When you’re ready to sell your business, there will be many factors for you to consider to get the terms, price and buyer who will be the right fit.
That’s why it’s critical to hire an experienced business broker because they will have the skill and expertise to guide you. A good broker will help you prepare your business to maximize your sales price and increase your chance of a successful sale. Jeff Chapman Eisnaugle from Business Broker Colorado, can maximize your value and help you avoid mistakes when getting ready to sell your business.
- Deciding the Right Time To Sell– Timing is important. To get the maximum sales price for your business, you should sell before you start slowing down and if possible, when the business is doing well and trending up. Often, business owners lose their passion for the business and let their sales and profits decline before they decide to sell. Potential buyers view this as problematic and the sales price usually reflects this. A bank usually won’t loan a buyer money to acquire a business unless that business is making enough profit to service the debt and pay the owner a decent salary. Both the buyer and the business must qualify for a bank loan.
- Not Keeping the Sale of Your Business Confidential –When you decide to sell your business, it’s absolutely vital to keep all aspects of the sale confidential because it could cause damage to your business. You want to make sure that your employees, vendors/suppliers, and customers don’t learn you are selling until after the closing. Jeff will maintain control over who knows your selling through a Non-Disclosure Agreement and by manually screening each buyer.
- Correctly Valuing Your Business– Properly valuing your business is important because if it’s priced to high, it may not sell and if it’s priced to low, then you’re not getting the maximum sales price that you deserve. Jeff from Business Broker Colorado uses several factors such as time weighting, traditional add backs, trend, size, industry, asset values, etc. before coming up with what you can realistically expect to get for your business. You don’t necessarily want to listen to “biased advisors”, be it your accountant, your lawyer, your brother-in-law, or friends looking out for you who tells you what they “think” you should get for your business.
- Getting Emotional– Selling your business is not only a big decision but can be an emotional one as well. Jeff is a compassionate business broker who understands buyers and seller’s different emotions. He will offer experienced advice and support through the entire process. He has the expertise to guide a seller through the sales process and improve the probability of a successful conclusion. The main thing to remember is that before you decide to sell, be absolutely sure that this is what you want to do and then keep reminding yourself of all the reasons why you’re selling.
- Properly Marketing Your Business-There is nothing more important than telling your story about your business so that potential buyers have a clear understanding of the company that you built, why it has a great future, and why your selling. In marketing it the right way, it should make buyers excited to learn more about your business and to make an offer. This is very important and why you should consider hiring an experienced business broker like Jeff from Business Broker Colorado. He has an extensive database of prospective buyers, as well as using highly effective and unique video marketing which is both an interview of the owner and a walkthrough of the business. He often locates numerous prospective buyers which results in achieving both better terms and a higher sales price. Having an expert business broker market and sell your business makes the whole process run smoothly.
- Choosing a Business Broker Who Suggests the Highest Listing Price– If you’re thinking about selling your business, you might be interviewing several business brokers to choose the right one. You have to be cautious because some brokers will tell the seller what they want to hear, over compliment their business, and agree to list their business at an unrealistically high price just to get the listing. Then, after they have the listing for a few weeks or months, they will start telling the seller they need to reduce the price. A professional and ethical broker will provide a well-researched valuation to determine a realistic price that your business will sell for. The decision of which broker to list your business with and what price to ask for it are two completely separate decisions. Select your broker based on their experience, marketing methods, size of buyer list, and your comfort level with them. Never select a broker based solely on the price they suggest.
- Sell Your Business Yourself– There are many reasons you may not get your maximum sales price when you try to sell your business yourself versus hiring a business broker. Having the correct valuation, marketing your business without your employees catching on, trying to negotiate the highest and best price for your company, and trying to run your business at the same time is a daunting task. By hiring a professional business broker such as Jeff Chapman Eisnaugle, he will market it various ways including the use of video and will show it in multiple places including to his large list of potential buyers in his database. He then finds the right buyer and negotiates the best terms and sales price. His skill and experience in selling businesses is invaluable.
- Having Poor Record Keeping– Potential buyers will want to look over the financials before they will buy a business. This will give them a clear picture of how the business is doing and will give them confidence to move forward with the transaction. Plus, many buyers will have to get a loan to buy a business and the banks absolutely won’t lend money without reconciling tax returns to “the books”. It’s very important that your internal Profit & Loss Statements are accurate. It is essential to have financial information that can be easily understood and verified by the potential buyer and a bank.
- Listing With an Out-Of State Business Broker– Denver metro is a hot market, and a lot of out-of-state business brokers advertise here to try to get listings. There are two problems with this. One, to get the best service possible, you should hire a local business broker who knows the local market and can be available for face to face meetings with potential buyers. Two, to legally sell a business in Colorado, a business broker is required to have a Colorado Real Estate License. A lot of out-of-state business brokers are not licensed in Colorado and are therefore breaking the law.
- Choosing the Wrong Buyer-There will be many potential buyers that will look at your business in detail after talking with them over the phone or meeting them in person. Ultimately, a professional business broker will help you choose a buyer who not only has the means to buy your business but who also has the character, personality, and passion to keep the business running successfully once it is sold. If you choose the wrong buyer it could negatively affect the business, the employees, and any money owed to you by the new owner. The advantage in hiring a business broker like Jeff Chapman Eisnaugle is that he has the experience to help you choose the best person to buy your business.
- Not Preparing Your Business For Sale-It’s helpful to get things in line before looking to sell your business. The help of professional advisors such as CPA’s, tax attorney’s, and bankers can also help you get in a good position. It’s also important to make your business financeable by having your records accurately reflect your company’s income, expenses, and be reconcilable to tax returns and bank statements. The best way to do that is through a financial tracking system like QuickBooks combined with either compiled or reviewed financials by a CPA. Other aspects of getting ready to sell is to make sure key employees are in place to help with a smooth transition, don’t overspend to keep your taxes low, and don’t wait to sell your business after it has slowed down because the businesses ‘trend’ is an important part of the valuation process. A positive trend will not only get you more money but a much higher probability that it sells.
- Choosing a Business Broker Who Quotes You the Lowest Commission–Your business is in competition with all of the other businesses on the market for the best and most qualified buyers. You need an aggressive, proactive business broker to get your business sold and for the highest price possible. A professional business broker knows how to market your business in a way that will get the most attention from potential buyers. Also, an experienced broker has the job of negotiating the terms between the buyer and seller, dealing with professionals such as accountants, attorneys and bankers all the while keeping the process running smoothly until a successful closing. An experienced and knowledgeable business broker deserves their commission because of the time, effort, and results that they get for their sellers.