If you’re looking for a simple answer to “how to sell a business quickly,” I’m sorry to be the bearer of bad news, but you won’t find it.
Don’t get me wrong, though. I didn’t say that it’s impossible to sell a business quickly. Rather, the point here is that there’s no simple magic formula that you could use to sell off a business as fast as a newspaper on a Sunday morning.
Business acquisition and selling is a fairly complex process that could take months or years to sail through. People who, otherwise, try to rush the process almost always end up crashing out mid-way. That’s partly why only 1 in 15 business sellers ultimately closes their sales with buyers [1].
So, if you hope to sell your business successfully in the first place, taking shortcuts should be out of the question. Instead of skipping any of the critical steps, you might want to approach it all rather methodically – by, perhaps, mitigating any issues that could potentially lead to hold-backs and delays. This should streamline the intricacies of business selling, allowing you to fast-track the whole process without sabotaging the outcome.
How to sell a business quickly – the step-by-step strategy
- Sell the business at the right time
- Get your business documentation and accounting books right
- Perform an accurate data-backed business valuation
- Hire a business broker
- List on appropriate business sale directories
- Pre-qualify prospective business buyers
- Offer installment sale seller financing
1. Sell the business at the right time ⏰
Before you even start worrying about how to sell a business quickly, you ought to ask yourself if the timing is right.
The point here is to establish when the conditions are optimal for selling the business. Or rather, as others would put it, you should be aiming to strike only when the iron is hot.
This is not to say you can hang on until the business reaches its climax. That might not be necessary at all.
You see, businesses tend to sell quickest when they’re bursting with potential – not when their future is in doubt.
As such, we’d advise you to put yours on the market right when it’s experiencing a growth spurt. Give it some months or so of steady growth, and then proceed with your listing while the business continues to expand progressively.
Don’t be the type that waits until the business has grown to market saturation. At least by taking action mid-way, you’ll have gained enough metrics to back up the sale – all without exhausting the growth potential of the company and its corresponding market opportunities.
Prospective buyers will, thus, excitingly pursue your promising business for both its proven potential (the growth already experienced), plus the untapped opportunities (upcoming growth).
Yahoo is a perfect case example to learn from. If its leadership had tapped out in 2008, at a time the company was growing steadily, Yahoo would have sold quickly to Microsoft for $44.6 billion ($53.6 billion today). But, instead, they chose to play the long ball – which backfired, as the competition only grew stronger in the following years. This saw Yahoo’s value drop by over 90% by 2017, when it eventually sold for a meager $4.4 billion.
2. Get your business documentation and accounting books right 📗
All the rosy stories about your business success might be exciting alright – but they mean nothing to prospective buyers if the company figures have not been properly documented.
People will want to see the paper trail behind all your claims – this is what they’ll use to assess your company’s track record, business value, financials, structure, plus assets and liabilities.
Some of the basic documentation that you need to get in order include:
- Employee list
- Organization chart
- Operations manual
- Copies of all licenses, patents, contracts, and loan documents
- Property ownership deeds
- Business registration certificate
- Company constitution
- Business and marketing plans
- Lease agreements
- Statements of compliance
- Business permits
- List of both tangible and intangible assets
These should be accompanied by the following accounting records:
- Profit and loss statements
- Balance sheet
- Cash flow forecast
- Details of the accounts payable
- Details of the accounts receivable
- Filed tax returns
- Cash management reports
- Payroll ledger
- Business budget
Check and ensure that they account for all the years you’ve been in business. The more you pile up the paperwork, the more forthcoming you’ll appear to your prospective buyers.
Also, ensure that the reports are accurate and up to date. Otherwise, too many inconsistencies might trigger alarm bells, making you come off as an insincere seller.
3. Perform an accurate data-backed business valuation 💵
This is one thing that’ll always come up in discussions on how to sell a business quickly. Your company’s overall marketability ultimately comes down to the value that you choose to attach to the business.
Underquoting your competitors might seem like a fair way to win over the market, but you’d probably end up underselling yourself and the business. An overquote, on the other hand, would mean fewer prospects and even lower chances of closing the deal.
The best way to avoid all these complications is to conduct a proper data-backed business valuation. You need a tool that can quickly crunch the numbers and establish an accurate business selling price based on your:
- Assets and liabilities
- Accounts payable
- Accounts receivable
- Share price
- Projected earnings
- Trade activities
- Growth index
- Market profitability
- Market risks
- Private equity
4. Hire a business broker 👔
There’s no denying that you’re the business owner here. What’s more, you’re probably the only person who knows the company inside out. That notwithstanding, we strongly advise against embarking on the sale journey alone.
There are several professionals that could help you along the way, and business brokers happen to be the most resourceful.
Think of a business broker as the chief coordinator of the entire business purchase and selling process. They’ll make everything easy by not only guiding you on how to sell a business quickly, but also administrating, and advising on all the relevant sale parameters.
That said, the best time to hire your business broker would be long before you put the company up for sale. They’ll help you with planning everything, organizing legal documentation, and business valuation.
Then when you’re ready to sell, they’ll link you up with the right prospective buyers, and proceed to pre-qualify the most promising candidates.
The perks don’t end there, though. It’s the same business broker who’ll handle most of the paperwork, help with purchase negotiations, as well as facilitate smooth due diligence and transition.
5. List on appropriate business sale directories 💸
As it turns out, there are about 15 prospective buyers on the market today for every single business on sale [2].
The problem for business sellers, however, is figuring out where, when, and how to reach out to the right candidates. There’s no central marketplace for all businesses, as buyers are usually scattered across a wide array of sources on and off the web.
Now, with that in mind, it would be best if you started with a profile of your target buyers. Then once you’ve defined who you’ll be targeting, you can go ahead and work out where and how to connect with them. The objective is to get your business listed on the platforms that are most frequented by your prospects.
To put it all into perspective, imagine having solopreneurs as the target market. Upon basic profiling, you’d figure out that they typically go for a small business that’s in line with their personal interests.
This alone should lead to niche-focused marketplaces, conferences, and business forums – where you could target the solopreneurs with descriptions of how the business suits a single owner-operator.
If you’re looking for strategic or financial buyers, though, you’ll have to turn to your broker. Strategic buyers are those established companies that take up and assimilate smaller businesses in their fields, while financial buyers are basically investors seeking to generate handsome returns.
Your broker should be able to reach out to both through their corporate networks.
6. Pre-qualify prospective business buyers 🤝
While getting the attention of multiple buyers is a good thing, you might not have the resources to engage all of them.
As such, you should narrow the list of prospects down to the few most promising candidates. In our rule book on how to sell a business quickly, we’ll call this “pre-qualification.”
This is where you screen your prospects by their attributes, with the aim of identifying the best candidates for your business. You get to save yourself all the trouble and time that would, otherwise, have been wasted on non-committers.
A business seller could, for example, qualify a retired executive as a high-interest lead and then turn away inexperienced prospects. This would not only boost your chances of quickly closing the deal, but also ensure that the incoming business owner has the requisite skills to keep the flame burning.
The only issue is, you can’t comprehensively pre-qualify prospects from their web metrics alone. You still need concrete details about what they do, how much they’re worth, their credit scores, what they specialize in, their industry credentials, etc.
For clarity on the type of info to collect plus the subsequent weighting criteria, you could have your business broker draw up a strategic plan for everything. It should be expressed as a workflow, showing the progression from the point you find a prospect, through the subsequent data collection procedures and NDA signing, to the final evaluation process.
7. Offer installment sale seller financing 💰
Let’s be honest – business acquisitions are never cheap. If you check out the listings of businesses for sale, you’ll notice that high-performing small businesses ask for as much as hundreds of thousands to millions of dollars.
This is far beyond the disposable income bracket for most aspiring business owners. Hence, it might take you quite some time to land a buyer who can afford the capital.
With seller financing, however, you’ll be able to structure the price in a manner that is economical to the masses. And no, it won’t reduce your profit margin – on the contrary, you get the chance to earn even more.
In particular, we advise business sellers to set up their seller financing as an “installment sale”. The good thing about this is, it operates under the same principles and rules as a commercial mortgage loan.
As a business seller, you’ll be taking up the role of a financier. Instead of closing the deal with a one-off lump-sum amount, the buyer initially deposits a percentage as a downpayment, and then later proceeds to remit installments on a periodic basis.
In the meantime, you’re allowed to charge interest just like a regular credit institution. That means that, by the end of the payment period, you’ll have made more than the initial lump-sum asking price.
The only downside here is that an installment sale takes away the thrill of a lump-sum payout. But, in return, you’ll be opening up the deal to more prospects – which should then help you sell the business quickly, generate more gross profit, and reduce your cumulative tax bill.
This is how to sell a business quickly! Over to you 🚀
Although each business sale is unique in its own way, these strategies apply across the board. You just need to customize each one to your specific transaction parameters and voila! They’ll cumulatively save you a lot of time that you’d have otherwise wasted on redundancies.
The redundancies we’re talking about here are those restrictions that keep you from engaging the right buyers at the right time and with the right offers.
On average, you can expect to spend one to two months on preparation, about three to four months on marketing the business across relevant platforms, plus three more months on pre-qualifying potential buyers, negotiating the business purchase agreement, and closing the deal.
But, don’t just bolt out and leave it at that. To keep the business running smoothly during the transition period, we suggest dedicating one to three additional months to onboarding and supporting the new owners.
So, next time someone asks you for tips on how to sell a business quickly, you could summarize it all by simply explaining the overarching principle behind all these strategies. That, to fast-track the business sale process, they just need to find ways to penetrate their target market, pull the best-qualified leads, and then by eliminating the common pain points, they’ll be able to keep buyers committed to the very end.
