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There are millions of questions to be answered when buying or selling a business. The BizHunter team may not have room to answer them all, but we will answer the ones that are the most critical to making the best deals possible. If you have a question for BizHunter, drop us a line at askus@bizhunter.com.

QUESTION: What are the essential steps to take when selling a business?

BIZ HUNTER: Surprisingly enough, only 30% of all businesses on the market for sale are actually sold. Nevertheless, if you follow our philosophy for selling your business (outlined below), the chances of selling will significantly increase!

Step One: Have all your records ready to show.
The specific records business buyers will want to see include:

The last 3 years of federal tax returns for the business.
The last 3 years of financial documents (profit/loss statement and balance sheet).
The last 3 years of monthly bank statements.
A copy of the current lease.
A list of all equipment being sold with the business.

Also, serious business buyers will want information regarding:

Whether or not the landlord will provide a new lease.
Lenders (for the possibility of loan/financing).
Note buyback firm (in case you’ll want to sell the note for cash after selling the business).
Adjusted Net income for the last 3 years. (For your reference, the Adjusted Net Income is: Net Income + Owner’s Salary + Depreciation + Interest Expenses + Other Business Expenses written off.

Step Two: Have a professional business valuation performed.
70% of all businesses don’t sell because their prices are set too high. Having a professional 3rd party business appraisal/valuation is well worth the expense. It is critical to the selling process, as it will be utilized by potential business buyers, their lender/financing companies, and others.

Step Three: Keep all your information and contacts in one place.
Keep a filing cabinet with folders of all contacts, notes, and paperwork for your business’ sale transaction. It’s important to stay organized. Create a log where you track all buyers who contact you. Collect their phone numbers, e-mail address and keep notes about them.

Now you’re ready to go to market!

Next week: How to get your biz ready to sell.

Want to ask the BizHunter team a question?
Drop us a line at askus@bizhunter.com.