I have been interacting with buyer prospects as a business broker for over five years and have heard just about every question one can expect. But if I had to pick the most common questions regarding your business listing, the following stand out.

1. Seller’s Discretionary Earnings (SDE)

Buyers want to know what you are actually “taking off” the business in earnings. Not what the P&L says, or the bottom line of your corporate tax return – but the true value to you, the owner. In order to disclose the true value, we must account for add-backs on expenses run through the business.

Your tax preparer does an excellent job of minimizing your taxes and taking advantage of every expense allowed by the IRS. There may be a vehicle, insurance, or other business expenses that have a personal value as well. Accounting for add-backs reverses the tax planner process and may serve to increase the value of your business sale.

2. Management potential among current staff.

The next most common question is whether a current member of your staff acts in a management capacity or has the potential to become a manager. Buyers are often assessing the potential of your business as an investment, without it necessarily becoming a job for them. Having a manager or manager-potential in place expands the buyer prospect pool.

3. Added Revenue Opportunities

Finally, buyers want to know what opportunities exist that would add revenue. That may include expansion of space/service area, efficiencies in sales/service/delivery, vertical expansion in existing markets or new market opportunities, or new product lines. Keeping a list of what you have done in the past to increase revenue and what you would consider as future opportunities should you stay in business becomes attractive insight to the buyer prospect.

Navigating the myriad of inquiry questions during the sales process and due diligence process can be daunting. Being ready to answer these three basic questions will get your business listing off to a great start.