Minnesota has a great business climate with workers who embrace productive ethics. You can sell your business in this state quickly if you follow some simple steps to ensure success. Here are five tips:
1. Prepare Your Business for the Buyer’s Inspection
Buyers are looking for a profitable business. You need to prepare financial statements that the buyer can quickly determine the net income. Do not use the IRS Tax Forms. It does not reflect the true income of the business due to the arcane points of the law to reduce the tax bite. Take the Profit and Loss statement and adjust the information to reflect all income and show as “adjusted net income.” This allows the buyer to compare your business with others in the market.
2. Offer the Buyer Financing
Yes, every business owner wants a cash sale. But over 90% of all business sales use seller financing to close the sale. You will need to run a credit check on the buyer and then negotiate a down payment, usually 50% of the purchase price. The buyer has to see if servicing the note over thirty-six months will allow a decent living income during the life of the loan. If the “sweet spot” can be reached, the risks to a default are reduced.
3. Advertise Widely
Classified ads in the newspaper are not effective anymore. Craigslist will pull too many unqualified buyers and drown you in time-consuming correspondence, chasing a sale that doesn’t exist. Use “business for sale” websites that are reputable and have built in safety features to ensure you will not receive useless emails. Use several websites to gain as much exposure as possible in order to sell your business. Minnesota business owners need to advertise effectively in order to garner prospective buyers quickly.
4. Request a NDA After the Initial Inquiry
Use the Non Discloser Agreement to screen the buyer. Use questions to determine if they have a source of money for a down payment such as a 401 (K) or a home equity loan. Cash is king and a reliable source will screen the wannabes from the buyer.
5. Negotiate the Terms for the Closing
Written agreements must be clear and straightforward. Be sure there are no loopholes or unclear language. This is the area that can cause pain and anguish for you. Seek legal counsel before signing any documents.
It is not easy to sell your business if you do not understand the process. It can easily take nine months to make a successful sale. Don’t do it alone. Visit www.sunbeltmidwest.com for advice and use the business brokerage service they offer. You don’t pay a dime until they make the sale for you.
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