Sell Your Business With Confidence

The worst time to sell a business is when you absolutely have to sell. Most buyers can sense fear and desperation, so if you don't come across as level-headed and under control, they will likely exploit every weakness to gain leverage in a transaction. Unfortunately, this is a rather common scenario in today's market; many business owners are struggling financially and are anxious to sell their businesses, but are having a tough time doing so.
It's equally harmful when an owner assumes a persona of empty bravado; this only masks the desperation--and not very well. This false bravado can send the owner into a state of denial, refusing to acknowledge that her business is on a downward trend and losing value. This is the most critical time for an owner to heed the advice of advisors. There's nothing more frustrating for a professional than to see a client in a downward spiral continue to do everything that led to the state of desperation in the first place.
So if you need to sell your business, what can you do to encourage success and avoid losing leverage by appearing desperate? Here are some important strategies to follow when navigating a business sale under difficult circumstances.
Listen to your advisors
Now is the time to ask lots of questions and to seek professional advice. Your business broker, accountant, attorney and wealth manager have probably all seen your situation before and will know how to handle it for the greatest success.
Establish a plan
Much of the desperation we see from business owners could've been avoided with proper exit planning. Planning, even in urgent situations, can help you gain understanding and clarity about your situation. A properly formulated exit plan should involve all of your key advisors, with primary and contingent plans carefully and comprehensively laid out. The creation of the plan alone can give you the power and freedom to think clearly even when times are tough.
Maintain confidentiality
Unless your situation is dire, you should tell no one outside of your immediate family and trusted advisors that you're seeking a third-party sale. Your instinct may be to take a shotgun approach and tell everyone in the hope that someone will come along and make you an offer. That could happen, but it's far more likely that, once word is out, employees, clients and vendors will start to scramble for a new employer or partner. This will only make matters worse and wreak havoc on your business. Chances are you're already under a lot of stress; there's no need to add more. Consider the benefit of working with an experienced business broker who can help safeguard the confidentiality of your business.
Stay focused
The moment you make the decision to sell your business is exactly when you need to ensure that all your efforts are focused on running the business. It can be hard to avoid pulling back from day-to-day operations or putting all your time and energy into the sale, but it's essential to stay committed to everyday tasks. Buyers like to see that a business has future prospects, even if the situation is dire.
Psychologically, you'll be in a much better position if you keep yourself and your employees fully engaged. You may be surprised at what your renewed efforts might yield in the way of business performance, which will only give you leverage when a buyer does come knocking.
Understand the need for multiple buyers
A surefire way to mitigate a desperate situation when selling your business is to have multiple interested parties. Our brokers constantly remind sellers that having only one buyer is like having no buyers. A good business brokerage firm has the marketing muscle to generate heavy buyer interest even if the business and owner are not in top form. A brokerage firm should have a large, existing database of buyers who may be interested in your business, an internet presence that attracts buyers and a trained, professional staff that knows how to manage a difficult situation. Engaging multiple buyers will enable you to get the best price and terms possible.
Price the business to sell
Now is not the time to overprice your business hoping someone will take the bait. The marketplace knows what a fair price looks like and, given your situation, you should be prepared to peg the price of the business at the low end of reasonable. This may sound counterintuitive, but the right price will actually help you attract more buyers and keep the price and terms at the highest level possible. We normally recommend a third-party valuation coupled with pre-approval from a bank so that we have as accurate a picture as possible.
Know how to meet with buyers
Business owners typically sell a business only once in their lifetime, so they're often unfamiliar with the nuances of meeting with buyers. These meetings typically determine whether a buyer is going to submit an offer, as well as the terms of the offer. There are key questions that can either reveal your desperation to the potential buyer or, if handled properly, communicate that you're motivated but won't be manipulated in a negotiation. A good business brokerage firm is able to anticipate these questions and help you rehearse how to respond in a truthful, level-headed manner.
Have multiple contingency plans
Realize that not all business-for-sale deals close successfully, especially in distressed situations. That is why it's important to have a thoughtful and credible plan B (and ideally, plan C) that can give you the additional confidence to maintain control. Make sure you can answer the question, "What will I do if I can't sell my business when I need to?" An experienced team of advisors can be an invaluable help with this and give you the peace of mind of knowing there are other options.
When you're suddenly faced with a situation that requires you to sell your business, it's difficult to avoid appearing distressed and desperate. It's absolutely essential that you don't, though, both for your ability to attract buyers and close a deal, as well as for your personal well-being. Keep these points in mind and seek the help of an experienced team of professionals.

Why You Should Buy a Business

As someone who helps prospective and existing business owners for a living, I am heartened by all the media attention aimed at helping people find employment and survive this difficult economy. I'm concerned, however, that there isn't more discussion about the option of buying an existing business.
In the business brokerage industry, we equate buying a business with "buying" a career or profession. For the unemployed and those worried about their job security, buying a business is just as viable an option as a traditional job search or starting a business from scratch.
Though it requires a larger upfront investment compared to starting something from scratch or conducting a traditional job search, buying a business can provide you and your family long-term security while paying you an immediate salary, covering your bank debt and providing a small cushion to grow the business. It's also one of the best investments you can make, as evidenced by its history of outperforming both the stock and housing markets even during periods of double-digit growth rates. When you buy the right business, you're building something that has real value and can be resold later--potentially for a profit. But those aren't the only benefits. Here are six more:
1. Immediate cash flow: Taking on a business with existing customers can be extremely beneficial. With a properly structured acquisition, the business revenue should enable you to cover the cost of any bank loan, take a reasonable salary and have a slight cushion for growth. This scenario is a stark contrast to starting a business from scratch with no immediate revenues, clients, employees or cash flow.
2. Brand recognition: There is a significant advantage when you acquire a business with existing marketing, advertising, client contracts, trained employees and third-party relationships. The business is established within its trade sector and known throughout the community. This is an intangible benefit that's almost impossible to create with a start up.
3. Bank financing: Financing the purchase of an existing business can be easier than raising money for a start up. The bank can see historical performance and not just rely on pro forma financials or projections. If you have industry experience to go with the business acquisition, the banks know you have the business acumen to successfully operate it.
4. Trained employees: One of the most valuable assets in a business acquisition can be the existing employee base. With the right team in place, business owners can focus on growing the customer base or developing new products and services. The work of finding, hiring and training new employees has already been done, and you can use this as a springboard for future growth. Plus, the entire business doesn't rest on your shoulders, which gives you peace of mind should you decide to take a vacation or a break from the action.
5. Systems and infrastructure: Many businesses will have systems that range from operating manuals to complex IT platforms. Existing systems support the company's operations and should be the foundation for future expansion. You also have the outsider's point-of-view to spot and improve weaknesses in the system.
6. Training and transition: Sellers can be invaluable in helping you transition into the business, offering guidance ranging from specific training, introduction to key clients and suppliers, supplying an employment contract for future services, and in many cases, seller financing for the business purchase.