Once you have your business fully prepared for sale and you have worked through the appraisal process to make sure that you have priced the business right it is time to get the word out there that your business is available.
(If you missed it, you can view stage one and stage two of selling a business before starting the final stage.)
Writing the Advert Copy
This is where you decide how to describe your business to prospective buyers in the adverts that you will run on business sales websites and social media or wherever else you choose to advertise.
The purpose of this advert is to get people to make an inquiry and request further information so that you can get the conversation about your business started.
With the advert copy, the idea is to give enough information to people so that they can decide whether or not they would like to find out more. We also want to do this without giving away too much.
It is a good idea to try and keep the text fairly generic so that people are not able to work out that it is your business. You want to do all that you can to avoid people wandering in and asking you about the business being for sale in front of staff, customers or at difficult times of the day, it does happen!
[Tip] Whilst the ad copy needs to show the key features and selling points of the business don’t overthink or overcomplicate this, sometimes less is more. This advert is trying to sell an appointment or an inspection of the business, that meeting is where you will start really trying to sell the business.
Choose Where You are Going to Advertise
There are many publications and websites where you can choose to advertise your business, prices vary from the low end (Gumtree) up to the top end (SEEK) and the results can also vary greatly.
Generally speaking, we have found that the quality of the leads is in line with the cost of the platform i.e. Gumtree will bring in a lot of inquiries but many of them can be timewasters whereas the more expensive options such as Commercial Real Estate and SEEK tend to give you less quantity of good quality inquiries.
Despite the rise of the internet the cost of advertising in traditional print advertising still seems quite high. We have helped a couple of clients to run these ads but the results have been pretty poor in relation to the cost.
Social media, in particular targeted Facebook ads can produce good results for a relatively low spend. You will of course need to consider from a confidentiality point of view whether or not you want this information in your feed. One way around this is to use Facebook Ads Manager to set up your post, this way you can choose to just run this just as an advert and it will not show in the feed.
[TIP] We use nine different websites to list our client’s businesses and the best results typically come from SEEK, Commercial Real Estate, and Australian Businesses For Sale.
Qualify Inquiries and Get Rid of The Tyre Kickers Early On
Regardless of where you decide to advertise you will want a system in place to filter the leads as they come in so that you are only talking to serious buyers.
Think about asking buyers to take a simple action such as signing a non-disclosure document before giving out any information about your business.
You would be surprised how many buyers can’t be bothered to do this, with our client’s businesses we follow up 5-6 times to chase people to return these. We use multiple methods such as email, phone, SMS and FB messenger.
If we do not get the signed form back after that we assume that they can’t be that serious and we then remove them from our list.
I don’t know about you but whenever I was seriously looking to buy a business I had no problem being asked to sign and return an NDA, in fact, I expected it.
You can easily find examples of non-disclosure agreements or confidentiality agreements online and then just edit them to suit your needs.
[TIP] You can read more about qualifying leads in this Blog Post
The Business Profile or Information Memorandum
The information memorandum or business profile as it is sometimes called is the document that you can use to provide more detailed information about the business to qualified buyers (after the previous step).
These are people that have made initial contact through viewing the adverts and have completed a confidentiality agreement and whom you may have spoken to about the business.
You send out the information memorandum to give buyer details such as business name, location, sales, profit etc. The idea is to provide enough information for them to decide whether or not they would like to arrange a viewing of the business.
The information memorandum also provides details about the sales process and reminds buyers about the importance of confidentiality when viewing the business.
After you have sent out the information memorandum it’s a good idea to make a follow-up call within 2-3 days to ask for feedback and see if they would like to have a look at the business either as a customer or out-of-hours.
The Inspection
If all has gone well with the previous steps then you should have a qualified buyer or buyers that are keen to come and have a look at the business and discuss the operations etc with you.
Whilst the inspection is an opportunity to answer all the questions that the buyers might have it pays to remember that this is also where you have the chance to further qualify the buyer. Try and make sure that you use this time wisely and gather as much information as you can about the buyer’s background and financial position. You would be amazed how many people get to this stage (and beyond) and do not have the experience or financial capacity to either gain approval from the landlord or complete the deal.
Make sure that you keep things positive about the business and try to just answer the questions that you get concisely but without talking too much or giving more information than you need to.
Whilst you do not want to mislead people in any way there is no point in offering information that could potentially put people off of your business. Your role now is to start selling so focus on the features and selling points and use the information that you have gathered from the buyer to help to draw them in emotionally.
Don’t give away too much about your personal situation, buyers will often try to find out your motivation for selling. Be careful not to give any indication that you are desperate to get out or that you have any problems as this can be used against you later on and lead to a lower offer.
A big part of the sales process is identifying what the buyer’s objections are and then overcoming them. Ideally, you will have a good idea of what potential objections could be and you will have addressed some of these in the business profile or during early conversations.
The chances of somebody coming along, looking at the business and making a decent offer without some sort of objection are quite slim. I love it when people tell me that they are not interested in a business because it gives me the chance to then isolate and overcome their objections. If somebody tells you that they are not interested in your business don’t give up, find out what the issue or concern is and then present them with a solution.
The Offer
After a successful viewing and after thoroughly qualifying your buyer the next step is to push for an offer.
At this stage, it pays to remain unemotional and try not to take anything personally. Buyers use a lot of different tactics and strategies to try and get a deal and try to convince you to accept a lower offer.
I find this much easier to deal with when it’s somebody else’s business as opposed to my own as I can remain totally impartial. It’s quite easy to get upset when somebody gives feedback about your business especially when it has cost you blood, sweat and tears. Try not rise to it though as it could cost you a drop in the price or even the deal.
If you have gone through the appraisal process thoroughly you will be confident that your business is priced right and with this in mind don’t feel that you have to negotiate on price.
The approach that we take is to price properly without adding in too much if anything at all for negotiation. The idea that you have to allow room for negotiation is quite dated and, in the current market if your business is perceived to be over the market value then you probably won’t even get any decent inquiries. You are far better off pricing correctly and getting some people to start talking too early on. “Testing the market” and listing with a view to dropping the price later on if you don’t get offers quickly enough are not effective these days.
Keeping Your Deal On Track
Once you have the price and terms agreed this is where the real work starts! Many people think that getting to this stage i.e. weeding out the tyre kickers and getting the offer are the hard part but the reality is this is where you have to work hardest to keep things moving.
In the early stages, your buyer has been led by emotion, they have been imagining themselves in the business, thinking about the changes that they might make and now they are going to start justifying their decision logically.
At this stage, the buyer will be going through more due diligence and most likely seeking second opinions from their advisors, friends and family.
Having all of the information that they are likely to ask for ready is going to help you to answer questions and overcome objections quickly. What you don’t want is to be asked for something that takes a while to find or prepare, any stalling or slowing of the deal at this stage can be fatal.
At this stage, you will be instructing your solicitor to prepare the draft contract and you will also be starting the process of the lease assignment.
If you have followed the steps and advice above as well as in the previous two posts then you are probably well prepared for this stage, you will just need to be willing to chase all three solicitors, you must remain in control and keep pushing the deal forward.
Preparing for Settlement
As you get closer to the settlement date your solicitor will prepare most of the documents in relation to what the buyer must pay upon settlement, this will include any pore payments that you may have made such as rent etc.
Depending on what you have agreed about stock you will also need to prepare to do a stocktake. Whilst there are companies that you can get to do this I have always done it myself with the buyer present.
It’s a good idea to discuss with the buyer what they will/won’t require when they take over, if there are certain lines that they will not be continuing then this will give you a chance to run that stock right down.
[TIP] Remember that if the value of the stock when counted is higher than the stock figure in the contract then the buyer is not legally obliged to take it. i.e. if the contract states the stock value to be $3000 and it ends up being $4500 then the buyer can choose just to take the $3000 worth of stock that they want and you will get stuck with the rest.
Whilst this post has really just scratched the surface of the sale process I hope that it has at least given you a few ideas and things to think about.
If you would like to learn more about preparing your cafe for sale then feel free to book a call with me. On this 30 min call, I will cover the following with you:
- What the current market value of your cafe might be.
- The steps you need to take to prepare for the sale.
- What the market is like at the moment.
- How to make sure that your cafe stands the best possible chance of selling.
There is no charge for this call and there is no obligation. At the end of the call if we think that we can help you we will let you know about how we work and, if we don’t think we can help we will give you some advice about alternative options.
Either way, you will come off of the call with a much clearer idea about the potential value of your business and what you need to do next to achieve a sale.
Click on the link below to book a time that suits you best, once you have selected a time you will be taken to a form that has around 7-8 questions about your business that will help us to get a better understanding and save time on the call.
