This is a major problem with potential Vendors.  In my many years of being a Business Broker I have seen the lot.  Everything from some notes on a piece of paper to an elaborate presentation and everything in between.

My first suggestion is not to try to do it yourself.  Different businesses need different information.  Some have a lot of equipment, some have very little.  Some have a geographical area it’s working some are just in shopping centres.  Some have a supply/distribution management some are Franchises where the rules change.  The best advice I can give is to get some help from a qualified accredited Business Broker who can help with the details and guide you through this most complicated exercise.

I think the most important thing to remember is the reason why all this information is needed in the first place.  By collating the information correctly and by presenting it in a manner that is simple to understand, it is much easier to show the attributes of the business, the true value of the business, the sustainability of the sales and the profits and more importantly an ability for an incoming purchaser to see the true value.

I have yet to meet a Vendor who doesn’t think his/her business is worth more than what the market thinks. 

This is because they are on the inside and they know all the real attributes of the business, it’s important to be able to let an incoming Purchaser really know how good it is.

There are not many people around who keep the purchase price of a business in the bank as liquid cash, so most Buyers are going to have to talk to the bank to borrow the money.  If the information is accurate, well presented, showing details of rents, earnings, staff, longevity of operation etc. and is presented in a professional manner it is easier for the banks to decide to help or not.

Most people selling a business think that it is like selling a house – it is so far removed from this and to be honest not many people are very good at it because they just don’t understand the concept.  For someone to buy a business they are changing their life and their lifestyle, so this is a very serious business we are in, lets help the incoming Purchaser as much as we can to make the right decision.  I have long aspired to letting the Purchaser purchase and not sell anything.  If the business suits the Purchaser he will buy it, we don’t want to force him to do anything he is not happy with. 

For him/her to buy he/she must have the facts ready to hand so that they can make a good qualified decision.  Work with a qualified accredited Business Broker with many years experience and you will eliminate most of the problems before they raise their ugly head.

When selling your business it is extremely important to get the “Sale Price” right in the first instance.  Why?  If you price it too low you will cost yourself money and if you price it too high it can sit on the market for a long period of time and become stale and even worse, the longer the business is on the market the more people wonder what is wrong with it and the less you get for it.  Either way it costs you Money!

Selling a business is not like selling a house where you can put a high price on it expecting to barter down and accept a lower offer.  People buy a business based on their return on investment.  In other words they compare the profitability to the sell price to ensure the price of the business is in line with the profit that the business is making. There is no hard fast multiple that is always right because all buyers take into account other factors that also help determine the price, like position, overheads, trading hours, history, potential, competition, lease, barriers of entry, skill level, systems, plant & equipment plus financial preparation and much more.

These days it is more important than ever to price your business right before putting it on the market and preparing it for sale properly as purchasers have a very wide range of businesses, franchises and investments to choose from.  When you sell your house the agent will often say that it will probably take 6 months to sell.  When selling a business it usually takes 2 to 3 weeks to prepare it for sale then 3 to 5 weeks to sell it and settlement should be 4 to 5 weeks later making the whole process approximately 3 months.

If you are unsure and don’t know where to start then you need to have your business appraised.  This service is usually free and will help determine the right price or at worst give you advice on what action you need to take to prepare your business for sale in the future