For many entrepreneurs selling their business is an opportunity to reap the rewards of many years of hard work. For others, selling a successful business is a chance to cash in when economic conditions are favourable.

Whatever your circumstances, the financial consequences of selling a business are considerable and are likely to have a long-term impact. The outcome of your sale can be either disastrous or rewarding, in both a financial and emotional sense, depending on how well you sell.

The level of care and effort you put into the sales process has a significant influence upon the price you receive for your business and how long it will take to complete your sale.

BusinessesForSale.com has been helping business owners sell their businesses for over 6 years. It has used this experience to put together 10 tips that will help you sell correctly.

1. Provide up-to-date financial information
Gather together the financial information required to market and sell your business. This information includes:

  • 3 years’ profit and loss (income) statements
  • Tax returns for the business
  • The lease
  • A list of loans against the business, with balances and payments schedules
  • Make sure that your financial statements, budgets and business plans are ready to be inspected by potential buyers.
  • Be ready to answer questions on every aspect of the business’s financial details.

2. Add value before the sale by grooming your business for sale
To capitalise on selling your business you want it to be at its best so that it will attract interest and a good price. Do this by:

  • Making all the paperwork as impressive as possible
  • Increasing your sales figures through aggressive campaigning or by offering a special deal for customers
  • Reducing costs – avoid making big purchases in the run up to the sale
  • Formalising employment contracts or deals with customers and suppliers.
  • Smartening up your business – clean, paint, and reorganise your premises.

3. Know your reason for selling
Part of preparing your business for sale is getting ready to deal with buyers and their questions. One question you will be asked by every prospective buyer is, “why are you selling?”. The way in which you answer is critical. Business owners sell for a number of different reasons. Your reason for selling must be sincere. You must NOT create an image of desperation.

4. Keep running your business
Even though you have decided to sell you must concentrate on monthly sales targets and the everyday running of your business. Consider employing an interim manager to help out.

5. Consider the degree of confidentiality that you wish to maintain
Buyers want to know as much as possible about the business. The more information you include, the more enquiries from prospective buyers. However, letting others know that your business is for sale can lead to problems with suppliers and employees. Confidentiality is hard to police, so if you have any reason to distrust a buyer then don’t disclose information unnecessarily.

6. Don’t overvalue your business
A high asking price scares away many potential buyers. It also gives the impression that the seller is not serious about selling their business. Surveys reveal that the amount of down payment requested by the seller can be the key to a quick sale. As a rough guide, the lower the down payment, the shorter the time to a successful sale. See our guide to valuing your business

7. Create competition between potential buyers
This is a sure way to encourage higher bids. Once you’ve estimated a price for your business you can reject any buyers who fail to reach that mark. Other bidders may then feel obliged to increase their offers.

8. Finance the sale of your business
You may not be able to sell your business if you are not prepared to finance at least some of the price. If you offer the seller financing up-front you can attract buyers and speed up the business sale. Seller financing is where the seller lends to the buyer to facilitate the purchase. After a down payment is made the buyer promises to pay the seller certain sums over a specified period of time.

9. Don’t be seduced by an eye-catching package
Carefully screen your prospective buyers. Your advert will have probably attracted responses from timewasters and sharks as well as legitimate buyers. Look out for your competitors and suppliers – these are the worst type of prospective buyer. Get your legal advisor to draw up a confidentiality agreement for interested parties to sign and do not go any further with anyone who won't sign it.

10. Consider using an agent
A good business agent can help you establish a realistic price for your business, target willing buyers on your behalf, put together a selling memorandum, negotiate the terms of a sale, and maintain your business confidentiality.

Business agents generally charge a percentage of the sales price (the average is between 3-7%) and many also charge an upfront fee to pay for their advice. If you are unsure about using a business agent, make every effort to sell the business on your own for a sensible amount of time.