As a business owner who built a business from scratch and watched it grow from all the efforts you put it in, you definitely want to sell it to a buyer who will take it to the next level or pay you exactly what it is worth in full.
Selling on a note is one of those effective seller financing options even though you will still retain all the risks that come with continued ownership of the business minus daily management. The future success of your pilot boring, medical support, or accounting business is what will determine the buyer’s ability to make regular payments for the business.
As the entrepreneur, you will always have the opportunity to repossess the business after foreclosing on the note in case it comes to that. Ensuring that the company isn’t run downhill will enable you to always find another buyer who shares a similar passion for your business and is willing to take it to another profit-making level and most important of all make all the note payments.
The Only Way to Sell
With the current tough economic times it can be difficult to find a buyer who will purchase your set up and give you a full cash payment. Taking a note for all or some of the buying price might be the only option that will allow you to sell your business. All you need to do is find a direct note buyer.
A Down Payment First
The most convenient option for you will be to have the buyer make a down payment first and take a note for the rest of the remaining purchase price. The business itself which includes assets or stock will no doubt act as collateral for the note.
In the event that the buyer fails to make payments, you the original owner of the business will always be the first in line according to the law, to repossess the business and recover the rest of the purchase price.
The Flexibility Involved
This kind of deal can also be very flexible because it allows you, the seller to make any adjustments they deem fit to the payment schedule, loan period, interest rate and any other terms that will suit their needs and adhere to the buyer’s financial capability.
For example you can offer a varying interest rate that can gradually increase when the loan takes too long.
Always Keep Your Interests Secure
After agreeing to sell your business on a note, it is only proper to ensure that your interests are protected. Have the buyer provide more security for the loan apart from the business itself. You can for example ask them to put up their own valuable personal assets such as real estate or any other investments that they might have.
It would also be in your favor if you asked the buyer to guarantee the loan personally the same way commercial lenders do.
Doing a background check on the buyer and getting information such as their credit record, character, management experience, personal assets and so on will help you decide if they are the right candidate to take the reins of your business.
You can also include a clause in your sales contract that restricts the new owner’s sale of business assets and any expansions until the note is fully paid off. You can also further indicate the need for submission of financial statements quarterly to enable you to keep an eye on the progress of the business.
Selling your business is a process, be informed of when and how to sell your business to avoid making mistakes. In the end you want to make a profit and there is no better way than building a business from scratch and increasing its value every day.
Title: Super-Connector at OutreachMama
Wendy is a super-connector with Towering SEO and OutreachMama who helps businesses find their audience online through outreach, partnerships, and networking. She frequently writes about the latest advancements in digital marketing and focuses her efforts on developing customized blogger outreach plans depending on the industry and competition.