Key #1 - Preparation Means Everything
In preparation for selling your business, there are a number of things you should do to get ready - long before you ever put your business on the market.
First, you want your business to look good for the buyers, and that means getting your financials in order and put into a format that makes sense for a buyer. While your accounting methods may be perfect for your day-to-day operations, you're likely not set up for the banks and the buyer.
You want to make it easy for the buyers to see the potential from your business. They only care about past success in so far as it pertains to projected profits. Many a business has failed to sell because, while they looked good in the past, the future projections weren't in alignment with what the buyer wanted.
You also want to make sure that YOU are ready to sell your business. Another reason for the failure of a business to sell is that the owner is reticent about selling. The sale won't work if you're not ready to sell the business.
Key #2 - Transparency Makes it Easy
By "transparency," I mean having full disclosure throughout every step of the sales process. You should be fully open to supplying your business broker whatever he or she needs to sell your business, and your business broker needs to be open with you about the value of your business and the likelihood that it will sell.
Far too many business brokers are only concerned about the listing. They get paid for listing your business, and for conducting a business appraisal or business evaluation. Your broker should tell you if your valuation is out of line with the current market, and give you instructions on how to increase the value of your business before agreeing to help you sell.
Also, transparency during the initial stages will ensure a smoother due diligence process. Because you've already revealed the potential issues or problems to the buyer, he will know what he's getting into, and can't use these issues to lower his bidding price later.
Key #3 - The Buyer is Your Ally
You and the buyer are in this together. A failed sale means wasted time and money for both parties, so it's in the best interest of both buyer and seller to work together to make the sale happen.
The buyer will have demands that you may not like. It's perfectly acceptable to say "no" and stick to your goals, while also providing the buyer with some flexibility. The ideal scenario is when both buyer and seller come out of a business sale transaction with their goals met.
Key #4 - Organization is Critical
Many business brokers simply use the online listing services to list a business for sale. That's fine, but it's typically going to lengthen the sales process.
Your business broker should ideally put together a sales kit or package ("Deal Book") that provides all the information a buyer needs to say yes or no to the deal. Then, an organized process of marketing works best.
Your broker will already have a list of potential buyers, as will you. The broker will broadcast a message to all buyers simultaneously about the opportunity, and after careful vetting of the responses, distribute the Deal Book to selected prospective buyers.
Key #5 - Competition is Good
Finally, once the Deal Book has been distributed to selected prospective buyers, you'll provide them with a firm date for submission of bids. They will know that they're bidding against other buyers, which puts you in the enviable position of receiving multiple bids from which to choose.
Thus, you can select a buyer who not only has the best offer, but has the most likelihood of following through to completion of the sale. This particular step is highly important because three out of every four business sale transactions will fall through during the due diligence phase, costing you countless hours and dollars.