Critical Steps for Buying and Selling a Small Business

Many potential business buyers never end up buying or selling an established business. Several key factors that make the search and process essential for success are:

Buying a Business:

Identify the Type/Size/Location of Businesses you Want to Purchase
Before you start calling/contacting business brokers, owner/sellers, and agents make sure you know what types, sizes, and locations of businesses you are looking to buy.  If you seem uncertain about your search criteria, brokers and agents will not spend a lot of time with you.

Know how much Money you are Willing to Put Down
Most of the time you will be putting down 30-100% down to buy a business. The amount of money you are willing to put down determines the size of business you are able to purchase.

Make an Offer if you Like a Business – Get the Process Started
A majority of business buyers are too timid when buying a business and are not willing to "pull the trigger" and sign a purchase agreement to start the process of buying a business. Many serious buyers lose out on great deals because they're too analytical or slow to write up an offer. Writing up an offer also usually "locks out" other potential buyers (your competition) for a period of time so you can take a look at important business records and info.

Selling a business:

Have All Business Records/Info Ready Before You Go To Market
Have these items ready before the business goes on the market to be sold: The last 3 years of federal tax returns for the business being sold, the last 3 years of financials (profit & loss statement, balance sheet), the last 3 years of monthly bank statements, copy of current lease, list of all equipment being sold with the business, etc

Write up a Comprehensive Summary of the Business
Make a one page summary of the business being sold: History of the business, date established, number of employees, important attributes about the business and surrounding area.
T

he Business Isn’t Sold Until you have the Check in Hand
You want to make sure you have a successful deal and a business buyer that is going to complete the deal. Continue to collect names of business buyers and their phone numbers etc. even if you are in escrow (50% of all deals fall out for one reason or another)

Peter Siegel, MBA is a consultant and author on the topic of buying, selling, and financing the purchase of small and mid-sized businesses. He has written (several books on selling & buying businesses   (http://www.bizben.com/sellbook) and currently writes a syndicated (selling a small business blog   (http://www.usabizmart.com/blog).