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Should I sell my business? Take this quiz
By The Business Sale Center
For each question, answer from 0 to 5
0 = strongly disagree with the statement
5 = strongly agree with the statement
1. I have a clear idea of what I want to do with my life after I sell my business.
2. If the sale price is acceptable, I am willing to take half of the sale price in cash and loan the buyer the other half for up to five years. 
3. Overall, I would say that myself and my business are both in pretty good shape.
4. I have 10-20 hours per week that I can dedicate to working on selling the business.
5. There are no big impending tax or legal problems that I’m worried about in my business.
6. Without me around, my business isn’t worth nearly as much.
7. Sales and/or profits have been stagnant or declining recently.
8. I have a specific minimum price that I will sell for, and not a single penny less.
9. I feel very uncomfortable giving out a lot of financial details about my business.
10. I’m worried about new competition and/or changes in laws pertaining to my business.
How to score:
Questions 1 through 5: Add the points for these questions.
Questions 6 through 10: Subtract the points for your answers here.
Highest possible score is 25 points - all 5's for questions 1-5 and all 0's for questions 6-10.
What your score means:
15 or higher – you and your business are on the road to being ready to sell
12 to 14 points – probably ready to sell, with some fine-tuning required
11 or lower – some overhauling is needed to get ready for sale
Your answers may shed light on your attitudes and business sale readiness:
1. Are you sure you want to sell? What’s next in your career? Some business owners realize that they don’t have an exit plan late in the selling process and back out after wasting a lot of time and money.
2. Most business sales (there are a few exceptions but not many) require the seller to “carry paper” for some percentage of the sale price. If you’re not ready to consider this likelihood, you may not have realistic expectations. And if someone tells you they can sell your business for 100% cash, that’s an indication you should not trust them.
3. Are you in a position where you must sell due to illness or poor business performance? Or do you want to sell? If you are in a “must sell” situation, you may have to accept a lower price in order to sell the business quickly.
4. Selling a business takes a great deal of time and effort. Just keeping the place clean for the parade of potential buyers and meetings with buyers eats up a lot of time.
5. If your business has significant legal or tax problems a potential buyer will find out about them, and you’re opening yourself up to even bigger problems if you manage to hide them until after the sale. These problems probably won't scare the right kind of buyers away but they may lower the selling price.
6. If the business is heavily dependent upon you and special abilities or relationships you have with customers, the business will be more difficult to sell. And don’t kid yourself that Uncle Harry will still be the company’s biggest customer after his favorite nephew has cashed in.
7. Declining sales or profits are an indication of trouble, no matter how you answered the other questions. Again, these problems probably won't scare the right kind of buyers away but they may lower the selling price.
8. It’s OK to have a price in mind – as long as it is realistic. Perform a valuation (or have one performed) on your business as a reality check on the selling price.
9. If you decide to put your business on the market, every aspect of your financial statements and business operations will be examined in microscopic detail. It’s important that you feel OK about giving out this information to qualified buyers. Hesitancy to release information is often interpreted by buyers as trying to hide something.
10. If you’re a storekeeper losing sleep worrying about the new Wal-Mart going up across the street, selling is probably not the answer to your problem since buyers generally investigate very carefully and will probably figure out any major problems.
About the author: James Laabs is an experienced business seller and author of the book The Business Sale System: Insider Secrets To Selling Any Small Business ($19.95, First American Publishing). Click here to find out how to order the book.
Overview of business selling process
By The Business Sale Center
There are different approaches to selling a company, but at the Business Sale Center, we have found the following steps should be followed to maximize the selling price and maintain confidentiality during the selling process.
Selling a small business is one of the most important events in the life of an entrepreneur. For many, it is a once-in-a-lifetime opportunity to reap the financial rewards of years of hard work and sacrifice. The financial consequences are greater and have more lasting impact than any other financial transaction the seller ever made. The result of the sale can be either ruinous or rewarding, financially and emotionally. With the stakes so high, it is absolu
tely critical for the business seller to have a sound plan for selling the business.
This step-by-step system has been proven to work in countless business sale situations. One of the great things about this plan is that, if the business owner sticks to it, most of the major pitfalls of selling a business can be avoided.
(1) Valuation – Determine how much the business is worth.
Do you really want to sell? Is now the right time? Use commonly accepted methods to set a selling price for your business. (See the Valuation article in the Preparation Section for more information)
(2) Prepare the business for sale – Gather financial statements and tax returns, develop recast financials, and generally spruce up the business prior to putting it up for sale.
(3) Find potential buyers – Now it’s time to find some interested buyers. How do you determine who are the best buyers? And how can you reach them? Also important – how can you keep the planned sale secret from competitors, employees, suppliers and anyone else who shouldn’t know about it?
(4) Screen potential buyers – If you’ve done step three properly, you have a group of people who have expressed a preliminary interest in buying a business such as yours. Many are sharks, a few are kooks and many are wannabes, a lot of them don’t have enough money to do a deal, a few are competitors and suppliers…and a small number are qualified buyers. It is absolutely critical to qualify potential buyers prior to giving out any information about your business.
(5) Provide a selling memorandum to potential buyers – The selling memorandum is an extremely important document. It must combine salesmanship and truth, putting your business in the most positive light. It sets the stage for all future negotiations and plays a major factor in how much you’ll be paid for your business.
(6) Provide initial follow-up information to buyers – After receiving the selling memorandum, buyers will have follow-up questions. These can be minimized with a well written selling memorandum, but questions invariably come up.
(7) Meet with potential buyers – Since this requires effort on your part and the buyer’s part, if you reach this step it implies a good level of mutual interest. Caution: Just like there are weird people who get a charge out of attending funerals, there are a small handful people who get some unexplained joy from touring companies for sale. Since preparing for a seller visit takes a great deal of time and planning, make sure visitors are qualified. This is especially true if potential buyers are local. In some cases, it’s advisable to get a letter of intent prior to a visit.
(8) Letter of intent – A buyer should now have all the information needed to provide a letter of intent. The letter lays out the deal structure including offering price and terms, as well as other important information. Although it is generally not legally binding, a LOI is a written promise to follow through with the deal if due diligence shows all the information you provided to be substantially correct.
(9) Evaluate letters of intent and select first choice – Now comes the interesting part, where you evaluate the deals in the letters of intent you’ve gathered and put them in the order you wish to deal with them. It is considered unethical to deal with multiple buyers, so you negotiate with only the top buyer (for a limited time) and if that falls through, you move onto buyer number two and so on.
(10) Due diligence and negotiating with the buyer who is your first choice – Now your number one prospect has the right (for a limited period of time, no more than 4 to 6 weeks and preferably less) to dig as deep into your business as they need to in order to feel comfortable writing the big check. Intensive scrutiny of financials, physical inventories and even interviews with key employees may happen here. It’s stressful, but you can survive due diligence.
(11) Complete the sale – One of the most exciting and nerve wracking days is closing day. It’s similar to closing on a real estate sale, but usually more complicated. Deals can still fall through at this stage, but with the right professional help, the sale is usually completed.
The Business Sale System: Insider Secrets To Selling Any Small Business ($19.95, First American Publishing)
? 2009 First American Publishing
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