Selling a business is a significant milestone, and selecting an experienced business broker is key to ensuring a smooth and successful transaction. If you're considering selling your business in Florida, here are 10 essential things to know before putting it on the market.
1. Prove Cash Flow to the Buyer
The easiest way to prove your business cash flow is to allow your business broker to get your business SBA pre-qualified. The SBA will review three years of your tax returns and determine your true cash flow. A pre-qualified business will sell the quickest and produce the highest price.
2. No Proof of Cash Flow? The Buyer May Walk Away
If you cannot provide clear evidence of cash flow, buyers may cancel their offer without penalty. Uncertainty about profitability is a dealbreaker for most buyers, so it’s crucial to ensure your financials are in order.
3. Be Prepared for Due Diligence
During the due diligence process, buyers will scrutinize your business’s financial health. Expect to provide tax returns, profit-and-loss statements, and other financial documents. Having these ready in advance speeds up the process and demonstrates professionalism.
4. Offer a Business Tour
Buyers need to see the business in action. A well-organized tour not only showcases your business’s operations but also highlights its value. Use this opportunity to answer questions and leave a positive impression on the buyer.
5. Prepare an FF&E List
An FF&E (Furniture, Fixtures, and Equipment) list outlines the tangible assets included in the sale and their current market values. A detailed list adds clarity to the transaction and ensures no confusion about what’s included.
6. Ensure All Business Information Is Accurate
Accuracy is critical when selling a business. Double-check all the details you provide to ensure they’re true and correct. Even small inaccuracies can undermine a buyer’s trust and jeopardize the deal.
7. Avoid Misrepresentation at All Costs
Misrepresenting any aspect of your business can lead to serious legal consequences. If a buyer discovers inaccuracies after the sale, they may sue for damages. Honesty is the best policy to avoid complications and maintain your reputation.
8. Identify Non-Recurring Expenses on Tax Returns
Carefully review your tax returns to identify non-recurring expenses, such as personal expenses, that may not be relevant to the business’s operations. Highlighting these can help buyers see the true profitability of the business.
9. Provide a Copy of the Lease
If your business operates in a leased space, provide a copy of the lease to potential buyers. A lease agreement with favorable terms can make your business more attractive. Buyers will want to know about rent costs, terms, and renewal options.
10. Be Prepared to Sign a Non-Compete Agreement
Buyers often require sellers to sign a non-compete agreement, typically for 5 years and within a 100-mile radius of the business. This reassures buyers that you won’t start a competing business nearby after the sale.
Final Thoughts
Selling your business is a complex process that requires selecting an experienced business broker to help you through the complex selling process. By addressing these 10 key areas, you can make your business more appealing to buyers, avoid potential pitfalls, and achieve a successful sale.
Need expert guidance for selling your business in Florida? Contact Bill Blair, a trusted Florida business broker, to help you navigate the process and maximize your results.
