How to write a business profile

One of the biggest mistakes business brokers and private sellers can make when selling a business is taking a short cut in packaging and presenting a business for sale. This doesn't mean preparing a glossy one page summary or cutting and pasting from your website and company financials, but means actually spending the time to write a lengthy Information Memorandum or Business Profile about your business.

HERE'S WHY ANYTHING LESS THAN 15 PAGES COULD LOSE YOU A BUYER

Just because you have a small business to sell doesn't mean your business deserves less effort than a larger business. In fact, a substantial number of business brokers will argue that smaller businesses need significantly more effort to sell than larger businesses!

Although they offer greater affordability, smaller businesses compete against potentially thousands of other business opportunities in the same price bracket including:

• other businesses for sale in the same or similar industry;
• start up business opportunities which can cost as little as a few hundred dollars promising the same earning potential; and
• the appeal of secured income by going back to work with no out of pocket expenses, risks or responsibilities.

On top of this, many small businesses will generally have poorly presented financials, few good systems or procedures in place, heavy reliance on family members (who are likely to depart from the business soon after a sale), long working hours for owners, and profits erring on the side of a good wage.

Too often, we see or hear of businesses selling for substantially less than their original asking price or the business is taken off the market or closed down. A key success factor in being able to sell a business is to attract buyers which sounds obvious but many sellers only target buyers in their industry or only advertise in a small pocket of mediums, not realising that buyers come from anywhere and a number of them don't really know what they want. Without the right presentation and handling of buyer enquiries, sellers often treat these buyers as "tyre kickers" or "time wasters" which may be true but so is the reverse of this.

HOW TO PERSUADE "TYRE KICKERS" TO BUY YOUR BUSINESS

As business brokers for many years, we found that buyers could easily be swayed from business to business even though they may've started out looking for something more particular. A good example is when we had a wedding theming business for sale heavily reliant on the departing owners and very niche in its potential buyer market. We advertised the business for five weeks and each week we had different buyers enquire about the business but no inspections. Each week we ran different ads and maintained the same price tag. On the sixth week we finally hit the right note, sent out over 20 Confidentiality Agreements, 15 Profiles, had three inspections and three offers from different buyers who initially dismissed the business!

In a nutshell, we advertised in as many mediums as possible, changed the ad every time, and worked each buyer according to the benefits the business offered to them personally.

THE DEAL BREAKER YOU NEED TO KNOW

A good business broker will look at ways to marry buyers to your business and make it their job to understand both.
 
The dangers of working with buyers:

• buyers can lose interest very quickly if information is not readily available or there are unexplained anomalies etc;
• buyers will most likely remember only a fraction of what you say;
• buyers will consult others before buying your business including accountants, solicitors, and financial lenders. Their advisors will feel less emotional about the purchase and will rely on the parts your buyer recalls which may not be as exciting or as accurate as your presentation;
• buyers will judge your business from the quality of your ad to the way you conduct yourself and your overall presentation. A good presentation will reflect positively on the way you operate your business and will offer buyers and their advisors greater confidence in making an offer to purchase your business;
• buyers may look at other business opportunities even whilst a Contract is in motion.

A professional Business Profile serves as a critical reference point throughout the sales campaign to create and maintain ongoing interest for all parties of the buyer. If you're losing buyers after initial contact then you need to seriously consider your overall presentation and look at how professionals get the job done properly.

HOW TO WRITE A BUSINESS PROFILE

Buyers don't know what they don't know so you need to educate them from different angles. A standard template, particularly if you're part of a franchise system, will offer your business a small point of difference, if any, so you need to be more creative with your business profile. Treat your business as if it's the only business worth buying in your price bracket. If a buyer has money to spend on a business opportunity, make sure they spend it on yours!

One common attraction for buyers is a good return on investment with minimal risk. If you can demonstrate that your business opportunity offers this and more, then you will be in a stronger position to sway buyers from other business opportunities!



Key points to consider:

1. Trading name
2. Address of business
3. Years established
4. Years current owner
5. Trading hours
6. Summary of staff requirements and owner's involvement
7. Premises details
8. Products and services
9. Clients and source of income - general overview of who and where
10. Supplier - general overview of who and where
11. Competitive market analysis - general overview of who and where
12. Growth opportunities
13. Major plant and equipment requirements
14. Reason for sale
15. Financial performance - compare at least three years trading financials
16. Asking price and inclusions
    

Bizclassifieds.com.au packages and presents professional Business Profiles for some of Australia's best business brokers and now offers this service to private sellers. Business Profiles are packaged in Australia by professional creative writers and experienced business brokers. To package and present your business professionally for sale, please submit an enquiry using the form below.

Copyright. This material has been written by BizClassifieds and is not to be used or duplicated in part or full.

Disclaimer: The information provided above is to be used as a guide only. No person should rely on this information. BizClassifieds recommends persons seek their own professional advice, and accepts no liability for any loss or damage which any person or business may suffer arising from any negligence on our part.

Buying a Business

Don't buy a business or sell a business until you know the basics!

Since 2004, we've worked with thousands of buyers collectively from around the world and Australia both as Business Brokers and through BizClassifieds' online business for sale marketplace. We see a common theme with buyer behaviour that you need to know before buying a business OR selling a business.
Buyers want the best return on investment - poorly written ads hide golden opportunities so dig deeper!
Every buyer wants a business opportunity that offers a good, if not exceptional, return on investment. A substantial number of businesses for sale and business opportunities completely miss buyer's interest and this is important to realise both as buyers and sellers.
The perfect business opportunity may not be packaged and presented well, and quite often the key selling point of a business is not uncovered until much later (mainly due to protection of private information in the early stages of enquiry and/or failure of the advertisement to initially spark interest), or not at all.
Advertisements that fail to sell the business in the first instance are dismissed even before a simple email or phone call is made. As sellers and buyers, it is important to understand this weakness in the marketing of businesses for sale. Every business opportunity that falls into your price bracket should be considered and not immediately dismissed without at least an email or phone call to the seller. We see time and time again advertising material that is written and re-written, packaged and re-packaged, has the ability to dramatically change the level of buyer enquiries. This demonstrates that good business opportunities can be right under your nose.

Competition is fierce for good business opportunities - Act quickly!
We know from our statistics that there are now over double the number of business for sale enquiries compared to the same time last year (300,000 approx. in the month July 2011 versus 700,000 in the month July 2012). Competition is incredibly fierce for good business opportunities so when you see a good business advertised for sale, be prepared to act quickly. This doesn't necessarily mean leap in and make an offer but initiate the enquiry, make sure you know how you're going to pay for the business, and know who to contact to make the sale happen.
Buyers change their mind - discover your hidden passion or talent
Ask any business owner or buyer about their journey to buying a business and you'll probably find that a substantial number of buyers end up buying a business completely different to what they set out to buy, or set up their own business venture. Understanding this interesting buyer behaviour may open your mind to new business opportunities that better suit a passion and/or talent you hadn't considered or discovered.
Sometimes you have to stumble into a business opportunity but don't hesitate to ask the seller or Business Broker whether they have other business opportunities that suit your budget. Be prepared to consider businesses for sale that are advertised outside of your budget (for businesses advertised with no price find out what range it falls in). You never know how motivated the seller is or what the seller is prepared to accept.

Don't be afraid to make an offer - an offer is an offer
We often see businesses sell for less than their initial asking price (and sometimes for higher). Businesses can fail to sell due to price.
Consider the business without a price tag and if you feel it otherwise suits your requirements, don't be afraid to make an offer. Contracts can be made subject to due diligence (further investigation). If further investigation uncovers considerations you find unsuitable to your requirements, you can either choose to compromise in some way, or choose to terminate the contract.
If you find the business opportunity is satisfactory for your requirements and your due diligence is also satisfactory, then your offer would have paid off. All business transactions are on terms and conditions mutually agreed between seller and buyer. This means that you would only enter into a contract of sale if your offer is accepted, or after both parties have negotiated back and forth and both parties are satisfied with the offer. If neither party is satisfied with the negotiations then you both walk away.