Selling your business is a life-changing event. While most owners once dreamed about buying their business, the decision to eventually sell can be brought on by a variety of factors, including a change in location, finances, or lifestyle. Whatever the reason, sellers should be aware of online resources that can make the transaction more efficient and effective.

Putting your business for sale on an online business marketplace is cheaper than a newspaper classified ad, and will ensure much more widespread exposure. Brokers and business owners selling independently have found a great deal of success in posting on the Web. Before placing the ad, though, you’ll want to remember four key points – preparation, using Web tools, providing the right information and screening buyers.

Prepare

Selling a business is not something to rush. Ideally, many months should come between making the decision to sell and putting a business on the market. This will allow you to properly assess the financial situation of your business and create reports detailing potential growth and revenue. It will also give you enough time to modernize any out of date systems that might deter buyers once the business hits the market.

Have all the information potential buyers might want – past performance, business costs, strengths and weaknesses, for example – prepared in advance. Business must go on as usual while the business is for sale, and once buyer inquiries begin coming in you might find yourself too busy to put together all the necessary information and keep the business running simultaneously.

Use Web tools

Online business marketplaces offer tools that can help make preparation for selling easier. For example, a “valuation report” can provide estimates of fair selling and buying prices for businesses based on comparable establishments, chosen geographic area, gross income and cash flow ranges. For example, this report can break down pricing information for restaurants – a broad category – into more specific guidelines. A full service business might be priced at around 33 percent of annual sales, as opposed to 40-to-50 percent for a fast food business. More specifically, a fast food business specializing in hamburgers might sell for 35 percent of annual sales, while a pizza business would generally sell for around 30 percent.

An online marketplace can also provide a listing of brokers in case site users want additional help in buying or selling a business. 

The option to upgrade a listing to featured or showcased status can also help users sell their business more quickly and easily through the ability to include more descriptive text in an ad search result, as well as highlighted, eye-catching placement. Standard listings often give sellers the chance to capture potential buyers’ attention with one headline. If this is the option you choose, make sure the title is concise and clear, but attention-getting. The title should convey why potential buyers should be interested in finding out more. If there’s anything about your business that makes it particularly desirable, such as location, make sure to include it in the headline as a selling point.

Provide the right information

Confidentiality is a significant factor for business sellers. In order to keep the business running smoothly during the selling process, you’ll probably want to be extremely careful not to let customers, employees and competitors know you’re selling. This means that certain details should be kept at a minimum when posting an online ad.

At the same time, it isn’t a good idea to post so little information that nobody will be interested in the listing. The key is providing the most information possible without giving away the identity of the business. It is important to give viewers an idea of the general location of the business, but do not post the business street address, phone number, or e-mail address in the listing. Instead, create a separate e-mail address and phone number for inquiries from potential buyers. If you have to provide further detail, have the recipient sign a nondisclosure agreement.

It would be wise, though, to include certain details that can benefit your ad, but won’t give away the identity of the business. For example, tell potential buyers why you’re selling the business. If you’re honest, people will tend to be less skeptical, and you’ll probably sell your business faster.

Once you place an ad, you might find that certain questions come up repeatedly in inquiries. This can serve as a good guiding point for what you should change or add to your listing if ongoing editing is possible.

Screen buyers

Another potential issue to prepare for is inquiries from people who aren’t serious about buying. According to a 2006 Yahoo Inc. poll, two-thirds of Americans dream of owning their own business. As a result, sellers often encounter people who have the dream, but no realistic intention of buying.

It is difficult for online marketplaces to screen potential buyers, so sellers have to determine the validity of prospects on their own. The best way to do this is by asking potential buyers direct questions about how long they’ve planned on buying, how they plan on financing the business and how much they have for a down payment. This kind of informal interview will allow you to determine early on whether the prospect is worth pursuing.

Check back tomorrow for Part 4 of 7: Negotiation 101:  Tips for Business Sellers

About the Author
Mike Handelsman is General Manager for BizBuySell, the Internet’s largest business for sale marketplace. Since 1995, BizBuySell has offered tools that make it easy for business owners and brokers to sell a business, and potential buyers to find the business of their dreams. BizBuySell lists over 50,000 businesses - spanning 80 countries - for sale at any time, with over 4,500 added or updated each month. BizBuySell also has one of the largest databases of sale comparables for recently sold businesses and one of the industry’s leading franchise directories. Please visit www.bizbuysell.com.