There are three time tested ways to create wealth – stocks, property, and owning a business. A business allows an owner to create wealth by keeping the income earned through creativity and hard work. But the other way a business owner creates wealth is through the sale of the business. It is common for an owner of a healthy business to receive the equivalent of two to three years worth of profits as a sales price. Buy a business, build the business, and sell a business – a rewarding way to have a productive career.

Most buyers of businesses are owner operators; they are not absentee investors. They want a well-paying job and have good intentions. Many business buyers leverage home equity to buy an existing business. Others buyers obtain financing through the Small Business Administration (SBA), friends, or by having the seller finance the business. By purchasing a business the buyer receives a cash flow that is difficult to match with a local salaried job. As a rule of thumb, a buyer should expect a cash flow in the first year of business equivalent to their initial down payment, for example, a business producing $150,000 a year in profit typically requires a $150,000 down payment to buy.

According to industry analysts (Business Brokers Press), approximately 20% of all small to mid-sized business owners are interested in selling their business. This suggests that buyers have a large pool of businesses to choose from. However, many first time business buyers and sellers are unaware of the resources that exist to help them market, research, negotiate, and ultimately execute a business transfer. In the United States, approximately half of all business sales are accomplished through the services of a business broker.

Successfully Selling a Business
The high level of complexity in completing a business transfer often makes it difficult to sell a business for its full value. According to the International Business Brokers Association, only one of six small businesses that are advertised for sale will sell for more than their liquidation value. Why do so many business owners fail to profitably sell their business? The key is the old adage – “practice makes perfect”. Most business owners sell one business per lifetime. Professional business brokers sell about one business per month! A good broker knows the way to attain the best price and terms for a business is to do the following: Expose the business to the largest number of qualified buyers, provide them with an understanding of the business, its current value and growth potential, and skillfully manage the negotiations, due diligence, and escrow processes until the closing of the sale.

Business Selling Skills
Here are some the factors necessary to successfully sell a business for market value.

• Value. The asking price of the business must make sense to both the seller and the buyer. An experienced business broker will research comparable returns for like businesses, analyze the businesses financial records for the current value, and consider future growth opportunities which will help to communicate its full value, and therefore seek a high yet reasonable price. This information sets realistic price expectations for both the buyer and the seller and ultimately improves the probability of a sale.
• Position. Buyers have many buying options; they review an average of six businesses before making an acquisition. High quality marketing collateral and the correct message is more likely to attract the buyer’s attention and initiate action. For example, marketing collateral should be designed by graphic artists who can produce a comprehensive and visual presentation of the business.
• Exposure. Successful marketing includes many media including print, internet, and direct efforts. Often marketing a must be done confidentially. Anonymity is maintained until the buyer is adequately pre-qualified.
• Buyer Pre-qualification. A well exposed business opportunity may reap dozens buyer inquiries. Since 98% of all people that inquire about a business never purchase one, a good broker is able to separate real buyers from “tire-kickers”. Therefore, a business broker saves a seller hundreds of hours of fruitless effort selling a business.
• Negotiate. What should you relinquish, and what should be a deal breaker? Do you understand the terms of the deal? A skilled broker will answer these questions. A broker should also manage the communications and agreements throughout the negotiation process.
• Project Management. All steps of the business transaction require attention and management to ensure the activities are completed correctly and the acquisition is successfully accomplished. Business transactions require a team of professionals that include lawyers, accountants, escrow agents, loan officers, property managers and others. A good, professional business broker has productive relationships with his team and can direct the team towards the final goal.

Successfully Buying a Business
Since the business broker is working with qualified sellers, and since the seller is paying for the business brokers’ services, it makes a lot of sense for a business buyer to contact a local business broker. For the buyer, the business broker provides a multitude of services, including:

• Assisting the buyer in defining motivation and buying ability
• Finding and evaluating appropriate business acquisition opportunities
• Providing data and analysis so that intelligent comparisons can be made
• Facilitating the negotiations and due diligence process so the buyer makes an informed decision
• Assisting in building an accomplished acquisition team
• Maintaining buyer-seller communication through the closing process to ensure a complete transaction

Selling and buying a business takes hard work, experience, and insight. Professional business brokers provide these skills and help to attain full value as well as dramatically improving the likelihood of an acquisition.