If you have ever sold a home, you can sell your business
Owning a business in a small town has many benefits, but one of the drawbacks is the difficulty of finding a buyer for your business when you decide its time to move on. The pool of potential acquirers is smaller and capital for buyers is harder to find. But if you understand the process of selling a business, then you can take steps to minimize the barriers to selling your company.
Selling a home and selling a business are remarkably similar tasks. If you’ve ever felt intimidated or confused about the process of selling your company, just think of the transaction in the same way you would if you were selling your home. This is the third in a multi-part series. Start reading with part 1 now.
Step 3: Create the marketing material
Once you have selected a real estate agent to represent you in the sale of your home, the next step is to create the marketing materials he or she will use to promote your property.
The offer sheet typically includes a picture(s) of your home along with key statistics like the number of bedrooms, lot size, and so on. Your agent may also take an ad out in the local paper. These materials are designed to persuade consumers to invest more time in your house by booking a showing or attending an open house.
When selling your business, your representative will create a “teaser” document designed to entice prospective buyers to invest some time to get to know your business. The teaser is usually a one- or two-page document that includes a few key stats on your company, such as your current revenue and profit and your projections for the future. Your company name is usually disguised to minimize the chances of key customers and employees hearing about it being on the market.
The importance of disguising the teaser is paramount when it comes to selling a business in a small town. I spoke to Brad Bottoset the owner of Reno-based business brokerage The Liberty Group of Nevada. Brad’s firm often represents sellers from small towns and one of his latest listing is in Fallon, Nevada (population: 7536).
“In a small town, there is often only one or two businesses in a certain industry. If I was representing a Ford dealership in Los Angeles, I’d describe it as a car dealership in the teaser. If I was selling a Ford dealership in a small town, I’d describe it as ‘a retailer.’ You need to be vague in a describing a small town business in a teaser to avoid the entire town finding out a business is for sale.”
Just as a real estate agent would, your broker will then work his or her Rolodex and send this teaser to a list of people who might buy your business. Some brokers may list your business on one of the Multiple Listing Service (MLS)-like listing services for businesses (e.g., www.bizbuysell.com) to draw interest from outside of your area
Make sure your broker includes some of the benefits of living in your town in the teaser. There are a lot of people who work in corporate jobs in the city that dream about buying a small business in a small town and enjoying life at a slower pace. Paint a picture of the lifestyle benefits of living in your area.
If a potential buyer wants to know more about your business, then your representative will ask that person to sign a nondisclosure agreement (NDA), after which he or she will get a comprehensive summary of your business performance and your business plan.
You want to ensure your teaser has just enough information to lure a buyer to get as far as signing an NDA.
Next Wednesday, we’ll look at step 4 in selling a house or a business: the showing.
John Warrillow is the author of Built To Sell: Turn Your Business Into One You Can Sell. Find out if you have a sellable business – and what you could get for it – by taking the 10 question Sellability Index Quiz at www.BuiltToSell.com.