In our last post, we began a discussion about selling your small business. There's a lot to think about and consider when deciding how to handle the sale, including when to sell and for what price.
Today's post will be a continuation of that discussion. We'll talk about how to find interested buyers and some different ways to handle sale financing.
Where should I look for buyers?
Even after your business has been appraised and an appropriate price has been set, selling is not as simple as putting a "for sale" sign in the window. Instead, consider reaching out to others in the business community, especially those with similar businesses or similar interests. Other business owners may not be interested in buying yours, but they might know people who are looking to buy. Word-of-mouth is still a surprisingly effective way to get things done. You may also want to consider approaching heads of larger companies to see if they are interested in expanding by acquiring your business.
How should the sale be financed?
First, you need to negotiate or unilaterally choose a financing method. Unless your buyer is a larger company, an immediate lump-sum payment is probably not realistic. Seller financing is the most common way small businesses are sold. This can be risky, as you are relying on the buyer to make regular payments and keep the business afloat at least as long as it takes to pay it off.
You may also have the option of third-party financing. If your buyer has good credit, a bank may be willing to extend a loan, which means you'd get paid almost immediately and the buyer would work out repayment details with the bank or other third party.
No matter how you choose to sell the business, the written sales agreement is very important. It must cover all essential aspects of the business transfer and sale and might need to put some enforcement mechanisms in place to ensure the contract terms are not violated.
An experienced business law attorney can help you write such an agreement, and can also help you with many of the other steps mentioned in these two posts.