Selling Specific Business Types
Selling a Retail Store
Wondering how to sell a retail business? Your retail store has served you well, but now it's time to move on. We explain the fundamentals of selling a retail store.
Retail is a fast-paced and exciting form of small business ownership.
In your early days as a business owner, you quickly realized that a retail operation is unlike any other type of business. It has its own unique challenges that you had to learn how to overcome - and those challenges continue when you take on the task of selling your retail store.
One of the first issues you'll face is the question of how to keep your customers in the dark about the fact that you are selling the business. If your customers learn that an ownership change is on the horizon, many will jump ship to a retailer they perceive to be more stable, resulting in a lower valuation and purchase offer when a buyer actually materializes.
Unfortunately, that's not the only issue you will need to address. Here are a few other concerns that need to be addressed as you approach a graceful exit from retail business ownership.
- Leases. Property leases count in a business sale. If the lease isn't transferrable, the new owner may have to relocate the store - and that could very well spell disaster for the operation. Talk with your landlord about the details of your lease before you put the business on the market.
- Supplier relationships. Suppliers may or may not honor current terms after the business changes hands. If your suppliers aren't contractually obligated, work with your suppliers and the buyer to flesh out mutually acceptable terms.
- Profitability. It's in your best interest to do whatever is necessary to make your retail business profitable before you list it on the market. Non-profitable retail businesses sell for a price that is based solely on the value of the assets instead of the higher price commanded by stores with a proven track record of profits.
- Seasonal cycles. If your store is seasonal, timing will be an important part of your sales strategy. For example, if your business experiences peaks during the holiday season, it will be difficult to attract buyers during January and February. Instead, put off the sale until summer.
- Inventory. Your inventory is your most valuable asset. Accurate and up-to-date inventory lists are a precursor to a retail business sale because they play a central role in appraisal and valuation.
- Location. If your store is situated in a so-so location, consider changing your location a year or two before the sale. By demonstrating a track record in a high volume spot, you can significantly increase the operation's value to buyers.
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