Nine Questions Business Owners Need to Be Prepared to Answer During the Sales Process

1.  Why Are You Selling?
Buyers will understand if you’re selling your business because of retirement, relocation, divorce, illness in the family or partner disagreement. However, buyers want to know if your business is in decline or facing some sort of problem. Share the truth as to why you are selling your business and a buyer will want to think about its potential.

2. Is the Business Profitable?
One of the first questions a buyer will ask is whether or not your business is profitable. They will want you to show them the bottom line in your financials, including tax returns, cash flow and profit and loss statements to determine if there is a growing multi-year trend of increasing revenue and a forecast for continued revenue growth. Providing documentation that business is stable and growing will make a positive impression.

3. What Is Unique About this Business?
Buyers will be impressed if your business offers products or services that differentiate it from competitors. 

4. Can You Prove the Financials?
A buyer will ask to see detailed proof that validates the financials you are presenting. Be certain that the revenue and profits that you are stating can be supported.  In addition, be prepared for questions regarding the breakdown of cash versus credit card.

5. What Is the Owner’s Role in the Business?

A business that is easy to transition to another owner or requires little day-to-day involvement by the current owner is highly marketable to buyers. If the owner’s job is highly technical it will vastly shrink the buyer pool. 

6. Is Your Business Staffed with an Experienced Manager and Employees?
A business staffed with an experienced manager and employees will be a major benefit to buyers that sugarcoats the deal. These employees offer continuity to the business after the sale. 

7. Does Your Business Have an Established Customer Base?
An established customer base that will remain with the business after the sale is invaluable to prospective buyers. It further demonstrates that the business is well established within its market with a loyal group of customers.  If your business has loyal corporate clients be sure to mention that to potential buyers.

8. Can The Business Be Financed?
Good deals get done with financing. Very rarely will a buyer offer an all-cash deal and most buyers expect to put down a substantial deposit with the remainder financed. However, acquiring financing from lenders is a challenge. Therefore, the only two options to you, the seller is: lower your asking price or work with the buyer to overcome their financial challenges. Seller financing is becoming more and more popular, as sellers realize it gets them a better price as it dramatically increases the pool of buyers.

9. Will the Lease Be Assigned?
The lease can be a key factor in whether you can find a buyer for your business. Frequently, the lease can be assigned to a new owner. However, be sure to check the terms of your lease and see if it allows for an assignment without any conditions. Your landlord may have attached conditions that are favorable to them.