One of the most common questions we get from sellers is, “How long will it take to sell my business?” This is one of those questions best answered with, “it depends.” I know you are looking at a more substantive answer than that so let’s take a look at what it depends on.
The single most important factor regarding the time a business is on the market is the price. Most buyers are looking at a lot of businesses for just the right one. If your business is overpriced relative to the cash flow, it will take much longer to sell, and in fact may not sell at all. The value of any business is made up of the sum of the tangible and intangible assets. The intangible ones are hard to define. Seek the help of a qualified professional when looking to value your business.
Assuming that the business is “priced right,” there is still a variability in the time it takes to find the right buyer and close the transaction. In general, the larger the business, and the more specialized it is, the longer it will take to sell.
The experience and professionalism of the intermediary (business broker) firm that you choose will also greatly affect the time on market. The national average for small businesses under $500,000 is 12 to 18 months on the market. At Emerald Coast Businesses Intermediaries, with our 20+ years of experience and detailed process, we average 9 to 12 months for businesses in the same category. Call us and come in today for a free analysis of your business. We will answer all of your questions honestly with no obligation on your part.
Because businesses are unique, it is very difficult to compare them apples to apples. Not only will the same business type, generating the same cash flow, differ in price based on location and other factors, it will probably vary in the amount of cash down necessary to buy it.
So what is the simple internet quick answer? As a general rule of thumb, your down payment (liquid cash on hand to invest), should be equal to what you expect the business to make in one year. For example, $50,000 down on a business that is cash flowing $50,000 per year is reasonable. With various financing arrangements, it may vary somewhat, but that is a pretty good idea of what you can expect.
My best advice to you is find a good business intermediary, and be honest about how much cash you have to put into a business. Then work to find something that you would enjoy owning, that will provide a reasonable return on your down payment, and make good use of the skills and experience that you bring to the table. The professionals at Emerald Coast Business Intermediaries can help you through this process!