BizSale Small Business Blog. Small businesses for sale.

Resolving any outstanding legal or environmental issues before selling a business will reassure interested parties they are making a sound investment, it has been suggested.

Associated Content's Richard Smith points out that potential buyers generally carry out background checks on businesses for sale, deeming their scepticism "only natural".

"Talk to your lawyer or other professional advisers to see what can be done about resolving any problems before selling a business," he recommends.

Harnessing the knowledge of professional brokers who are familiar with negotiating business sales is a further tip, as is ascertaining how much an enterprise's assets have depreciated before listing a business for sale.

"Potential buyers will definitely look into the market value of the business' assets [because] they will use these assets as loan collaterals," notes Smith.

He also advises taking location and owner expertise into account when selling a business, as a lower price should be expected if most of an organisation's revenue has depended on such expertise.

Firms which don't keep cash sales on their books will have a harder time selling a business, he concludes, emphasising that using a business for personal expenses will also "skew" its cash flow.

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The British Beer and Pub Association recently revealed that 39 pubs a week are being closed down due to a steady fall in consumer spending and increases in beer tax.

Urban and suburban freehouses are falling the fastest compared to tied pub companies and big brewery pubs.

These pubs are being sold off for development. It is also relatively easy to get closures approved by local councils and to ignore petitions to save freehouses, according to Greg Mulholland, Liberal Democrat MP for Leeds North West.

Regional brewers seem set to weather the current economic storm, over and above large pub companies, as they make speciality ales that can be bought in pubs and shops and off-licences. So companies such as Greene King, Fuller and Youngs & Co. are still seeing sales even though more pub-goers are opting to stay at home.

According to a newly published survey by broker Seymour Pierce, every pub has an average of £600,000 of debt in what is being called a “debt hangover”.

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A buyer is likely to offer more for your business if they are confident that the business is well set up and likely to be easy to take over. Do you have a well-defined strategy in your business plan?

The buyer wants to see a strong management team in place. If the running of the business is too dependent on you, the owner, this could seriously affect its chances of selling. It is, therefore, a good idea to encourage strong, reliable members of staff to stay with the company by having appropriate incentives to offer.

Take care that you are not overly dependent on a few customers and suppliers. The buyer will expect to see an expanding customer base and good relationships with a selection of suppliers.

Informal deals that you may have with your customers and/or suppliers should be formalised.

Other legal and financial issues that should be checked over include the following:

• Make sure your business complies with legislation such as health and safety etc.
• Ensure that you have ownership of any intellectual property.
• Check property contracts if applicable.
• Check that your finances are in good order.

Taking care of these issues could take time in some cases so plan in advance.

It is beneficial for you, as a business owner, to include an exit strategy in your initial business plan. This will prevent any hasty decisions to leave, which could render a business more difficult to sell.

Show that you are willing to help the buyer settle in to the business, this will be likely to help the sale. If it is appropriate for you both, you can agree to work with the business for a set period of time after the handover.

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Before selling a business you may have plans to expand it, here are some tips for getting support from business investors.

1. Your presentation doesn’t have to be perfect, just make sure it is captivating enough to keep the investors attention. Be clear on what you want to say, it will be a stronger story.

2. Once you have finished explaining your business and have answered any questions, remain alert until you have said your goodbyes. Try not to ease into relaxed talk, they may ask a question when you have let your guard down to which you could easily regret giving the answer afterwards.

3. Remember that the investors will most likely be seeing other business owners who are looking to attract investors as well. Just focus on giving a strong presentation, and you will provide good competition yourself.

4. It doesn’t matter to the investors how many times you have answered the same questions about your business, to them it is the first. Remember to be consistently enthusiastic in your presentation.

5. You may be asked difficult, even personal questions, do not be tempted to skim over the truth, the investor most likely has invested in other businesses before and are well aware of the likely pitfalls. Be honest.

6. The investor sitting before you has listened to many pitches about wonderful businesses that will guarantee they strike it rich! Make yours stand out with its individuality and with your own enthusiasm. Be sincere and this is what the investor will recall from your meeting when they come to decide which business to commit to investing in.

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