A little known statistic is that nationally, of all the businesses that go on the market
“only 20% of businesses that go on the market ever sell.” (Muradian’s record is close to 90%!) Most of the businesses that fail to sell have one thing in common; poor financials or an inability to tell a prospect what the business makes for the owner.
1. Poor or no financials 60%
2. Overpriced 20%
3. Undesirable business 10%
4. Reliance on owner 7%
5. Other 3%
A necessary part of putting together a marketing package to sell any business is being able to clearly tell three things to a buyer:
1. How much did the business take in?
2. What were the expenses necessary to operate the business ?
3. How much money did the business’ owner get from owning the business? (The
The primary financial document is the Statement of Income and expense, sometimes
referred to as a Profit and Loss statement or simply, P & L. A simplified P & L might
look like this although the expenses for different types of businesses will vary:
Income and Expense Statement
Total income 139,000 ALL business income
Cost Of goods sold
Gross profit 90,000
Expenses (Only business expenses).
NO personal items like
Payroll & payroll tax, employees 15,000 car payments,
home Office expense 200
Owner’s salary & payroll tax 6,000
Net Profit $67,500 “The bottom line”
To sell a business having the P & L for the past three years plus the current year-to date is required. Also as each month ends, a new Year- to- date report must be prepared to update the numbers so the listing looks fresh to a buyer.
With a P & L you can answer the question “what does the business make?” , and expect
to get your business sold faster.
Search and you will find
Contributed by Jack Crosby, Muradian Business Brokers, Hot Springs, AR, email