Selling Tutorial
Is it time to sell? Selling your business is a major decision!

Congratulations on taking the first step
For Business Sellers

Insider Tip
Preparation is key!
The First Steps
- Three years’ profit and loss statements
- Federal Income Tax returns for the business
- List of fixtures and equipment
- The lease and lease-related documents
- A list of the loans against the business (amounts and payment schedule)
- Copies of any equipment leases
- A copy of the franchise agreement, if applicable
- An approximate amount of the inventory on hand, if applicable
- The names of any outside advisors

Make sure the financial statements of the business are current and as accurate as you can get them.
If you’re halfway through the current year, make sure you have last year’s figures and tax returns, and also year-to-date figures. Make sure all of your financial statements presentable. It will pay in the long run to get outside professional help, if necessary, to ensure these documents are thorough and accurate.
You want to present the business well “on paper” and give prospective buyers insight into your cash flow. This includes the profit of the business, as well as the owner’s salary and benefits, the depreciation, and other non-cash items. Not everything is dependent on your bottom line.
Prospective buyers eventually will want to review your financial figures.
Notes If you’re like many small business owners, you’ll have to search for some of these items. After you gather all of the above items, you should spend some time updating the information and filling in the blanks. Have all of the above put in a neat, orderly format as if you were going to present it to a prospective purchaser. Everything starts with this information.
Insider Tips The big question is not really how much your business will sell for, but how much of it can you keep? The Federal Tax Laws determine how much money you will actually be able to put in the bank. How your business is legally formed can be important in determining your tax status when selling your business.
For example: Is your business a corporation, partnership or proprietorship? If you are incorporated, is the business a C corporation or a sub-chapter S corporation? There are also tax rules that impact certain businesses on seller financing. The point of all of this is that before you consider price or even selling your business, it is important that you discuss the tax implications of a sale of your business with a tax advisor. You don’t want to be in the middle of a transaction with a solid buyer and discover that the tax implications of the sale are going to net you much less than you had figured.
Who are the Buyers?
- Laid-off, fired, being transferred (or about to be any of these)
- Early retirement (forced or not)
- Job dissatisfaction
- Desire for more control over their lives
- Desire to do his or her own thing
A Buyer Profile
- The desire to buy a business
- The need and urgency to buy a business
- The financial resources
- The ability to make his or her own decisions
- Reasonable expectations of what business ownership can do for him or her
What Can You Do to Prepare?
Appearances Do Count
Everything Has Value
Eliminate the Surprises

Insider Tip
Those buyers are not realistic buyers for small businesses
Buyers who want to go into business strictly
- Tidy-up outside premises.
- Repair non-operating equipment or remove it if you are not using it.
- Remove items that are not included in the sale and unnecessary items, especially if inoperative.
- Maintain inventory at a constant level. If you let your inventory slide, your business will look neglected. If anything, increase it so your business will look busy.
- Repair signs, replace outside lights, etc. You don’t want your business to look as if it has been neglected.
- Keep normal operating hours. There may be a tendency to “let down” when you put your business up for sale. However, it’s important that prospective buyers see your business at its best.
- Spruce-up the inside of the business. etc.
What would you do to make it more attractive or more saleable?
Do you have other questions?
Be sure to visit Seller FAQ for answers to the following questions
- How long does it take to sell my business?
- What can business brokers do – and, what can’t they do?
- What can I do to help sell my business?
- What happens when there is a buyer for my business?
- Why is seller financing so important to the sale of my business?
