I never intended to sell my small business.
I launched The Bumble Brand in 2008 as a side business while I ran my music management company. The Bumble Brand is the world's only purveyor of Bumble Bells, audible jewelry for babies and toddlers. Four styles, three sizes, and a CEO who had never before sold a product. Turns out, this CEO didn't much like selling them and by 2011, I was ready to close up shop and move on to my current business. It wasn't until someone suggested I sell the business that the idea even crossed my mind.
This past month, I sold The Bumble Brand. Turns out, selling my business was a lot like starting one up. Oh, the things I wished I had known. I was reminded once again that there are certain things you can't know until you experience the process firsthand.
Nevertheless, here are a few tidbits I uncovered along the way:
1. There is no such thing as the "right" sale price. The exact sale price of your business is in the eyes of the beholder -- or rather, the price will be what you and the buyer feel the business is worth. I'd suggest staying flexible: If you're stuck on $300,000 and no one is willing to pay that, then by all means bring it down. Similarly, if you've got low expectations but you meet someone whose pockets are dripping with the green stuff, be bold and raise that number. I met buyers who balked when I stated my asking price. And I met buyers who didn't wince even once at that same number. Take the Stephen Colbert approach on this one and go with your gut. If it feels right, it may feel right to the future owner of your company, too.
2. Keep your business going. Don't stop running your business while hunting down a buyer. They want to see that you remain profitable even as the transaction occurs. In my dealings with buyers, the fact that The Bumble Brand had ceased to be my first priority put me at a distinct disadvantage. In retrospect, it seems obvious. But at the time it simply didn't occur to me that easing off the accelerator would negatively impact the business' value.
3. Know your numbers. And your annual figures. And your quarterlies. Creating a P&L would be good, too. If you don't know what I'm talking about, hire a freelance business consultant, lawyer or accountant to create these for you. Certain buyers asked me for my yearly profit and loss statements, and only those. Others wanted the down and dirty details of my quarterlies. And still others didn't want anything except the business.
Suffice it to say, I did not prepare these items all in one go before I put the business up for sale. I eventually figured out to hire the fantastic gals at LocalOakPark.com who not only helped me crunch numbers but created a beautiful sales packet that I was able to hand to any potential buyer. Better to err on the prepared side.
4. Get your legal documents ready. You're going to need a Letter of Intent (LOI) from the buyer once they make an offer. This is their basic promise to you that they intend to buy the business, barring any mold/fraud/insert-damage-here that they uncover about your biz. You'll also want to have your purchase agreement on hand, which is the contract that establishes the sale of your business. Once that puppy's signed, YOU HAVE SOLD! Many entrepreneurs hire lawyers for these agreements; it's a pretty good idea to do so. Why? Because you won't know what to expect, and you'll need the proper clauses inserted into your purchase agreement so that every unanticipated future issue is covered.
5. Flippa.com rules. I paid the $69.95 per month to be listed on BizBuySell.com, "the Internet's Largest Business For Sale Marketplace." I even paid a bit extra to be listed on Bizquest.com, a partner site, as well. Several inquiries came in but not even one serious buyer approached me. After several weeks, I turned to Flippa.com, "the #1 Marketplace for Buying and Selling Websites." It took all of $19 to list my business on Flippa.com. The results? Fantastic. I received a number of inquiries from serious buyers and eventually sold to a spectacular woman thanks to the site.
The process of selling my business was, for me, more thrilling than the actual sale. The Internet makes it terrifically easy to get the word out and find a buyer. Now that I've successfully sold a business, might as well do it again…and again…and again.
Jill Salzman is currently growing her third entrepreneurial venture, The Founding Moms, the world’s first and only kid-friendly collective of monthly meetups for mom entrepreneurs. Having built two successful companies, she launched The Founding Moms to connect mom entrepreneurs around the globe with one another.In her spare time, Jill enjoys kloofing, traveling to small towns, and erasing her daughters’ crayon artwork from the kitchen walls.