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What is a Business Profile and Why You Need One to Sell Your Hospitality Business.


What is a Business Profile and Why You Need One to Sell Your Hospitality Business.

It's the key to making a good first impression. Most sellers enter the market hoping to sell within a few months then unintentionally get stuck on the market for years trying to sell their business because the information was lacking, advertising was poor and didn’t generate enough interest from the beginning. The seller gets a few enquiries, goes back and forth for weeks and months with buyers, but never closing the sale.

The end result is the listing on websites drops down to the bottom pages, buyers lose interest and brokers move on to better listings that they can sell quickly, hence there are so many business that have been on the market for over a year, not selling.

The longer a business is on the market, the less desirable the business becomes, it affects the value and makes it even harder to sell as the months tick away.  It’s a horrible scenario that plays out all the time for sellers and the last position a seller wants to find themselves in when selling a business.

Even for a seller that has prepared the business for sale, it’s not uncommon for a well prepared business with everything ready to take up to 5 to 10+ months to actually go from listing on the market to settlement with many sales taking even longer or are completely lost depending on;

  • Popularity of the business.
  • Location Issues.
  • Council, Permit and Licence Issue.
  • Questionable value of the business.
  • Finance Approval Issues.
  • Problems during due diligence
  • Delays assigning the lease.

When selling a business, time is of the essence! Sellers have a small window to generate as many enquiries as possible to capture a buyer's interest. Any and every enquiry from a buyer is an opportunity to sell

It’s critical that sellers create immediate interest within the first few weeks of listing and make sure they are prepared with a Business Profile about the business. A good Business Profile that explains the business and has all the documents a buyer needs to do their due diligence and make a complete and informed assessment of the risk and opportunity is the key aspect of marketing the business for sale.


What is a Business Profile?

Think of it as “The Complete Marketing & Due Diligence” information pack for the business. A business profile is a pre-prepared document explaining the business to buyers. It can be as simple as a few pages summarising the business to a comprehensive professionally put together 10-20+ page document, it all depends on the type, price and complexity of the business.  

The profile fully explains the business to buyers with a tangible, detailed document highlighting your businesses key strengths, current financial performance and potential and everything else.

Why Do you need one when Selling a Hospitality Business?

A conversation can only goes so far. A Business Profile is the next thing you give the buyer after they respond to your business-for-sale ad and it is the key to making a good first impression.

Buyers are busy, many are just normal working people in jobs, so they have limited time to search listings, inspect, assess information and speak to sellers and highly unlikely to inspect every business they like or recall important details.

A Business Profile serves a few important purposes:

  1. Raise the buyer's interest level for your business.
  2. Validate the asking price.
  3. Required for Due Diligence

Buyers and lenders would prefer to receive a prepared document about the business first, then decide to see if it is worth a look, risk and investment.

Don’t underestimate the importance of a Business Profile later on in the sale process either. Even after the buyer has made an offer they will use the Business Profile to go over everything in detail during Due Diligence to validate the business. A Business Profile will answer all the questions a buyer has during due diligence well in advance.

If confidentiality is an issue, use a confidentiality agreement.


What type of Information goes in a Business Profile?

There are no hard and fast rules about what must be in your Business Profile. It should highlight key factors and explain what the business currently does and offers, detail income, expenses and profits. It should be a detailed and truthful overview of your business, whilst being positive and compelling.  

Here are some points that a Business Profile should include;

  • Short description of the business, hours, capacity
  • How the business was started/ established
  • Reason for selling
  • Income streams 
  • Business trading patterns
  • Type of food, drink, products & services
  • Type of customers
  • Details of the premises
  • Details of the location, area & suburb
  • Staff structure, roles & responsibilities
  • Marketing activities & promotions
  • Suppliers & third party services
  • List of plant & equipment included with the sale
  • Intellectual Property such as recipes, domains name, website, social media
  • Financial Reports showing turnover, Cost of Goods, wages, expenses, addbacks, profit
  • Explanation of financial adjustments, inconsistencies and abnormal expenses
  • Lease details including rent, lease terms, annual increases
  • Copies of lease, licenses and permits
  • Asking price
  • Sale Terms
  • Training & Assistance
  • Opportunities
  • Photos of the Business
  • Floor Plan of the Premises
  • and much more...

Whether your business is worth $20,000 or $20 million, out of all the potential businesses a buyer might come into contact with, they will remember the one with the Information Memorandum.

Do the Business Profile as standard practice and let the document sell the business for you. It’s a valuable tool to help you sell. It will reduce the friction with buyers and brokers, show the value of the business, maintain your asking price, present the business in the best light, answer most of the buyer’s questions and many they didn’t think of.

If you have been on the market for a while, a Business Profile could be exactly what you need to help sell your business quickly and effectively.

Click Here to read more about our Business Profiles for Hospitality Business Sellers. 


By Peter Kais | hospitalitytrader.com


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