More and more business brokers San Diego are recommending seller financing. This is mostly because of the tight lending restrictions that are in place. Offering seller financing when selling your business can help sell fast and earn a big takeaway. But how do you go about this?
Seller financing is the option in which the business seller agrees to allow the buyer to pay for the business in installments. A down payment will be required and the parties will agree on favorable regular payments. The option offers benefits to both parties. As a seller, there are certain things you need to do to ensure the whole deal goes well.
Know the risks
Cash sales are risk-free for sellers. However, when it comes to seller financing, there are many risks involved. This is because with the seller-financed transaction, you will be tied to your business for months or even years to come after the sale is completed. The success of this transaction is tied to the success of the business. If the business fails, the buyer will be unable to pay you. An experienced business broker San Diego will help you evaluate the pros and cons of this option and further help you come up with favorable terms to mitigate the risk.
Advertise willingness to finance
Buyers are searching for business for sale that offer favorable terms. Seller financing is, without doubt, the most attractive option. As you market your business, it is imperative that you advertise your willingness to finance. That way you will be able to attract more buyers and close even faster. It is not uncommon for buyers to search for businesses that are seller-financed.
Increase the sales prices
Due to the risk that is involved, it is good to leverage interest and increase sales prices. The best thing about this sales option is that it gives you the chance to multiply the principal value of your business. You can do this by increasing the sales price or by adding future interest payments from the business buyer. Financed sales garner higher rates of return than any other investment vehicle.
Get help from the professionals
Working with experienced business brokers San Diego is not the only thing you should do. Remember that you will need to secure airtight collateral, come up with coherent loan terms and have sufficient insurance coverage. To do all this, you will need financial and legal advice from trusted professionals. Don’t forget about the taxes. A trusted tax professional will help rip the full tax benefits of seller-financed business sale.
These are the four most important things you will have to do when getting ready for a seller-financed sales option. The rule of thumb is to ensure that you get all the terms right before you start marketing your business.