Where to start when selling a "small" business?

[marketdrayton]

I'm looking at selling a business that i can no longer manage. It's a sunbed salon within Notts and has been running for 2 yrs. The business is growing well and will be a success, it's already holding it's own comfortably and that's with paying staff close on to 3k a month!
As i am now 3 hours away i am finding it too strenuous to keep on top of the running and would like to sell up and concentrate closer to home.
I'm looking at selling it through an agent, one ideally who will charge a fee on completion of sale, but most of the agent's i've spoken to are into the "big" companies and a mere £50-£80k company isn't whetting there appetites!
Anyone know of whom to contatc / the best way to market such a business!?!

Thanks in advance for any suggestions i may receive!

C

[Mattt]

srebbe64 might be able to help, or at least give pointers

[Ade355]

The small business agents I have used seem pretty much similar in terms of fees with a typical minimum fee of around £4,000 on completion payable by the vendor if its a small business. The only difference is some agents will get more involved with holding deposits and prepping references, but to be honest I find it easier if the agents do as little as possible and the solicitors are left in charge of everything - too many bodies involved just slows down the process even further.

You can find a agent that serves your area/industry on here:
http://www.businessesforsale.com/


Manage your own expectations with respect to how long the business will take to sell. If the price it at an average level it could take a year to get a serious buyer involved (just pot luck) and then it will take 2-4 months+ to assign the lease and complete (unless you own the freehold). This is mainly because solicitors slow down the process as much as possible to justify their £1000-£1500 fee - Im convinced they do it on purpose!

Make sure any serious buyer has decent references and experience in the industry (or is willing to leave a 12 mth rent deposit!) or your landlord with probably just bat him away wasting everyone time and money (again, unless you are selling the freehold).

In terms of deciding the price, you need to be honest about how it will look for any potential buyer if you want to sell in a decent amount of time. Does the business actually make any money when staff run, or does it just breakeven? If only breakeven then the business may be worth only the sum of the assets... or possible nothing and simply a big liability if there is a long onerous lease (etc etc) so is somebody going to be buying themselves a job or an investment? Its tough to raise cheap finance for these kinds of purchases at the moment, so you really need to find a cash investor in which case they will want a profitable staff run business - this is then worth something maybe around 2 times annual profits + assets given the low barriers to entry for competition.

Just IMO, obviously I dont know you business circumstances. If there is somebody out there buying up all the smaller players for whatever reason etc etc, then things might be completely different. Good luck!

[marketdrayton]

Cheers Ade,
The business does make money, albeit not a huge amount. Partly because there is finance of £1k per month so once that has disappeared (which i'll pay off) it will be a £15-£20k net profit p.a. So it should be worth someones $$$. I value it at £50k, it's 1st yr t/o was £56k,and i was aiming to market it at someone buying a job as you mentioned, because with a "small" remortgage it's a £2.5k p/m job for someone no problems whatsoever, and obviously much larger in the summer. It'll buy itself after 2 yrs easy....
It all prob comes across as the old saying "if it looks too good to be true, it probably is", which i want to avoid!

Thanks again. I'll start chasing that link!

[The Moose]

i know it sounds a bit weird, but what it on ebay - a 7 or 10 day auction. you never know what may come of it.

agents will probably charge more than you are willing...??

the other thing you could do is employ someone to run it, or maybe even "rent" out your business and you and the person renting it from you split the profit??

just an idea...

Moose

[marketdrayton]

I did think of the ebay thing, but it's a p**s take selling anything on there, let alone a business!
I thought of the rental thing also, but trouble is it doesn't earn enough profit to allow someone to pay rent and pay a dividend of the profit, well, not a wage i'd be prepared to work for anyway!
The advice is all very welcome, and thanks Moose Appreciated.

C

[Ade355]

Thanks for the further information. I would suggest that you list it on businessesforsale directly (without an agent) as an experiment to see if it generates interest at that price.

What are the total assets worth (sunbeds etc) at current used prices, out of interest? What are the total rent/rates annually?

[edb49]

Could advertise in Daltons?