How to Minimize Your Risks and Crush Your Market for High Profits

21 October

According to the nationally recognized BizBuySell Insight Report, the business-for-sale marketplace swelled 55.7 percent in the first quarter of 2013. Curtis Kroeker, the group general manager for, discusses how small business owners are getting more comfortable and confident selling their business. Their improving financial numbers also mean buyers are more confident about purchasing businesses.

With a recovering economy and small business sales on the rise, there are ways to mitigate your risks and set up your business for a profitable sale.

Get Your Business House in Order

Entrepreneur suggests treating your business sale like selling a home. Few would simply list their house without making some upgrades and cosmetic tweaks before putting it on the market. Upgrade your own business by meticulously organizing your financial statements for potential buyers, hiring a tax attorney to go over your financials and detail, and consider any necessary equipment upgrades.

Put yourself in the buyer’s shoes. If you were going to buy a business, what would you want it to look like?

Stay Transparent With Your Business Finances

One of the biggest risks in selling a business stems from what is claimed. Lawsuits are usually initiated by buyers against sellers for misrepresentation. Complaints usually stem from claims that were made from the owner about the income or benefits of owning the business.

But the opposite problem can also arise. What isn’t said can also be a liability, business consultant Peter Siegel writes on his blog, BizBen. If the seller doesn’t disclose negative aspects of the business, such as a large customer leaving, the buyer could claim he was deceived.

Keep in mind financial transparency starts within your own company. The Huffington Post reported the CEO of Laddering Works, Eric Holtzclaw, started sharing dollar amounts and budgets to his employees. This helps everyone stay motivated to keep on top of budgets, and empowers them to stay on track.

Know Your Competition

It’s nearly impossible to defend the asking price for your business if you have no idea what your competition is worth. You could also be selling yourself short by asking for too low a number. Researching the trends of your market will give you an upper hand as you negotiate prices and contracts with possible sellers, Entrepreneur says.

You can start by visiting competitors’ websites, signing up for their company newsletter to get a sense of their sales strategies, and read online reviews about the competition. Attending trade shows and conferences is also a smart way to study the marketing tactics of your competitors. It can be as simple as taking a look at the brochures or handouts from their trade booths.

Keep Your Business Safe reports phishing scams cost the U.S. more than $687 million in 2012. There are unfortunately a lot of unsavory people masquerading as legitimate companies and investors. Don’t fall victim to phishing email scams from potential buyers. Phishing usually starts as seemingly innocent email communication directing you to fake websites that may look professional. You may be persuaded to hand over personal and financial information that could be used against you. Consider using a company to help monitor your identity and credit, alert you to red flags, and provide other identity theft protection services.