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DQ News: 3 Vital Steps to Selling Your Business

The closing rate on small business sales in America is staggering: less than 10%. That’s right, less than 10% of small businesses listed for sale will actually sell.

As a small business owner looking toward retirement there are few people capable of explaining how to monetize the largest source of equity outside of your home. How can you ensure your business will sell?

There are three crucial steps any small business owner can do to effectively sell their business.

First, identify possible buyers

Canvass the market. Create a listing of competitors (both direct and indirect), employees of larger firms within your industry, relatives, suppliers, and customers to develop your list of possible buyers.

Second, get pre-approval on a business loan

Many banks and Community Development Organizations can provide these services. You’ll submit your business and personal tax returns along with a price at which you would like to sell.

If banks and SBA funding come to only 70-80% of what you would like to receive, you may wish to offer seller-financing so that your price can be met.

Third, market, market, market

Listing your business for sale will do just that, list your business for sale. Capable business brokers can help by acting as the marketing agent, but many do not.

 Unfortunately, many business brokers collect a few thousand dollars to just list your business on a few business sale websites.

Actively marketing the business means doing the footwork of getting pre-approval for an SBA loan, developing marketing material and contacting 100-200 potential buyers in addition to listing it for sale on websites and getting to a closing table.

About the Author: Jim Noone is a partner at iBankr.com. iBankr.com is a business sale marketplace that allows small business owners to follow a checklist method to sell their business. Creating an account and using this ten-step method typically increases the success rate by 5x compared to just listing a site for sale. The site’s most popular feature is the free business value calculator located at Business Value Calculator.   

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