Maybe you’re considering opening a different business, relocating, or even retiring.
Regardless of the reason, selling a restaurant can be more complicated than you may think.
This is because it takes careful preparation and a solid strategy to successfully exit with enough profit for all the labor you’ve put into it.
Steps to Take in Selling Your Restaurant
You can either decide to hire a business broker to assist you in selling your restaurant or take on the task yourself.
If you are considering selling your restaurant on your own for the first time, you should follow these steps.
#1. Gather the Necessary Paperwork
This is an important preparatory step to take when you begin the process of selling your restaurant. If you have decided to sell your restaurant, you need to start gathering essential documents.
The required documents may vary from state to state, but below is a list of some general documents that you may need to have at hand:
- A list of your assets
- Lease document
- Your licenses (e.g., liquor license)
- Copies of health inspection records
- Document showing architectural plan
- Financial statements and other important financial documents
You probably do not want to reveal all these documents to a prospective buyer. However, you should have them at hand because you will eventually need them during the sales process.
Also, compiling these documents allows you to view your restaurant through the lens of a buyer. It gives you a clear picture of the business you are selling. Furthermore, it helps you to identify whether there are any loopholes you will need to address.
#2. Put Your Financials in Order
Your financial records are a crucial part of selling your restaurant. That’s why you should strive to make these documents accurate and well organized.
You can then show your financial records to prospective buyers to help clear any doubt they might have concerning your business.
These financial records can include:
- Inventory of equipment and assets
- Profit and loss statements
- Tax records
- Cash transactions
- Bank statements
Also, ensure that you have soft copies of all of these documents. This will make it easier for you to send the information to prospective buyers.
Likewise, as a seller, you have to disclose information such as debts, owed taxes, prospective repairs, etc. Failing to inform a buyer about these things can create legal problems for you if a buyer later discovers these liabilities after sealing the deal.
#3. Gather the Details of Your Commercial Lease
In the process of preparing to sell your restaurant, you must find out the terms of your commercial lease. It would be disappointing if, after securing a buyer, your lease ends up preventing you from sealing the deal.
For this reason, it is advisable to talk to your landlord concerning your plan to sell your restaurant and extend your lease.
#4. Appraise Your Restaurant
Buyers and investors will often request an in-depth analysis of your financials, whether they are favorable or not. This helps them to evaluate the value of your restaurant.
It is therefore in your best interest to ensure that you augment sales and reduce expenses to build your cash flow before trying to sell your restaurant.
The average time it takes to sell a restaurant is six months. Within those six months, there is a lot you can do to strengthen your profit and cut various costs, and thus increase the value of your restaurant.
Also, when it comes to your assets, you need to understand the depreciation involved. Everything depreciates, so it’s best to individually estimate your assets.
This will assist you in deriving the overall value of your restaurant. In turn, deriving the overall value will help you to determine a selling price.
#5. Make Your Restaurant Attractive
The appearance of your restaurant can go a long way in helping you attract potential buyers. Conversely, if the general aesthetic of your restaurant does not appeal to buyers, they might take a pass right off the bat.
To prevent this from happening, everything within and without your restaurant must be clean. Well-trimmed grass and a clean parking lot can help create appeal for potential buyers.
Clean windows, polished handles, and a neat floor are also simple things that can help create a memorable first impression.
Furthermore, you should ensure that all your equipment is in top condition. If your equipment is not functioning, it might convey the message that you are just in a hurry to pass on a bad deal to the buyer.
Additionally, faulty equipment raises doubt about your financial situation and production capabilities. It can even dampen the morale of your employees, which in turn negatively affects your productivity, and ultimately your profit and loss statement.
You should appear credible to build the confidence of potential buyers concerning purchasing your restaurant.
#7. Search for Buyers
Searching for potential buyers can be time-consuming and often requires specific skills and a certain level of experience. This may demand that you hire a professional business broker to help. The professional broker will offer recommendations for saving time and drawing in more potential buyers.
However, if you decide to take on this task yourself, you will need to carry out proper advertising. You can list your restaurant on business websites, and tell family and friends about your intentions to sell your restaurant. You can even give them a referral bonus.
Also, it is essential to note that you will come across competition when trying to sell your restaurant. That means you need to try to stand out from the competition.
#8. Be Prepared
Whether you decide to sell your restaurant yourself, or through a broker, you should always be ready. Be prepared to show your restaurant to potential buyers at all times.
You never know when a buyer could walk into your restaurant. Some buyers might even come in as customers just to carry out some research before contacting you.
#9. Sell Your Restaurant
This is the last action to take after a successful negotiation with a buyer. This stage involves the presentation of the necessary paperwork to complete the transaction. The paperwork often starts with the Asset Purchase Agreement.
You may need your attorney’s assistance in drafting this document. Involving an attorney helps to ensure that the Asset Purchase Agreement covers every aspect of the transaction.
This document includes details such as the selling price of your restaurant, your items and equipment, and inventory value.
Note that even after sealing the deal, you should continue running the restaurant and operate it as if you are not going through with selling it. This is because negotiations might fall through at the last minute. If they do, your business will still be operational, and you won’t have to start from scratch.
Choosing a Business Broker
While trying to sell your restaurant on your own can be an exciting endeavor, it can also be quite risky, especially for first-timers.
The fact remains that in order for you to get the most out of the business deal, you need some level of experience to stand out against the competition while trying to find buyers.
Experience is also vital during negotiations with potential buyers. This is where a business broker comes in. A business broker has the resources, experience, and strategy needed to easily take on the task of selling your restaurant. Additionally, a broker can help you sell faster and at a great price.
With the help of a business broker, you can focus your undivided attention on operating your business and rest easy knowing that a professional is in charge of selling your restaurant.
Contact a Business Broker
Choosing to sell your restaurant through a business broker has several advantages. First, however, you need to select the best business broker to assist you in selling your restaurant. This will ensure that you get the result you want.
At Zoom Business Brokers, we consider it our duty to ensure that business owners are handsomely rewarded for their labor. We do this by helping them to secure the best deal for the sale of their businesses.
Over our years of acting as an intermediary between buyers and sellers, we have accumulated so much experience, and this has enabled us to consistently meet client expectations.
Contact us today and let us help you sell your restaurant for a great price.