Four Keys To Selling Your Business Online
By Mike Handelsman
There can be many ways to find a buyer for your business
By Mike Handelsman
Selling your vending machine route is a life-changing event. The
decision to sell can be brought on by a variety of factors, including a
change in location, finances, or lifestyle.
Selling your vending machine route is a life-changing event. The decision to sell can be brought on by a variety of factors, including a change in location, finances, or lifestyle.
Whatever the reason, sellers should be aware of online resources that can make the transaction more efficient and effective.
According to a recent Yahoo Inc. poll, two-thirds of us dream of owning our own business.
Potential buyers are always looking, and many of them look online.
Vending machine businesses are now frequently bought and sold online. At BizBuySell, an online business marketplace, we see many interested buyers and a growing number of sellers in this category.
Beyond simply giving you access to buyers whom you might not otherwise meet, selling a business online makes economic sense. Putting your vending business for sale on an online business marketplace is cheaper than placing a newspaper classified ad, and will ensure much more widespread exposure.
Indeed, business brokers and business owners selling independently have found a great deal of success in selling businesses on the Internet.
However, before listing your vending business, you will want to remember four key points: preparing, using web tools to your advantage, providing the right information and screening buyers.
Preparing to sell
Selling a business is not something to rush. Ideally, many months should come between making the decision to sell and putting your vending business on the market. This allows you to properly assess the financial situation of your business and create reports detailing potential growth and revenue. It will also give you enough time to modernize any outdated systems that might deter buyers once the business hits the market.
Have all the information potential buyers might want: past performance, business costs, strengths and weaknesses, for example – prepared in advance. Business must go on as usual while the vending machine route is for sale, and once buyer inquiries begin coming in you might find yourself too busy to put together all the necessary information and keep the business running.
Using web tools
Online business marketplaces offer a variety of tools that can help make preparation for selling easier.
For starters, it is crucial to price your business accurately.
According to our research, vending businesses sold for an average of $187,000 US last year.
The data also indicates that vending businesses typically sell for an average of 91 per cent of sellers’ original asking prices. If you want to sell your business for around $200,000, you’d do well to ask for $220,000.
Of course, the price your business will sell for depends in large part on your revenues and profitability. According to recent data, the price-to-revenues multiple for vending businesses averaged 0.92 and the price-to-cash-flow multiple averaged 2.60.
In other words, a business with annual revenues of $500,000 would likely sell for $459,000. An alternative valuation might be arrived at using the company’s cash flow information. For example, if the business had an annual cash flow of $100,000, the valuation would be $260,000. Most buyers are more interested in cash flow numbers than revenue numbers.
Online marketplaces often provide information that helps you to define your selling price.
A comparables report can provide specifics based on comparable establishments, chosen geographic area, gross income and cash flow ranges. This kind of report, which is available online, can provide general rules of thumb about pricing.
An online marketplace can also provide a listing of brokers who can provide additional help in buying or selling a shop.
The option to upgrade a listing to premium status can also help users sell their business more quickly and easily through the ability to include more descriptive text in an ad search result, as well as highlighted,
Standard listings often give sellers the chance to capture potential buyers’ attention with one headline. If this is the option you choose, make sure the title is concise and clear, but attention-getting. The title should convey why potential buyers should be interested in finding out more. If there is anything about your business that makes it particularly desirable, such as location, make sure to include it in the headline as a selling point.
The right information
Confidentiality is a significant factor for business sellers. In order to keep the shop running smoothly during the selling process, you will probably want to be extremely careful not to let customers, employees and competitors know you are selling. This means that certain details should be kept at a minimum when posting an online ad.
At the same time, it is not a good idea to post so little information that nobody will be interested in the listing.
The key is providing the most information possible without giving away the identity of the business. It is important to give viewers an idea of the general location of the business, but do not post the business street address, phone number, or e-mail address in the listing. Instead, create a separate e-mail address and phone number for inquiries from potential buyers. If you have to provide further detail, have the recipient sign a nondisclosure agreement.
Do tell potential buyers why you are selling the business. If you are honest, people will tend to be less skeptical, and you will probably sell your business faster.
Once you list your business for sale, you might find that certain questions come up repeatedly in inquiries. This can serve as a good guiding point for what you should change or add to your listing if ongoing editing is possible.
Another potential issue to prepare for is inquiries from people who are not serious about buying. Sellers often encounter people who have the dream, but no realistic intention of going through with a deal.
It is difficult for online marketplaces to screen potential buyers, so sellers have to determine whether prospective buyers are serious or are just kicking the tires. The best way to do this is by asking potential buyers direct questions about how long they have planned on buying, how they plan on financing the establishment and how much money they have for a down payment. This kind of informal interview will allow you to determine early on whether the prospect is worth pursuing. o
Mike Handelsman is general manager for BizBuySell. Since 1995, BizBuySell has offered tools that make it easy for business owners and brokers to sell a business, and potential buyers to find the business of their dreams. BizBuySell lists over 40,000 businesses, spanning 80 countries, for sale at any time, with over 4,500 added or updated each month.