Following the Correct Path to Selling a Business - VR Business Sales Blog

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Tuesday, May 5, 2009

Following the Correct Path to Selling a Business

JoAnn Lombardi
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The time always comes when you decide to sell your business. You may have not thought about it when you were looking to buy, but this situation happens all the time: the once-in-a-lifetime opportunity becomes a financial and psychological albatross that you seek to have someone else take over.  
The Right Time to Put the Business on the Market  
Frequently, an owner allows blind devotion and optimism, inaction or a combination of the three to keep from offering their business for sale until it’s too late.  
A variety of things occur that make matters worse:  
Poor sales: The situation may escalate into a major problem due to the owner’s short-timer attitude.  
Descent into Debt: To keep business afloat, owners will often borrow more money that places more debt on the business’ assets. As a result, your value will plummet.  
Cutting Costs = Cutting Quality: Many owners will cut costs such as salespeople that will result in a diminished ability to generate sales. A large- or medium-sized business will become a small one overnight when you dispose of valuable parts of your operation.  
However, not all businesses are sold as a result of being financially in the doldrums. There are personal reasons such as illness, death or impending retirement of the owner.  
If an owner reaches the point that it’s time to “pass the torch,” the sense of urgency to sell will hit like a tidal wave. If the buyer senses this, the offering price will drop and the terms will become more difficult to negotiate even if the business is in solid condition.  
Even if the company is in great shape and there’s no intention of retiring, you may find out that you have had enough and want out.  
Why You Should Go with VR to Help You Sell  
If you’ve decided to sell your business, we here at VR can help you accomplish this.  
If you consider doing so on your own, just remember a few things:  
  1. If you run a blind ad in the newspaper, your employees, customers and suppliers will more than likely learn through the grapevine anyway that you’re selling, which will lead to a plethora of problems stemming from customer relations to employee morale;
  2. You will be subject to a onslaught of prospective buyers, most of whom aren’t seriously interested and others that won’t even be qualified;
  3. Some may only be looking for free advice.  
Therefore, you will end up wasting more time weeding out the dust kickers than working on your business if you chose to do this by yourself.  
Do not even attempt to consult someone that is not experienced in selling businesses such as a real estate broker. A few years ago, one contacted me about a listing that he had picked up, and it was clear from the word “go” that he didn’t know what he was doing. When I asked him whether the sale was going to be a stock or asset sale, he awkwardly blurted out with a confused look on his face, “Both?”  
This is why you need to go through one of our VR business intermediaries. We will guide you through the process from start to finish without any confusion or apprehension. You will have complete company confidentiality when you’re selling. We will describe your business to the prospective buyer without identifying you, informing the buyer of the asking price and terms, and determine whether the buyer can pay. Visit our website for more information or to locate an office nearest you at


Response to: Following the Correct Path to Selling a Business
Sean Garrett says
How can I obtain more information on selling my business? I am out of Helena, Montana.

Response to: Following the Correct Path to Selling a Business
Lance Howard says
I read an article from the Small Business Administration (SBA) in researching selling trends. They showed that three to five years is a long enough stretch for many of today's business owners. One in every three plans to sell; many of them right from the outset. The business they've bought is not a legacy for their children--it's a shorter-term investment of their time as well as their money. This is very true based on experience that I had. That is why it's critical to prepare your business now. I was a partner to a business out of Columbus, Ohio. The majority owner didn't have an intention of really building the business long term. His objective was to grow fast, make a profit and sell. Therefore, we had to have everything in place through the two years that we had the business before we sold. The ability to present a healthy operation with an owner in the position to follow that success are major advantages in the completion of a successful business sale.

Response to: Following the Correct Path to Selling a Business
Marissa Hunter says
From my experience, you have to be prepared to move forward emotionally and financially. Sometimes a seller will delay the sale because they haven’t seriously considered their future plans or their financial expectations are out of line. It's pivotal that the seller in question is ready to divest, and there are no hesitations or doubts that can turn a real potential buyer away.

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