Minnesota is a great place to live and raise a family. The people have a good work ethic and the tax policy is favorable for small businesses. Are you ready to sell a business? MN business owners like you are ready to do so. Maybe you want to “cash out” and start a new enterprise? Or maybe it is time to retire and spend time with your family. Look at the selling process as an adventure and know that glitches and roadblocks will occur. Then you will be ready to deal with any problem that occurs. Here are five tips:
1. Value Your Business
Profit is King. Don’t use the standard profit and loss statement or your tax forms. The expenses reported on these forms under report the cash flow. Use the “Adjusted Net Income Statement” to clearly restate your income in a common format.
The Adjusted Net Income is the cash flow of the business. In today’s economy, multiples of 2 are a general rule of thumb for this exercise. If your cash flow is $200,000, the value of the business is $400,000. The buyer will assume the cash flow is $200K and will look for it in your financials.
2. Advertising
Classified ads in newspapers have not been effective. Craigslist will pull a flood of inquiries that will suck up time with no results. Use “business for sale” websites to reach your audience.
3. Ask for a Signed Non Disclosure Agreement
Use this form to screen buyers and see if they have a source of money such as a 401 (k) or a home equity loan. This will separate the buyers from the wannabees.
4. Information Package to Display Outstanding Features
While the financials are the number one feature, this is the time to show photos, videos, and testimonials from satisfied customers to the buyer. Other features such as being located in a busy mall or near a lake will enhance the business. Use this document to make your business opportunity shine!
5. Offer Seller Financing to Attract Buyers
Over 90% of businesses sell this way. To sell a business, the seller must ensure the buyer can earn a decent income while servicing the loan. This will reduce the risk of default and ensure income for the seller.
To sell a business in Minnesota requires careful planning and strategy. Visit www.sunbelt-business-advisors.com to connect with experts who can help you valuate, market, and close the sale.
