Insert the owner(s) names and their percentage share.
Insert your business address, email address, and phone number.
Describe where your business operates (e.g. offices, service locations).
Company website (if any)
Briefly describe the main purpose of your business and the sector in which it operates. Write this as an executive summary that you could use on other platforms. For example, you could use it when listing your business for sale on a public marketplace.
Write the category of your business (e.g. carpet cleaning). If your business operates in more than one category, list the top 3 to 4 categories and order them by importance.
When the business was established, where, and by whom. Give the main historical facts and/or key events during the business's history.
It’s important here to be persuasive. You must highlight the positive reasons as to why a buyer would want to purchase your business. Do this by describing its strengths, key values, and potential for future growth.
Your reason for selling; make is short. Be careful not to appear too desperate to sell. Avoid any mention of negative reasons for selling-up and moving on.
This is where you declare that your business is already well prepared to continue without your personal and unique presence. A prospective buyer wants to assume that the key information and customer/supplier relations are well documented and professionally handled by the company's staff.
Briefly describe your main product(s) and/or service(s).
Do you sell to businesses or consumers (or both)? Briefly describe the typical profile of a customer that would purchase your products or services.
Briefly explain the sales channel(s) where your targeted customers can purchase your products or services, whether this is a shop, restaurant, website, distributor, or some other sales method(s).
Include key market facts; prioritizing market size, trend direction, and market share. This is important information for a buyer, so do your research and reference any relevant reports which support it. Enter the total market size in units or value, ideally both. After that, indicate whether the market is growing, declining, or staying pretty much the same. Finally, enter your current percentage of the market share.
Outline the main promotional activity that is used to build awareness and interest in your offers and brand, such as advertising, social media, personal selling, or other methods of marketing.
Why are customers buying your products or services? What motivates them to select your offer above the competing ones? Is it uniqueness, pricing, location, quality, service, etc.? In other words, try to summarize your "value proposition".
Businesses that survive and make sustainable profits have found a formula for adding value to customers. This formula involves companies making their offer distinctive from the competition. Briefly describe your main advantages as compared to competing rivals. Name and shortly describe 1 to 3 of your nearest competitors on the marketplace.
Business financial strength is of vital concern to potential buyers. Describe your company's financial position by providing facts about past performance, and where it's heading next (forecast income statement for the next 3 to 5 years). Shortly describe your business's debt vs equity position.
Describe your staffing situation and policy. Note particularly if you’re a significant user of subcontracted labor. Enter the number of full-time and part-time employees in your company.
Number of employees that are full-time: 7
Number of employees that are part-time: 2
Type your asking price or price range.
Add further comments (if any) on the asking price.
Owner financing is a solution where instead of getting the funding from a bank or other finance provider, the buyer borrows all or part of the sale price from you - the seller.
Owner financing is available / not available
Add any details/terms about your owner financing option (if any). These details/terms could include the loan amount or percentage of the purchase price, term length in years, interest rate, and repayment schedule (monthly, quarterly, yearly).
What plans do you have in place to ensure a smooth transition of business ownership? Measures might include training, a stated post-sale time commitment for hand-over completion, or even a willingness to stay on in the business for an agreed period.
In considering a prospective buyer, what are the minimum qualifications they need to have, if any? Clearly state the buyer criteria here that is acceptable to you, such as prior experience and available finances. This can help significantly reduce applications submitted by time-wasters.
What type of business sale is it? It’s best here to clearly state your preference, whether you prefer an asset sale, transfer of membership, or a shares/stock transaction, without going into any detail at this stage.
What terms of sale are acceptable to you? Here’s a chance to lay-out your minimum acceptable terms for a deal (if any). This helps set buyer expectations at an early stage, perhaps scaring off the less serious.
Restrict this to the 2 or 3 main examples which are both plausible and will add the most to sales growth and profitability. You should also include any efficiency, risk-reduction, and/or cost reduction measures.
All businesses have challenges and risks, so it wouldn’t be wise to pretend otherwise. Describe the top 2 to 4 main challenges and risks here that are most likely going to impact your business within the next 12 to 24 months.
Describe the impact on your profitability due to any new significant competitors that have entered your market during the past 1 to 2 years, or new ones that you know are about to enter.
By highlighting 2 to 5 significant improvement measures that you’ve taken, particularly in recent times, you’ll demonstrate a progressive and proactive approach to running your business.
List the documents that you consider as attachments to this sales memorandum.
Video: What Is An Business Information Memorandum? | Presented by Shawn Davis
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