because you have a small business to sell doesn't mean your business
deserves less effort than a larger business. In fact, a substantial
number of business brokers will argue that smaller businesses need significantly more effort to sell than larger businesses!
HERE'S WHY ANYTHING LESS THAN 15 PAGES COULD LOSE YOU A BUYER
Although they offer greater affordability, smaller businesses compete against potentially thousands of other business opportunities in the same price bracket including:
- other businesses for sale in the same or similar industry;
- start up business opportunities which can cost as little as a few hundred dollars promising the same earning potential; and
- the appeal of secured income by going back to work with no out of pocket expenses, risks or responsibilities.
Too often, we see or hear of businesses selling for substantially less than their original asking price or the business is taken off the market or closed down. A key success factor in being able to sell a business is to attract buyers which sounds obvious but many sellers only target buyers in their industry or only advertise in a small pocket of mediums, not realising that buyers come from anywhere and a number of them don't really know what they want. Without the right presentation and handling of buyer enquiries, sellers often treat these buyers as "tyre kickers" or "time wasters" which may be true but so is the reverse of this.
business brokers for many years, we found that buyers could easily be
swayed from business to business even though they may've started out
looking for something more particular. A good example is when we had a
wedding theming business for sale heavily reliant on the departing
owners and very niche in its potential buyer market. We advertised the
business for five weeks and each week we had different buyers enquire
about the business but no inspections. Each week we ran different ads
and maintained the same price tag. On the sixth week we finally hit the
right note, sent out over 20 Confidentiality Agreements, 15 Profiles,
had three inspections and three offers from different buyers who
initially dismissed the business!
HOW TO PERSUADE "TYRE KICKERS" TO BUY YOUR BUSINESS
In a nutshell, we advertised in as many mediums as possible, changed the ad every time, and worked each buyer according to the benefits the business offered to them personally.
A good business broker will look at ways to marry buyers to your business and make it their job to understand both.
THE DEAL BREAKER YOU NEED TO KNOW
The dangers of working with buyers:
- buyers can lose interest very quickly if information is not readily available or there are unexplained anomalies etc;
- buyers will most likely remember only a fraction of what you say;
- buyers will consult others before buying your business including accountants, solicitors, and financial lenders. Their advisors will feel less emotional about the purchase and will rely on the parts your buyer recalls which may not be as exciting or as accurate as your presentation;
- buyers will judge your business from the quality of your ad to the way you conduct yourself and your overall presentation. A good presentation will reflect positively on the way you operate your business and will offer buyers and their advisors greater confidence in making an offer to purchase your business;
- buyers may look at other business opportunities even whilst a Contract is in motion.
A professional Business Profile serves as a critical reference point throughout the sales campaign to create and maintain ongoing interest for all parties of the buyer. If you're losing buyers after initial contact then you need to seriously consider your overall presentation and look at how professionals get the job done properly.
HOW TO WRITE A BUSINESS PROFILE
Buyers don't know what they don't know so you need to educate them from different angles. A standard template, particularly if you're part of a franchise system, will offer your business a small point of difference, if any, so you need to be more creative with your business profile. Treat your business as if it's the only business worth buying in your price bracket. If a buyer has money to spend on a business opportunity, make sure they spend it on yours!
One common attraction for buyers is a good return on investment with minimal risk. If you can demonstrate that your business opportunity offers this and more, then you will be in a stronger position to sway buyers from other business opportunities!
Key points to consider:
- Trading name
- Address of business
- Years established
- Years current owner
- Trading hours
- Summary of staff requirements and owner's involvement
- Premises details
- Products and services
- Clients and source of income - general overview of who and where
- Supplier - general overview of who and where
- Competitive market analysis - general overview of who and where
- Growth opportunities
- Major plant and equipment requirements
- Reason for sale
- Financial performance - compare at least three years trading financials
- Asking price and inclusions
Disclaimer: The information provided above is to be used as a guide only. No person should rely on this information. BizClassifieds recommends persons seek their own professional advice, and accepts no liability for any loss or damage which any person or business may suffer arising from any negligence on our part.