Sell a Business Quickly
Selling an average business can take 6-10 months. Some businesses are sold in a matter of weeks, while others take over a year. We will discuss the key factors to sell a business quickly to help you determine whether it’s feasible in your situation.
How Fast Can A Business Can Sell?
How realistic are you about selling your business quickly? How long would you expect to sell a business fast? It’s not realistic to say it will take you a few months or weeks. We have sold some businesses “overnight” but there were many other businesses we could not sell. This was due to the lengthy business sales process, which we’ll discuss further in this article.
On average, it takes 1-2 months to prepare a business for sale and then another 6-8 for the marketing and sales process. If a deal falls through, it can take a year or longer to sell your business. To sell a business quickly, you will need to be aware of the relative time-frame for selling a business in your industry and location. You will also need to understand how desirable your business is in comparison to similar businesses — the more profitable, up-to-date with capital equipment, well staffed and long-term your business, the better your odds of a quick sale.
Motive to Sell Your Business Fast
Businesses that are able to sell quickly share one thing in common: A motivated seller. Motivated sellers want to quickly sell their businesses and are willing to invest in the process.
A seller must have a reason to sell. Most people sell a business because they want to retire. They’ve usually worked hard to build a strong company. You may be looking to travel or relocate. Although retirement can motivate you to quickly sell your business, there are many emotions that go along with it. If you’re not willing to sell your business, the psychology involved in selling it can prove difficult.
We are often approached by business owners who ask us how they can sell their business quickly. You are likely a motivated seller, and want to quickly sell your business for a variety of reasons. With urgency, the process can be expedited if the seller is organized, responsive and excited to get started with the sales process.
Best Bet To Sell A Business Quickly: Business Brokers
It is important to find the perfect match between your business and the Business Broker you choose. A Business Broker that has experience in selling your type of business and who can help you sell it as quickly as possible is gold. If a business broker has not sold your kind of business before, they won’t likely be able sell it as quickly as someone who is familiar with your industry.
We specialize in the sale of Liquor Stores, Gas Stations, Restaurants, and commercial properties. A Business Brokerage with experience in selling businesses quickly in the same industry as you is an advantage. We already know potential buyers. We are fluent in the industry language, which allows us to market the company and speak with potential buyers. A business broker who specializes in your niche is your best bet to fast track your business sale.
A Business Broker who you can communicate well with would also be a good choice. Selling a business is easier and more efficient when communication is good. It is not easy to exchange a lot information. A good relationship can help speed up the sharing of new ideas and details about your business. Working with someone you enjoy chemistry makes it easier. You can sell your business quickly if you’re a motivated seller looking to get it sold fast.
Giving Out Initial Information on Your Business
A Business Broker needs to know information about you business in order to sell it. This information usually comes in the form a confidential discussion about your company, including what products or services you offer. How many customers, suppliers and employees are you able to offer? Which are your weaknesses and strengths?
We will need your tax returns for the past three years and the most recent profit and loss statements for the current year. We will need your help to determine all your benefits and perks so we can provide buyers with a full picture of your total compensation. This information will be used to determine a possible selling price.
Smart Pricing To Sell Your Business Quickly
It is important to properly price your business if you are looking to sell quickly. It doesn’t have to be priced at a significantly low price. You don’t want the business to go undervalued. Yet, for the benefit of a speedy sale, modest pricing is usually necessary.
To determine pricing, you will need a business valuation from a Business Broker who has previously sold similar businesses. Pricing a company depends on many factors. Part of the equation is your net cash flow, also known as income or profit. It includes the salary you receive, as well as the perks and other benefits the business offers. Other factors include whether you have a rising or falling income and which industry it is.
Let’s use a case study to illustrate: A service company with a net annual cash flow of less than $500,000. These businesses will usually sell at a price of 2-3 times your annual net cash flow. If your net annual cash flow is $400,000 then a service company will typically sell for between $800,000 and $1.2 million. If you are the sole owner of the company and the business revolves around you, pricing it should not be below the range. Depending on the other factors you consider, it may be worth pricing it at the lower end of this range (e.g. 2 to 2.5X annual cash flow). To sell a business quickly, you want to price it low enough that potential buyers are interested but not too low so you don’t lose money.
Pricing a business aggressively can work in your favor if you get multiple bids to sell the company at a higher price than the asking price. Having multiple bidders often leads to faster buyers so they don’t lose the opportunity to purchase the business before you do. It’s natural to desire something other than your own, so pricing aggressively can lead to increased competition.
A database of potential buyers is available and we have developed a detailed marketing strategy. We can usually introduce one to eight qualified potential buyers in the first week of an assignment. We recommend that a client who is motivated to sell a business quickly, reduce the price if they haven’t found any buyers.
Sell A Business Quickly Through Collaboration
While we are experts at selling businesses, you’re an expert in your industry. Working together will yield the most effective results. You can let us know what is unique about your company before we start marketing it. You can also share your ideas with us about positioning the company to reach the best buyers. It’s possible that you have specific buyer ideas or don’t wish to work with. We would love to get your thoughts on what a potential buyer might do for you.
After a thorough screening of potential buyers, once we find one that’s qualified and is interested in our offer, we will make a recommendation to you. You can then discuss your company and answer questions from the buyer. Our goal is to help you be open, honest and transparent, but also to make it easy for you to do business with. Tell them about all the wonderful things your company has to offer. You can discuss your weaknesses and offer the potential buyer the chance to take the business to the next level. Remember that all buyers we present to you have signed confidentiality agreements and given us information about their qualifications in order for you to discuss your company in confidence.
Offers For Your Business
Once you’ve met one or more potential buyers, and have answered any initial questions they may have, it is time for them to offer their business. The most promising buyers will be the most active and likely to make a deal. The offers should include the price, terms, due diligence time, and information.
It is important that you and your accountant work together to give all the information necessary to the buyer quickly. Your accountant should be available for any details you need to sell your business fast. Our brokers can help you to discuss any due diligence questions that may arise, including whether the information being requested is appropriate or out of scope for what’s usually done during due diligence.
Prepare Financing Options To Sell A Business Quickly
1. Prior to going to market, it’s a great idea to get your business pre-approved for a Small Business Administration (SBA) loan. Where the buyer has sufficient funds to purchase a business. This is preferable if you are looking for a fast sale.
2. Seller financing is another option. The seller may provide some funding and allow the buyer to make payments over the term. The seller financing amount can range from 10% to 75% off the total purchase price. Seller financing can help you sell your business faster than buying bank financing. Sellers can make additional money on the sale of the business through interest charged on the loan to the buyer.
3. We broker commercial loans with lenders who can offer funding for bank financing. The seller usually receives 75% to 90% off the purchase price at closing. The bank may want to finance the seller by offering 5-10% of the purchase price or keeping money in escrow for at least 30-90 days. This is to ensure that the seller provides a smooth transition. The bank can also dictate the terms and conditions of the purchase agreement. They will conduct their due diligence before finalizing the transaction. Although banks try to be quick, the truth is that having an outside party involved in the transaction can slow down the process due to the underwriting process.
Businesses have been sold quickly using all types of financing. Each deal is unique, and we meet with sellers to discuss the pros and cons of every offer, scenario, and financing option. You can then weigh each offer in terms of the speed at which a deal is closed and how likely it will be, as well as the total price and amount that was paid at closing. We can also help you decide who is best to manage your business.
A Word About Legal Representation
It may be important to find a business lawyer with experience in negotiating transactions. We can recommend lawyers who have the experience to help you move forward quickly if your attorney does not possess this skill. Lawyers can either slow down a deal or make it impossible to complete. You don’t want minor issues to stop you from closing your deal. We’re familiar with the common issues and have been part of hundreds of transactions. When necessary, we’ll help you bridge the gaps between lawyers and ensure that a deal moves forward.
We Help Sell A Business Quickly
Our Business Brokers help keep deals moving by providing answers to questions and keeping the communication going. Although not all transactions lead to quick sales, this is the goal of every assignment we undertake. Sellers are motivated to sell their businesses quickly. With the right business brokers, who has expertise and experience in your industry, you can speed up the timeline.
Each business is different. A confidential consultation is available to talk about your business goals and to develop a plan to achieve them. To schedule a confidential consultation with us to discuss your needs and determine whether we are able to help, please complete our Seller Contact form. Feel free to contact us via telephone or email us.. We hope to hear from you soon.
Our experience includes selling Liquor Stores, Restaurants, Gas Stations and SBA Loans. Check out our video channel and Mission Peak Brokers blog for more information about how we sell businesses.
We look forward to hearing from you and helping you sell a business quickly.