This article are provided for information purposes only, and are not intended as legal advice.


FSBO – business for sale by owner

April 13th, 2009

You are thinking of selling your business and want to “fsbo” list your business as for sale by owner.  How do you do it?  Like any business, the first thing you do is prepare your business for sale.  Gather information on the business including 3 years financial statements, 1 to 3 years tax returns, internal financial statements, create an executive summary of the business which includes a description of the business, type of customers, age of company, uniqueness of business, talk about concentration of customers.  Many companies have an 80/20 rule.  80% of the revenue is generated by  20% of the customers.   Are you economically dependent on one or two customers?  If you have greater diversification and less concentration than the 80/20 rule, then your business is more attractive to someone compared to a company which is reliant on 1 or 2 customers.   Many companies sell to Walmart but the percentage of their sales to Walmart is extremely high compared to other customers.  If they lose Walmart as a customer, will the company survive?  If not, you have economic dependence on one customer.  This definitely has risks because you have all or nearly all of all your eggs in one basket. 

 

In your executive summary you should also write about opportunities for growth, strengths of the business and if you have more diversification than the 80/20 rule.  Are you in a leased premise or owned?  Are you selling the property if you own it?  Is the property in a separate company?  These are all very important because you have to advise what are you selling, shares or assets of one or more companies?

 

Once you have accumulated all this information, then you can register your business on The Business Place.  Many people are reluctant to say too much about the business because they will give the business name away and competitors may figure you are for sale.  If you are so worried, do not be so specific about the industry that you are in.  Remember, your listing on The Business Place must want a person to contact you.  If you do not put any information down, why would anyone contact you?  If you do not make the effort to identify what you have for sale why would an investor make the effort to find out what you are offering?

 

If you go to an outlet mall, you never know what they have for sale and what you are going to buy.  However, you know that you are looking for something interesting, it could be clothes, it could be accessories.  You do not know exactly what you want until you see it but you have an idea what you are looking for.  This is the same as for an investor.  They do not know exactly what business that they want to buy but they have an idea of the industry, product, customer etc that they want.  If they see a listing with this information that fits their parameter, then they will stop and look, read your listing and then contact you.  If it is not interesting because there is not a lot of information provided, they will keep looking. 

 

By not providing enough information in your listing, you do not realize that you may have missed your perfect purchaser.  There is a correlation on the website, the more information provided about a business, the greater number of people enquire about the business.  How many enquiries does it take to sell a business?  That depends, you only need one if you have the right buyer.  If you are selling the business then you have to put in the effort to market the business which means provide enough information for a prospective buyer to want to contact you.


Filed under: FSBO — Gary Landa @ 8:36 am


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