If you want to sell more businesses at a quicker pace, preparing a detailed business information package can help you achieve that 7-figure income. We often receive comments from other brokers on how quickly our businesses sell at Crowne Atlantic Business Brokers. I respond by stating “it’s all in the preparation of our package.” We take the packaging of our businesses very seriously. We believe every business is unique, and our job is to highlight those unique attributes and features, as well as how this business can work for a new owner. We borrow the eyes of a buyer and look at buying a business from their perspective. Of course, keep in mind that the best package in the world can’t fix horrible and/or inconsistent numbers. This article is assuming the business you’re selling is truly viable.
How To Make 7 Figures By Preparing A Great Package
Let us compare the business package to a bouquet of flowers. Many brokers offer bits and pieces of separate data such as a profit and loss in one file, and a tax return in another file, and if you’re lucky, an equipment list. The data looks like separate flowers spread out on a table; Buyers then see a mishmash of data with no organization or thought. It makes it easy to see why stores sell flowers in a bouquet. The flowers look better when beautifully packaged together. The information package helps tell the story of a business, and offers brokers an opportunity to add context to the financial data.
Instead of challenging Buyers to picture the operation for themselves, tell them the story. Give them a gorgeous bouquet of flowers instead of pieces of flowers thrown on a table.
When you create a package, you need to share with the buyer truly helpful and descriptive information on the business. The bare minimum standard list of items to have in your business package include:
- Executive Summary
- Summary of Assets Included
- Equipment List
- Staff Chart
- Photos/Video Links
This list is quite basic, and your package should contain these items. When the main items are in your business package, look at it once more and ask yourself, “are you looking at this business package from the buyer’s lens?” Do you truly elaborate on the features in each of these sections of the package?” Are you thinking ahead to what questions a buyer will ask about the financials, the operation of the business, the layout of the facility, and the current team in place? Are you mentioning why features are or are not ideal, and how it affects the income of the business?
Easy Guide of What to Say
|PACKAGE ITEM||COMMON DESCRIPTION||HOW TO ELABORATE|
|Location||Located in Central Florida||Located in an industrial area with great access to I-4. Cheaper rent. Business is next to reciprocating businesses that refer work back and forth|
|Staff||Owner has 5 employees||Owner has one manager who manages evening hours and one who manages daytime hours, one bookkeeper, and one salesperson who has been there for 10 years. None of the staff is family related.|
|Financials||Financials Tax return or P&L with no commentary||Show addbacks for 3 years; list any out of the norm expenses or situations...and there is something within 3 years at some point to list which stands out for every business I have ever seen.|
|Equipment List||Partial equipment list||It is vital for you to understand what tangible and intangible assets are included in the transaction to be able to properly convey that information to the buyer. Prepare this in advance the best you can.|
|AR/AP||Often this isn't clear in the package||DON'T OMIT! This is important to mention if there are receivables and if they are or are not included.|
|Photos||One photo...maybe||This is your chance to create a visual of what this company physically looks like, or what the set-up of the business is. If there is a home office, see if you can get a photo of the space. If there is anything remotely fun, highlight it. Any business can be exciting!|
Lastly, most buyers ask the same set of questions. Help manage those expectations, and have these questions answered in the package. For example, when my daughter was 5, I told her “most adults are going to ask you the same questions over and over.” Questions like: How old are you? Do you like school? Where do you go to school? What do you want to be when you grow up?
I told her to expect these questions, and have some answers prepared. Why do adults ask the same questions? Many don’t know how to start a conversation with a child, or how to relate to a child, so they start with the same basic questions. It is the same thing with a potential buyer of a business.
Here is a sample list of basic questions I receive from most potential business Buyers:
- Why is the owner selling?
- How did you arrive at the valuation?
- Is there customer concentration?
- Are there repeat customers?
- What’s the competition?
- And most importantly, what is the growth potential?
It amazes me that most brokers cannot answer these questions about their listing. If you know you don’t have updated financials and the buyers are going to want it, why are you even putting up the listing? Can you really sell a business quickly when you, or the business, isn’t properly prepared? Sellers hire brokers to do one job…sell their business.
Being proactive and getting these questions answered in the package helps the potential buyer immensely, and saves time to weed out buyers that are not interested.
Sellers hire brokers to do one job – to sell their business. It is imperative that a broker not only makes sure that the business is ready to be sold, but that the broker is prepared to interact with potential buyers. Can a broker really sell a business quickly when the broker, or the business is not properly prepared?
When you have a properly prepared package, the Buyer’s first impression of the business is a beautiful bouquet of flowers. Offering Buyers a properly packaged business is one way to attain the 7- figure income as a business broker.
Jackie Ossin Hirsch
Crowne Atlantic Business Brokers