Many vendors forget the big picture. In most cases when you want to sell your business, in effect you will be asking someone to hand over their life savings.. If a financier is involved, then you will be asking for more than their life savings. Would you hand over your life savings easily? I don't think so. You would be expected to consult your legal and accounting team, and follow their recommendations. Well that's exactly how it works. The real selling is not so much to the prospect, but more so to the purchaser's solicitor, accountant and bank manager. If they are not sold then it is unlikely your business will change hands.

The only way to sell to professionals is to promote by demonstration, trust and understanding, and that's easy. All you have to do is provide validated documentation as it's required. Always remain co-operative and informative demonstrating a willingness to oblige. Your prospective buyer will require you to provide legal and accounting documentation relating to your business but rest assure, this does not mean you hand out your trading figures, that's a mistake. In fact its not a mistake, its a huge enormous mistake. A good broker knows that. Your trading figures and P& L's should be withheld, until you or your broker has qualified the prospect as genuine, and I would like to explain what constitutes "genuine".

Of all of the thousands of inquiries I have had over the years there has emerged two very different patterns of inquiry. There's often been

There's many more statements of excuse as to why they have to have the  trading figures first, and we're unable to list them all here. All these people want is to see how much the business is earning. But those sentences describe that type of inquiry, and I may say in the early years of my business broking I took them seriously, and amazingly — Not one of those people ever bought a business, not ever. These are the traps you can easily fall into, and they always lead to avoidance on the phone or meeting and disappointment for the vendor and the broker alike.

The interesting issue is that what they are asking for, is what the vendors have told the tax man over the past three years, which really doesn't reflect very much about the business anyway. Think about that, and one must question the level of intelligence, and the motive. 

Often people in this category don't go anywhere near having the recourses to buy any business, and are frequently asking on behalf of somebody else that wants to remain anonymous. It never ceases to amaze me what some people will do and say just to find out how much you are earning. These tyre-kickers and time wasters lack the education required to efficiently and prudently manage a business. They don't ask the relevant questions because they don't understand the essential elements of what's important enough to make it all work.

Genuine Buyers:
Let's look at a genuine person who is interested in the business. What's important to them? Firstly, 

You see this type of inquirer is keen to meet the vendor to talk about operational procedures, and that is when the trading figures should be handed over, at the meeting. The inquirer can ask questions directly relating to the figures in front of them and get accurate answers directly from the source, you the vendor. They can then take the trading figures with them to work out in the comfort of their own home whether the business is overpriced or a bargain. That's how real buyers act. They demonstrate intelligence, tolerance, understanding and flexibility. They have knowledge because it's likely they have been looking and reading prior to making their inquiry. 

You see, there's a time and place for everything, and trading figures are confidential and sensitive documents. Something your competition would love to have. A genuine buyer understands the sensitivity of your personal income and expenses and don't really expect you to fax them to anybody. In particular somebody you have never met. That's a genuine buyer. 

Very rarely a genuine buyer talks money first up, they do research first, so when they do talk money their comments are legitimate and calculated. Always respect your genuine buyer, they know market values and have usually done plenty of research.

It will be a mistake if you believe you will lose a sale for withholding your trading figures until the inspection. Those that demand them are never going to buy your business in the first place. I hope you don't have to find out the hard way, because the longer you are advertising the more those ads will impact on; not asking price, but sale price, and that's a fact.

There are a number of influences that determine time and price. If your location and or product is in an area that enjoys a strong and steady economy with a broad, balanced mix of businesses, combined with encouraging interest rates, then you shouldn't have to wait too long before a sale. Of course the price has to be right and the trading figures should show at least a small profit. They don't have to be outstanding, as long as they're OK. Your business needs to demonstrate potential for expansion and perhaps diversification.

Market Price, Time & Perception

Price: We know by definition that whatever a business sells for is regarded as "market price". You should also consider that it is the market place, and the market place alone that will decide on the level of offers. Remember this, at the end of the day it is only you the vendor; that will ultimately decide to accept or reject any offers. You are the only one that knows exactly how much you will accept for your business. So let's look at what you have to do to achieve a premium but fair price. 

Do you remember the last time you purchased something? You wouldn't have bought if you didn't feel you got a bargain, and you're no different to all of us. We all want to feel we bought at the right price in relation to what we received.

You will only ever get one chance for your business's first impression

You can go to work every day, and the first day you see something wrong you say to yourself, "I must fix that later". Then the next day you see it again and say, "Still haven't done that I'll get onto that shortly", and the next day and the next day and so it goes on until the broken or unsightly item looks quite normal. But not to a fresh set of eyes. This is not about procrastination, it's about you wearing your buyers shoes. The more that's wrong, is the more that comes off your asking price. You can't change somebody's very first impression of what they saw the first time they arrived at your business. If its shabby where your customers arrive then perhaps one could think it may be a bit shabby out the back as well. Make the arrival area of your business one that you can be proud of, because that's what I would want to feel after I have bought your business.

The most common question from vendors is how long will it take. I think vendors think about selling for quite a long time, unless there is unexpected ill health, but in the main they think about it for a long time. When they decide to sell, it's usually supposed to be in a hurry, especially if there are financial issues. If you are in too much of a hurry you will end up on the market unprepared and that's the last thing you need. An astute buyer, knowing you're in a hurry will just sit back and wait, wouldn't you? If you didn't you wouldn't be astute. The longer we wait the cheaper it gets. You see, price is linked to time.

If you compress the time — you reduce the price

Business Brokers and Realty offices around the country display a variety of properties offered for sale. They have in many cases been listed for years. The sole reason they remain unsold can only be one reason, Price. Then secondary in many cases, the inexperience of a residential salesman that is starting to dabble in businesses because it seems business brokers get more commissions. They will probably sell, but only when the market place has caught up to the asking price and that usually = Time.

If your price is perceived as too high, then in all fairness you will more than likely scare away prospective buyers that have been looking at businesses for some time. Simply, the easiest and fastest way to sell your business is to those buyers already looking. Remember this, People don't wake up in the morning and say. "Today I am going to buy a business." Genuine buyers usually look at a variety of packages over a period of time and often become frustrated, and could very well be ready to buy.

Usually their frustration is born from unprepared vendors that shuffle around trying to gather documents when they are requested. Perception is, that if a vendor is slow at gathering compliance and accounting documentation, then they must also run a fairly unorganised and messy business, or maybe their hiding something. Vendors must wear buyers shoes, and with respect, ask yourself how long you would you wait around, especially when you see other businesses advertised. So, the important element to remember is this. Genuine prospective buyers have gained experience in the market place and they know values. You should always be mindful when your business goes on the market, it is in direct competition with all other businesses in your price range.

Here's a question: If you were travelling around looking to buy a business and a vendor said "I need this much to break even" or "I want this much because that's how much I paid for it" or "I need this much because that's how much I've got to pay out to the bank." 

If you are the buyer looking for the best deal or bargain, would you care about those things? I doubt it, you the buyer are looking to buy at the very best price available and that will be market price. Market price has nothing to do with personal situations, very unfortunately, what you paid for your business, or how much you owe to break even has no bearing at all on the worth or value of the package. The package, (your business), will be valued by an entire range of elements. Each of which are equal in importance. Each of which have the capacity or potential, that if not controlled can heighten the risk of exposure in the first few months after takeover.. 

Price is about Perception. If your business has had plenty of exposure by way of advertising, location, patronage and product or service demand, then it will be perceived as successful. If your local economy is buoyant then the future will be perceived as secure.
To formulate the value of a business the following elements are taken into consideration.

Getting the asking price right is very important to your marketing efforts. You have worked hard to make it what it is today, but that has nothing to do with other businesses of a similar nature for sale. Remember, you own it, it's yours and without exception, you are emotionally involved. You will remember how hard and expensive some of the work you have provided over time has been. You will be vulnerable to over-estimating its value, so be careful and try to get it right the first time. 

Everything in your existing business has been used. Everything is "second hand", which means can be valued against an acceptable itemised second hand value from second hand dealers. If you over value too much you may scare away any potential buyers. If you do happen to sell at your inflated price you will end up paying a fair portion of your additional income as capital gains tax. That is the difference over the written down value on your previous tax year, to the new value identified in the apportionment section of your business sale contract. Either way, inflating your price is risky business.

If you are not in a hurry to sell, and decide you will list the business for sale at an inflated price, and hope that somebody will turn up one day prepared to pay more than it is worth, then you should not expect too much enthusiasm from your broker. All that does is generate a question over the efficiency of the broker, it gives them the risk of developing an untrustworthy perception, especially among potential business buyers that may be following the brokers advertising. Usually those businesses just sit around until the market is perceived to have caught up to the asking price. As a business operator you should understand that when it comes to money and business, nothing is personal, it's all about the money.

Don't ever be insulted by a brokers comments, because they are looking as a buyer would see it. You don't want to scare those good prospects away with the attitude that you I can always come down. You have to have somebody in front of you to come down with, and if you're too high the first time people may not inquire at all. 

Important issue: Get as many opinions as possible, but beware, there are those that will make unrealistic promises just to get the listing. I know it sounds contradictory to the last paragraph, but often residential sales people dabbling in business sales have been known in the past to sometimes extend potential without the knowledge they are doing it. They may mean well, but these scenario's often lead to disappointment in sale price as opposed to asking price. Vendors often feel they have been foolish by accepting a lot less than their asking price, when in fact the sale price has been more in line with market value.

If you are engaging an agent or broker you should always receive a Marketing Proposal ~ before you sign anything.

Elements of the proposal should be discussed after you have had sufficient time to study the contents. 

A good business broker will happily give you names of businesses for you to contact that they have recently sold. You would be a fool if you didn't get at least three different references. An inexperienced broker or a residential business dabbler will always have an excuse why they are unable to give you references. 

Your business has been your life and for the cost of a few phone calls you will be able to find out how that particular person performed. Remember this: The public mis-handling of your business could cost you thousands in dollars as well as declining patronage, if you have placed it in the hands of inexperience or unsuitability.                       Click Methods of Sale