Turnkey Business Explained And Know How To Sell Them
Before learning how to sell a turnkey business, let us first have a brief on what is a turnkey business.
What is a Turnkey Business?
A business is called a “turnkey business” in a situation when a successful business model for the particular firm is already in place with all plans and strategies in execution, providing profits, and products and services already defined. So the initial start up phase is complete. An external individual or buyer will now “turn the key” to take up the operations from here on by buying the franchise or business. The buyer does not have to develop the business from scratch. A turnkey business for sale already has an established model you need to immediately start running a business. It requires initial investment and labour. For example, the buyer may need to pay the franchise and current royalty fees, a startup and operational fees for one store location but he does not have to worry about other important business aspects. Thus, by buying a turnkey business, a buyer only has to do a bare minimum work before opening the door to the customers. Most franchises and existing successful businesses are turnkey businesses for sale. The biggest advantage of a turnkey business is that the uncertainty is much less. Most often, the deal includes offices and employees. So the purchases can focus straight on maintaining the business.
Thus, a turnkey business for sale is of great demand in the present market. These are businesses people turn to mostly when they want to skip the hardships of building a new business and jump to earning profits.
A model for the Turnkey Business System
How to sell a Turnkey Business?
The crucial steps to be followed are before you list your turnkey business for sale are-
Take Business Inventory
To start off, take a thorough inventory of the business. The inventory should include all the assets for sale as well as the other aspects needed for the smooth operation of business. Make a list of all the computer software, fulfilment systems, procedures and processes required for daily operations. Check if you have any existing contracts with any client or external supplier and review them for the safe transfer of work to a new owner. In case you own a franchise, the contract’s fineprint should be checked to see if it is allowed to transfer the branding along with the physical aspects of the business.
Make a layout of all the operations you carry for the business, how much time it takes and any details the future buyer should take special note of. If you have employees, then decide how many will be retained, who are willing to stay and who will be released and prepare them accordingly. Review your competition in the market.
Establish a Selling Price
You have to decide the price of the turnkey business for sale. You have to consider the assets of the franchise, the revenue driving sales, the potential income and the possibility of additional profits. The assets are the physical property you own like the building, the real estate, the inventory, the equipment and the production supplies which are involved in the sale of the business.You have to review these numbers and the projected earnings for the coming years to settle to a value.
A practical buyer would want to see the paperwork behind the business. After you have determined the selling price, it is important to prepare the papers for dealing with buyers. The documents should include the assets and processes you are selling and proof of business performance. Since you want to sell the business to the buyer, you need to impress the buyer with the successful statistics of your business. Display to them the profits, the tax returns and the financial statements of your business over the past few years. Add copies of contracts with suppliers, distributors and clients. You can also add a copy of your lease agreement. If your papers are information based and proof based, it will make you more trustworthy to the buyer. The paperwork helps the buyer to evaluate the potential in your company through all the details in the documents. Prepare a Non-Disclosure Agreement(NDA) before getting involved in talks with a buyer to ensure that the buyer does not mess with the important and confidential documents.
The last step is to list the turnkey business for sale. If you hire a business broker to find you a potential buyer for your company, then it will cost you the broker’s sales commission. To save this, you may list your business in industry and regional publications. You can also list your business on several online websites.
If you are willing to put up your turnkey business for sale, you must start preparing at least a year in advance. It will provide you time to improve your records like finance, customer base and other aspects to make your business more successful. A shrewd buyer will also ask why you want to sell the business. So prepare and review your reasons carefully. If you keep all the factors in mind, you will be able to sell your business swiftly.
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