3 practical tips when selling your business
I won't get into the heavier aspects of selling a business here. (I'm keeping it on the light side for the holidays). But there are some down-to-earth, practical things to consider when selling your main street business:
1. A good lease. If you want someone to buy your business, you should have an attractive lease in place that has at least another year on it. If you're on a month-to-month lease, renew it before you sell. This gives you instant value, especially if you can negotiate on the merits of your history of on-time payments, good credit, and relationship you have with your landlord. A new buyer may not have the same footing as you do. (Make sure the lease is assumable.) If you're getting an SBA loan, your lease will have to extend past the loan term for them to approve your loan.
2. A plan for your debt. Buyers won't want to assume a Seller's debt, so have a plan for how you'll take care of it when they ask. Most of the time, it is paid off from the proceeds of the sale but if you're upside-down, then restructuring your payments to manage them over time might be your second option. But remember that your debt should not define your asking price on the business. Your business should be priced on its value, not on the amount you need to pay off your debts.
3. Consider offering partial seller financing. Sellers have an additional opportunity to earn some money as interest by offering partial seller financing. This not only makes your business more attractive to a buyer, but carrying say, a 7% note is going to make your money work harder than most other investment options. Plus, if your buyer defaults, you get the business back and can resell it again. Of course, you want your buyer to have skin in the game so only consider partial seller financing.
Good luck and if you need any help, let know.