How to shortlist the right buyers to buy your business
Every year, thousands of businesses change ownership. Many of them are small ‘sized’ businesses, similar to beauty salons, cafes, restaurants, dry cleaners, quick-print shops, retail stores, landscapers, and tax advisory services to name but a few. And a handful are medium to large in size. Regardless of the business size, if you are looking for the right buyer to buy your business and desire to have the best deal possible, be ready to do a lot of preparation, planning and research beforehand, this will serve you in good stead.
Are you truly ready to sell your Business?
Regardless of what sort of business you have; be it a beauty salon, a certified services company, a retail store, or a home-based website that sells imported garden equipment, there is a good possibility that there’s an interested buyer out there (if the price is right). However, finding the right buyers to buy your business and selling the business on positive terms will necessitate planning and hard work by you – it will be worth it.
First of all, you must think about whether you’re really prepared to sell or not. To make the most of the opportunity you need to be prepared and understand the business sale process and market trends. Know how to prepare your business for sale, how to set a realistic value, how to find prospective buyers, negotiate your sale, understand the paperwork and finalise the sale purchase agreement. Make sure you protect your business sale interests by pre-qualifying potential buyers.
Selling a business entails know-how of diverse areas as the process of selling a business is full of potential pitfalls. Business owners must be confident enough that they are making the right choice and decision by selling their business to get the best price, given current circumstances and their realistic interests. Make sure that the fact that you are selling is not an unintentional response to the receipt of an alluring offer. Even if an enticing high offer has landed on the table, check it out first and qualify it before giving into the enticement easily as you could be led down a garden dead end path.
Potential buyers – weeding out the time wasters
When you are sending out your business sale teaser letter and trying to lure in buyers through advertising or word of mouth, you may receive many responses from interested parties that are not the right buyers from your point of view. Talking to too many unworthy buyers may delay or even stall the sale and your time is precious so don’t waste it. The method of selecting the right buyers for your business is called pre-qualification. Professional business brokers generally do this job of short listing the right buyers to buy your business, but if you are planning to do it yourself, you must have your pre-qualification plan prepared. Don’t be surprised to find that 90% of interested parties won’t have the purchasing power to buy your business. We came across that 90% during our business sale process.
Maintain confidentiality throughout
If you are dealing with too many buyers, its difficult to maintain confidentiality and your sensitive business information may be visible to more people than you may feel at ease with. Consequently, by not satisfactorily screening out inappropriate buyers, you risk exposing your business secrets that may possibly have a harmful consequence on the potential financial performance of the business.
Shortlist the right buyers for your business
You need to recognise the significance of choosing the right buyers to buy your business. The right buyers should have the following qualities:
- You have verified that they can afford to purchase your business
- You believe that they want and need your business ie. they realise its value
- You believe they won’t waste your time
- You believe they won’t disclose sensitive data to others
It’s worth saying twice, make sure that the potential buyer has the financial capability (cash!) to pay for your business, in full, today.
A business sale can be an exhausting process (it was for me!), make sure that you relieve some of that pressure and stress by being prepared and shortlist those potential buyers through qualification. Become familiar with the business sale process, know how to whittle down the buyers list, learn about the pitfalls and how to avoid them – its all covered in my How To Sell A Business eBook.
Joanna Miller, Co-Founder of Business Wand, helps business owners navigate their way through the start to finish process of selling a business. Her specialty is helping owners understand how to prepare and make the most of their business sale process to maximise their company’s value. To understand how you can sell your business quickly for the highest sales price, purchase her book, “How To Sell A Business: The #1 guide to maximising your company value and achieving a quick business sale”