wants to buy a business, one of the first things that they look at will be your financial records. They provide prospective buyers a snapshot of your business' financial health and prove the successes that you've had as a business owner.
If you want to sell a business fast, then you need to have up to date records that comply with the current accounting standards. You should keep your records current and up to date so that the buyer can easily compare your financial statements comparable with similar businesses in your industry.
You should also demonstrate that you plan each year in advance, forecasting a profit or loss and budgeting for costs. If you can demonstrate that you integrate annual forecasting into your accounting process each year, it shows strong financial oversight, which can make your business more valuable.
You should also compare your company's financial data to industry benchmarks so that the prospective buyer can quickly see where you stand in relation to your industry at large.
As you start to collect various documents and financial reports a general rule of thumb would be to compile the following:
- Complete lists of all equipment and other assets to be included or excluded in the sale.
- Profit and loss statements, balance sheets and tax returns of the business covering the last three years or more.
- The most recent interim profit and loss statement and balance sheet.
- Real and personal property leases.
- Copies of all patents, licenses, loan documents, contracts or agreements.
- All agreements relating to employee benefits.
- Any environmental reports.
- Copies of all other documents needed to present a fair and accurate description of the business to prospective buyers.
2. Operational Excellence
How you manage the operations of the business is key to prospective buyers. Poorly defined business processes and lack luster execution of the day to day operations, will likely caution potential buyers and may prompt them to consider their alternatives.
Being able to track and measure the operations of your business let's potential buyers see that the business has been well-managed and will continue to do so after you've handed over the reins. Having the right tools, process and people in place will make onboarding much easier for the new owners.
For one, having clearly defined documents that outlines various business processes by department is absolutely essential. This shows that there is a set procedure that your staff follows. It's also serves as a great training tool for the new owners.
An org chart will also be very useful for the new owners. You should also keep all current contracts with clients and suppliers in your records with digital copies of everything.
3. Market Your Business
When selling a business, you need to aggressively market your business as a product. Yet what does marketing a business look like and how do you go about it?
Where to List Your Business
There are many different places where you can list your business for sale and each one is effective for a slightly different customer.
For instance, if you're in a niche industry, marketing in trade publications, magazines or other online media can be a great idea.
One thing to keep in mind is that industry buyers are generally less likely to pay a premium for your business since they already have the industry experience and less likely to see value in the training you may provide as part of the offer vs someone coming into your industry for the first time.
If your business is more general, online marketing platforms like BizBuySell is quite common and their reach is extensive. You can get started listing your business with them for as little as $60 bucks per month.
If you are an Online only (e.g. Amazon) businesses, websites like WebsiteClosers.com could make a lot of sense, since they focus exclusively on online business.
If you’ve already explored these DIY options and don’t feel confident marketing your own business this is where having a business broker can make a lot of sense.
Experienced business brokers will likely have a vast network of highly qualified buyers lined up looking for businesses to acquire. Being able to tap into this network can be worth its weight in gold especially if you are looking to sell your business quickly and for top dollar.
As a member of the Sunbelt Network, we are able to place your business in front of a multitude of Deal Makers across the globe. Each Sunbelt office can confidentially access your listing and help promote the sale of your business at the best price possible. By using our proprietary website, our network is connected to an average of 12,000 business for sale listings.
Finding a Buyer Directly
Given that you're an established, successful business owner there is a high probability you already know people in your network that may be interested in the acquisition of your business for both financial and/or strategic reasons.
If you are pressed for time, instead of waiting for buyers to come to you, why not be proactive and reach out to prospective buyers to gauge their level of interest?
One major downside to this approach is that if potential competitors get wind of your intent to sell this can create risk for your business and potentially complicate the sale and reduce the overall value.
Having an experienced intermediary in this situation can protect your interest and confidentiality.
4. Creating a Competitive Atmosphere
Business value is largely a function of supply and demand. If you receive only a single bid from a prospective buyer, chances you're not getting the value for your business that you deserve.
Competition is what drives up the price/value of your business. Creating a competitive atmosphere is essential to get top dollar for the sale of your business.
This means that you should approach multiple buyers and continue talking to each of them even after you get an initial bite.
Keep the other potential buyers in the loop and updated with the most recent news and you should be able to create a sense of urgency and competition both driving the value up and increasing the velocity of the transaction.
5. Honesty is the Best Policy
When you're hoping to sell your business, it can be tempting to try and cover up any problems that your business has. This will only hurt you in the long run though: any buyer worth their salt will thoroughly research your company and if they uncover a weakness that you've not been upfront about, it could cause a huge breakdown in trust.
Selling your business fast and being honest are far from mutually exclusive. One can help the other: giving your prospective buyer the cold, hard truth about your business will let them make an informed decision in less time and will also breed an atmosphere of mutual trust and respect that is priceless.
This doesn't mean that you should keep the spotlight on your weaknesses however: highlighting your strengths is also vital. Regardless of your business background, you need to become a top-notch salesperson and show what makes your business unique and valuable. Maybe it's your product, your customer service, your revenue figures: whatever it may be, demonstrate your company's value.
6. Screen Your Buyers
If you don't screen buyers, you could be wasting your time. Screening buyers is a fantastic way to separate the wheat from the chaff when it comes to finding professional buyers who will be willing to buy your business quickly.
Buyers will want to know a lot of surface details about your business before proceeding any further so it can save you time to have a list full of information about your company ready to go. Make a PDF that you can send out to interested parties at a moment's notice.
You should also have interested parties sign an NDA. Confidentiality is very important when selling your business and before you reveal any more details to the buyer, you should have them sign a simple NDA. Keep things brief yet legally enforceable.
Use the NDA to find out more about your prospective buyers too. Ask them what their net worth is and how much liquid cash they have. This is a simple and effective way to sift out the timewasters.
7. Arrange a Meeting with Qualified Buyers
Negotiating with a prospective buyer is a case of balancing time and effort on both of your parts. If the potential buyer asks a simple question that you can answer in a few minutes then responding to them by email is OK, but if they have many follow up questions it’s best to schedule a dedicated meeting time to hash out the details instead of all the back and forth email. Negotiating the sale of the business requires finesse and nuance which is sometimes lost over email communication.
This could be a face-to-face meeting or, during current times, a video meeting. Either way, ask them to bring corroborating information about them, their assets, their industry experience, perhaps a credit report if you are offering seller financing.
Remember this is very much a give and take process. Buyers who are unwilling to share information or commit time to meet in person are likely not going to be a great fit. Use your best judgment and remember serious buyers will generally make an offer just after a few meetings.
8. Be Prepared for the Prospective Buyer's Research
The buyer will carry out due diligence on your business before they make a decision on whether to buy your company or not. We covered the importance of record-keeping and assembling your records and documents earlier and this will serve you well here.
Create a folder of documents that cover every aspect of your business. You should include revenue figures, projections for the future, current contracts, and more.
This step is important for both you and the buyer. The buyer may well be getting sales fatigue from due diligence with other companies and if getting this information from you is like getting blood out of a stone then that may be the final straw. It saves you time too: preempting the prospective buyer's questions means that instead of scrambling around for days trying to find the information, you'll have it ready to go.
Be open and transparent during the due diligence process. Show that you can be trusted and aim to smooth over as many potential deal-breakers as you can.
9. Consider Financing
If you have the means and desire to offer seller financing for prospective buyers this can be a great way to open up the sale of your business to other buyers. This approach does carry risks but it's a good way to get a fast sale and create the competitive atmosphere we discussed earlier.
Another approach is to work with buyers who will arrange financing from a bank. This is less risky but may slow the selling process down as you're introducing a 3rd party into the mix who will need to carry out their own due diligence.
10. Negotiating An Agreement
When it comes to putting together an agreement it can be tempting to do it while due diligence is still ongoing. This is the fastest way to create an agreement and, so long as you've both been transparent, is relatively low-risk. The keyword is relatively.
If either side uncovers something during due diligence that then causes the deal to collapse, you'll need to pay legal costs to have lawyers come in yet again to create/modify legal documents.
While it is ultimately up to you and the buyer to choose a time that you're both comfortable with to draft the agreement, you should be aware that waiting until after due diligence is completed comes with pros (potential faster sale) and cons (exposure to additional legal expense)..
11. No Bites? Consider Selling to Employees
If you're having trouble finding a buyer, you could consider selling your company to its employees. If you have a strong relationship with your employees and want to reward them for their hard work and loyalty, this could be a great way to sell your business fast and ensure that it's in safe hands.
One way to sell your company to your employees is to create an Employee Stock Ownership Plan or ESOP. These can give you some flexibility when it comes to remaining in the business if you aren't prepared to leave it completely and also come with some tax benefits.
12. Engage a Professional Business Broker
A business broker can take a lot of the stress out of selling your business and help you sell it fast. A broker understands what you should look for when selling your business and can help you prepare a great summary of your business that will attract buyers.
Brokers will also typically have experience in your sector which can help you a lot when it comes to selling your business. They can help you target the right people, screen prospective buyers, and keep your sale confidential.
We’ve discussed at length how to prepare your business for a quick sale. Here's a look at some common selling mistakes you'll want to avoid when planning to sell your business fast.
Avoid These Simple Mistakes When Planning to Sell Your Business Fast
Not Planning Ahead
The best time to begin planning the sale of your business is before it's time to sell. Many small business owners fail to prepare ahead of time.
This can make the selling process overwhelming and result in more stress and less profitability for you. Even if you think you'll never sell, it's in your best interest to understand the process.
Most business owners end up exiting their business at some point. Educating yourself on the process and the terminology can help you come out ahead if you do sell in the future.
There's a lot that goes into selling a business. And it can take months to years for a business to sell. Did you know that the average business takes two to four years to sell a small business?
That's why you want to plan ahead to address any possible issues and not miss your window of opportunity.
Setting up a succession plan is a critical and necessary step for business owners to plan and prepare for.
Setting Your Price Too Soon
Before you set the price, you need to know the real value of your business and the external variables that will impact the price tag of your business. Factors such as the economy, your particular industry, potential legal requirements to enter/stay in the market are all factors you should consider as you assign value to your business.
Many owners rely on casual advice from friends, advisers inexperienced in valuating businesses or other similarly unreliable sources. This can result in valuations that are either too high or too low.
If the owner’s expectation of value is too high, it will prolong the selling process until a price concession is made. If the price is too low, money is left on the table. Unless the business owner goes through the valuation process, he or she just will not know if the business is priced at market value.
As you begin to assess the value of your business, gain the help of your accountant, financial planner, or real estate expert. Their expert opinion and analysis will be invaluable during this part of the process.
One mistake we see business owners make is pricing their business too low, too quickly due to burn out or experience a life changing medical event or family loss and need a quick exit.
This scenario is really unfortunate given the time and investment put into growing the business into what it is today.
If you find yourself in this position do your homework and consider the advice of professionals before leading too quickly with a low price. Remember It's easy to lower the price of your business but it’s always more difficult to raise the price after it's set.
Rushing the Process, Alone
Too many business owners wait until the last minute to sell their business, generally at a time when profits are almost non-existent and future growth looks uncertain. When your business is struggling, is not the ideal time to sell your business.
If you can keep the business afloat and ride out the difficulties do so. The best time to sell is when your business is doing well, and you don't have to sell. Obviously putting a profitable business on the market is the best way to sell it and maximize your return as well.
If you are not in a position to weather the storm and must sell business your business quickly don’t rush the process. Gain help from a professional, such as a business broker or intermediary.
It’s important to note potential buyers will be suspect of your reasons for selling, especially in a sector that is poorly performing. Your broker will be able to help devise a strategy that will help quell the fears of prospective buyers and put you in a position to receive a reasonable offer in a reasonable amount of time vs doing it alone.
It's okay to feel confident about the possibility of selling your business. But you don't want to neglect the work to turn this possibility into a reality.
Many sellers decide to sell their business with the idea they'll get top dollar for it. But they often overvalue what it's worth.
The real value of your business isn't based on your estimation of its worth. Instead, it's based on quantifiable data.
Be sure to have a third-party valuation of your business. Compare similar sales in your area.
Once you understand what your business is worth, address any issues that stand in the way of a higher selling price.
Lack of Confidentiality
Confidentiality during the selling process is critical. This needs to be a priority throughout the process.
Unlike the sale of real estate or new development franchises, the sale of an ongoing business should be very confidential for both the seller and the prospective buyer.
If the word gets out too soon, it can affect sales and your relationship with your employees, vendors or other stakeholders. A good broker understands the importance of confidentiality.
They know how to market your business discretely and target potential buyers without your competitors and employees being alerted. A lack of confidentiality can lower the potential value of your business and drive away employees, vendors, and potential buyers.
Sunbelt Atlanta Business Brokers specialize in keeping all aspects of your business and your desire to sell confidential. Of course, certain information about your business must be disclosed to potential buyers. However, this is only done after your Sunbelt Atlanta Broker prescreens, filters and registers every prospective business buyer.
Trouble Finding a Good Fit
Taking the first offer you receive is often a bad idea. And it may not be the best offer you'll get.
Selling a small business isn't just about cashing out and making a profit. It's about doing what's best for the business and the people involved.
You want your business to fall into the right hands. And you want to take care of those who helped your business grow.
That's why choosing the right buyer matters. You want a buyer who has the knowledge and the finances to make the business successful in the future.
Too many businesses go down after a new owner takes over. You want to weigh your options and go with the best fit for the long-term success of the company.
Disengagement From the Process
You're an expert on your business. And you should stay involved in the selling process.
A good broker takes the bulk of the work and the stress off of you. But you're still a valuable part of the process.
No one has the desire to sell your business more than you. And your knowledge, experience, and motivation play a huge role in inspiring confidence in your business.
You want the buyer to see the business as an investment in the future. The buyer should be able to see themselves running the business and making it a success.
You and your broker should have an agreement about your respective roles in the process. You should work as a team to present your business in the best possible light to find the right buyer and the right price.
Failing to Find the Right Representation
You understand your business, but that doesn't mean you're the best one to sell it. You need the expertise of a qualified broker or intermediary to make the best possible deal for you.
When it comes to selling your business, it's not the time to go DIY. An experienced business broker understands the complexities of selling a business.
They know what's at stake and understand how to engage buyers and create interest in your business. Make sure you do your homework before choosing your selling team.
Ask for references and see what previous clients have to say. Surrounding yourself with a good team can make the selling process faster and increase the likelihood of profitability at the time of sale.
Not Recognizing Serious Buyers
If you're selling a business for the first time, you'll soon see some buyers aren't buyers at all. They may be looking for inside information about your customers, employees, or pricing strategy.
Many people who inquire about your business will not have a sincere interest or the funds to buy it. Brokers understand this, and that's why they're skilled at targeting real, qualified buyers.
Some buyers are looking for the "perfect" opportunity or have unrealistic goals or financing expectations. It's best to avoid these types of buyers.
A good business broker is discerning and can spot real buyers vs. "tire kickers." Be wary of wasting time with those who have no intention or chance of buying your business.
Rely on your broker to weed through potential buyers to find serious candidates.
Neglecting to Negotiate
You may have a great marketing strategy in place, but selling your business will take time. With a little luck and a lot of hard work, the right buyer will come your way.
Hopefully, you'll receive multiple offers and will have a choice of buyers. This means you'll need to negotiate to get the right price.
Your broker should lead the way, and you should prepare to negotiate when the time is right. When you receive an offer, you have to decide whether or not to take it and if you need to negotiate the terms.
Indecisiveness or procrastination is a mistake and could cause you to lose a serious buyer. Make sure you have a qualified broker by your side ready and willing to negotiate on your behalf.
Not Preparing for Deal Fatigue
Selling your business takes time. You may get lucky and sell right away, but the process could take many months.
Sometimes deals fall through, and buyers come and go. It's a long process that requires your attention and patience to the end.
During this time, you may still be running your business. That's a lot on your plate at once.
It's common for sellers to become impatient and experience deal fatigue. This could result in you accepting a low ball offer or losing money just to reach a deal.
Prepare yourself for a wait. Stay engaged, and the right buyer and the right deal will come along.
Setting the asking price too high or too low can be detrimental to finding a buyer. You have to be realistic about the status of your business.
Buyers will not pay top dollar for a business that's not currently successful. Consider how your business is faring right now before setting your price.
When pricing your business, consider other businesses in your industry, including those in your area. Inexperienced sellers often price a business too high which can lead to a longer time on the market.
Another mistake is pricing too low. This is often a result of a seller's fatigue.
A seller grows tired of waiting and decides to underprice their business. The seller loses money and may regret the hasty decision.
The goal is to make as much money as your business is worth. So do your homework and follow expert advice before naming the sale price.
Don’t Misrepresent Your Business
As a business owner, you want to present your business in the best possible light. But there's a difference between focusing on the positive and misrepresenting your business to influence a buyer.
Exaggerating the virtues of your business could come back to haunt you later. Be positive, but present the truth to the buyer, whatever that may be.
Don't try to cover up problems or present false projections for the future. You want to sell your business but not at the expense of your credibility in your industry.
Misrepresenting your business could ruin a potential sale and lead to possible legal action against you in the future. Make sure you have a trustworthy, experienced broker to guide you throughout the selling process.
Selling a business isn't easy but you don't have to do it alone. In fact, it's all we do everyday. And we don't take any money up front to help you sell your business. Our interest are tightly aligned yours. Therefore, if you need to sell your business quickly for top dollar we'd love to have a conversation with you.