When meeting with business owners who are thinking about selling their business, I want to let them know what serious buyers look for when they’re contemplating purchasing a business. For a small to medium size business where they buyers will be the owner/operator, they want to make a living wage and get a return on their investment. 

From the Discretionary Earnings of the business, the buyer will need to take a living wage, service any loan or note, make some improvements and save a little for any emergencies that might arise. The buyer also wants to get a return on his or her investment within a few years. They are not looking to spend the next 10 years trying to recoup their initial investment. And in most cases, they won’t pay a seller an exorbitant amount of money on the potential of the business. If the Discretionary Earnings are low, don’t expect a buyer to pay a lot for your business.

A serious buyer will want to understand the day to day operations of the business. They will take a close look at the role of the owner, the product or service the business provides, the employees, the equipment & inventory, financial conditions, the client base, and how the company can grow in the next five to ten years.

What I look for when qualifying a buyer is his knowledge of the industry, his background and experience in business, and his ability to fund and financially maintain the business during the transition period.

Buying a business is an investment and owning a business is one of the only investments where the owner can have control of their own success.

If you have any questions about selling your business, please contact Certified Business Broker Robert Dean at Banner Business Sales, Inc. Phone: 310-709-1985. Email: info@bannerbusinesssales.com Website: www.BannerBusinessSales.com