WHAT BUYERS LOOK FOR WHEN BUYING A BUSINESS

As a seller it is natural for you to be most concerned with your own needs, but don’t lose sight of the buyer’s needs. Unless the buyer’s needs are met, they will never buy the business. Sales that actually take place are win, win situations, not loaded heavily to the buyer or seller.

  • WHY IS THE BUSINESS FOR SALE? This is one of the first questions a buyer asks. There should be a  good reason for sale such as health, retiring, moving etc. Buyers are always  concerned that you may be selling because of some undisclosed fact which may  hurt the business in the future. Buyers must see a logical reason for sale –  without it they will assume the worst!
     
  • BOOKS AND RECORDS. Even  though buyer’s may trust you completely, they will want proof of the sales and  profits that the business has made in the past. This means that you should  have income tax returns, sales tax returns, balance sheets and P & L’s  ready for the buyer’s examination
     
  • REASONABLE PRICE AND TERMS. Quite frequently real buyers won’t even look at a business that is  over-priced because they feel the seller doesn’t really want to  sell.
     
  • TERMS. Generally  speaking, banks are not very quick to finance the purchase of a small  business. Over 95% of small businesses sell with seller financing, thereby  showing confidence in the buyer’s ability and the business’ future.
     
  • INCOME. Buyers must feel  they can make a decent living wage from the business after they have made  their payment to the seller for debt service.
     
  • EQUIPMENT AND FIXTURES. Buyers will want a complete list of your equipment and will inspect it to  insure that everything is in good working order.
     
  • LEASE. All buyers want a  good lease and look to the seller to help in the transfer of the lease or in  getting a new lease.
     
  • TRAINING. One of the  reasons that buyers acquire a going business is that they can obtain a  business they have no experience in and feel confident that the seller will  train them. This opens up the number of potential buyers for your  business.
     
  • APPEARANCE. Everyone  wants to be proud of their business, therefore nice looking businesses sell  first! Buyers deduct large amounts from their offering price for businesses  that are in less than top shape. You should keep your business neat, clean and  in good repair if you want top dollar.
     
  • NON-COMPETE AGREEMENT. Most buyers fear that you may decide to open another business just like the  one they are buying and take all their customers. A promise not to compete  within an appropriate distance and time, is normal for many  businesses.
     
  • TIME IS OF THE ESSENCE. It’s always wise to respond quickly to an offer because buyers are often  looking at more than one business when they make an offer. An offer can be  withdrawn any time until it is accepted and delivered back to the buyer. If  you don’t respond in a reasonable time, the buyer may lose interest in your  business and move on to another.
     
  • NO SURPRISES. Almost any  situation can be resolved if it is disclosed in advance. Please be  sure to tell us about any problems such as: Are you behind in tax payments?  Are there any problems with the landlord or lease? Are there any liens against  the business? Are you in compliance with zoning, health and other regulations?  Etc. If the buyer is surprised by something similar to this late in the  process, they often just walk away.

Considering selling - The Process - Questions & Answers - Do's and Don't's 
Seller's checklist - The meeting - Transferring ownership

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