Uncategorized

4 Questions to Ask When Selling a Business

For the salesperson, these answers provide important information. It helps to establish trust with the buyer, to clarify their goals and needs, to anticipate risks, and find the best solution. In this article, you’ll find the most important questions you need to ask when selling a business to make the deal a success.

At present, there is a popularisation of entrepreneurship and the agitation of people to have their businesses or enterprise. There is no question about it, as the topic has been dealt with more than a hundred times. But what is a person with little or no business experience to do?

If you have decided to sell your business online without too much hassle, it will be more convenient to contact an experienced agency WebsiteClosers.

Checklist for the seller

Evaluate your business before you sell it.

Package your business before you sell it.

List your business on a dedicated site and send out information to potential buyers.

Filter out inadequate or insolvent buyers.

Meeting with a buyer and vetting the business.

Legal re-registration of the business for the new owner.

There are times when an entrepreneur trusts no one but himself and decides to sell the business himself. In this case, it is better to determine in advance the fundamental questions that need to be asked when selling your business.

What to ask when selling a business

1. What kind of business is for sale?

It would be a mistake to think that only loss-making businesses are put up for sale. It is not always only operational circumstances that may be the motive for selling a business. The right questions for the buyer of a business will help him better understand the circumstances of the transaction.

The seller, who is confident in the attractiveness of the object of sale and the adequacy of the price of the business is unlikely to succumb to pressure and make significant concessions in the negotiations. And the excessive pressure from the buyer, who proceeds from the wrong assumptions about the state of the business sold, will not contribute to an agreement in the transaction. That is why, often, the buyer undervalues the object of sale, and the seller tends to overvalue it. And these factors sometimes prevent both parties from reaching an agreement on the sale.

2. Who to sell the business to?

When the decision to sell a company finally takes shape in an entrepreneur’s mind, the question “Who to sell the business to?”. 

The main categories of buyers of a business:

Individuals. Beginners or experienced entrepreneurs can act as buyers of businesses, as an alternative to building a business from scratch.

Large groups of companies. Various holdings and corporations quite often buy companies for their own needs. Sometimes it is easier to buy a ready-made business than to create one from scratch.

Private investors. Having available financial capital, investors may invest it as an investment in someone else’s business. As a rule, in this case, the investor does not seek to directly engage in operational activities. And it is even possible that the former owner remains in the business, but with a smaller stake.

3. How to determine the selling price of a business? – Business valuation

When a firm owner decides to sell a business, one of the main questions they have is how much is their company worth. How to formulate and justify the price that the business owner wants to get? And how much does that price correspond to the market?

Determining the real selling price of a business, in fact, is not so simple. Or rather, the very figure the company owner wants to get is relatively easy to formulate. There are various generally accepted business valuation techniques that allow you to form an approximate price. That’s just the theoretical methodologies and the actual practice of selling a business, sometimes very much at odds.

4. How to assess the value of a business to its owner?

The business owner must have full knowledge of his firm. When there are reasons for selling a business and the owner decides to sell the company, there is a need to determine the selling price of the business that the seller wants to get. It is not enough to simply look at the company’s financials and accounts. A full audit of all assets and assets to be sold must be conducted.

Conventionally, business assets can be divided into these categories:

fixed assets – i.e. everything that is directly involved in the business process and is recorded in the books as PPE;

financial assets – money in cash and accounts, receivables, corporate rights in other companies, shares, deposits, loans, etc;

tangible assets in the form of movable and immovable property – buildings, land, vehicles, machinery, etc;

intangible assets – intellectual property rights, patents, trademarks, licenses, digital products or objects, etc.

inventories and residual products;

personnel and management;

other rights and market advantages – e.g., priority right to long-term land lease or exclusive right to represent a particular trademark;

other assets, depending on the business area.

Experienced business brokers already have an established circle of investor contacts and many buyers are found through personal connections. They keep the names of their clients wholly confidential and often do not give full details of the company in offers posted on the internet, so as not to draw too much attention to the company or to harm the business.

Before contacting, pick out the main questions you should ask the broker when selling a business in your situation.