How to create an effective listing on Buy and Sell A Business
Nunzio Presta, the CEO of BuyAndSellABusiness.com, has hosted thousands of small businesses listings on his online marketplace. He’s also rubbed shoulders with entrepreneurs and brokers who have overseen hundreds of these transactions.
We talked about the process of selling a business and how to create a listing that is going to get a buyer’s attention.
What’s the first thing a small business owner who is thinking of selling needs to do?
You have to have a deep conversation on why you’re selling, who you want to sell to, and the valuation of your business. Ask yourself: “Do I have a sellable business?” If the answer is yes, then they move onto the next step and if the answer is no, you need to take a year or two to create it.
What does a sellable business look like?
It needs to be self-sufficient; the financials need to be well organized, and the timing needs to be right. We have this model called S.E.T. which forces business owners to evaluate the social, economic, and tech trends that might make it a good or bad time to sell.
Is this something small business owners do on their own?
They may need to hire a broker to walk them through the process. You also need to be honest about the valuation, and that often takes an accountant or a chartered business valuator. The buyer is not going to take your valuation at your word, they need to see financials.
When do you need a broker and when can you do this on your own?
There are a lot of entrepreneurs who have done this before and some have a strong team they can lean on. But if a business doesn’t have that team, the business broker would provide a valuation, help market the business for sale, preparing necessary documents, find and screen buyers, and manage the due diligence process after the marketing is finished.
That’s the value a broker provides but it comes at a hefty price—8% to 12% commission. The smaller the business is, the lower the value proposition for hiring a broker. The issue is that many smaller businesses, ones worth less than $1 million, are not as organized as a bigger business. It’s a fine line you need to walk, but it’s important to be honest about whether you need help and whether it’s worth it.
How organized is organized enough?
Do you have financial statements? Are they audited? Can your business run without you? If someone else were to come onboard, could they easily operate it? If you can say yes to those, then I think you have a sellable business.
Okay, so if you have a broker, they’ll help you put together a solid listing. If you don’t, what does a solid listing look like?
You need to be clear about the opportunities for the business going forward. Most buyers aren’t looking to buy the business for today, but for future opportunities. You want to take advantage of all the fields on Buy and Sell a Business. The more information, the better.
Also, images. Listings with great images perform significantly better than those without. Show the business, the product.
If you look at the history of a company like AirBnb, at the beginning they weren’t getting any hits because the images of their properties were terrible. So, they said, ‘let’s offer to snap some pictures ourselves.’ Once people started taking them up on that, they saw a significant uptick in bookings.
We can do the same thing. If you don’t have a photographer and you’re in the Greater Toronto Area, contact us and we’re willing to stop by and snap some nice pictures.
Any other ways to hack the listings?
One more thing—and 90% of people just skip it. Our platform integrates with Yelp and if you have a page, we highly recommend leveraging it. Customer reviews are a surefire way to wow your buyer.
Is there anything they need to do after they’ve posted their listing?
Communication matters a lot. If you have a hot lead, you want to respond accordingly. You can’t take a week to get back to people. You also need to be willing to answer some deep and private questions about the business. Your buyer will be devoting their life to operating and growing that business, so you need to be open. If you’re especially nervous about that, you can get them to sign an NDA to mitigate risk.
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Opinions expressed here by Contributors are their own.
BuyAndSellABusiness.com is also running a buyer’s workshop for those looking to purchase any small business—franchise or otherwise. It’s just 30 minutes long and completely free. You can register at our website.
Also, we launched a private Slack community designed to help people connect, share insight and ask questions about buying, selling and growing businesses or franchises. Apply to join here.
