Selling your food truck business is one of the most important things you’ll ever do, because unlike all the other business decisions you’ve made over the years, you’ll do this only once. You get a single chance to put a price tag on it, and when you sign the sales documents, it’s over. Today we’ll discuss what to do once you’ve decided you want to sell your food truck.
So You Want To Sell Your Food Truck: Now What?
Recognize that you may be ready to sell your food truck
If your food truck has been a success, you’ve probably had to pour most of your time, energy, and money into it. You may see your truck as an extension of yourself, and imagining life without it may be nearly impossible. On the other hand, your food truck business may have been only marginally successful and something you can’t wait to get rid of. Or perhaps you entered the mobile food industry with the idea that it would be a short-term opportunity that could culminate in bigger things. Whatever your situation, here are a few indicators that it may be time to sell your food truck:
- It’s not fun anymore. Burnout is a very real issue for food truck owners and an entirely legitimate reason to sell.
- You aren’t willing to invest in future growth. You may be comfortable with the current size and profitability of your food truck and have no desire to make the capital investment necessary to take it to the next level.
- Your management skills are over matched. It’s not uncommon for mobile food vendors to build their business to a certain point and then realize they lack the skills required to go further.
Although these are just some of the reasons food truck owners use to determine whether they’re ready to sell their business, you can also use these indicators to modify your current business model. Instead of selling, you may decide to change your role or bring in staff or partners to fill the needs of the business to grow.
Set your food truck’s sales price
Selling a business is both art and science, and in no other area is this more evident than in its valuation. If you’re considering selling your business, knowing how much it’s worth is important. Too many owners have no idea, and while every seller wants to achieve maximum value for their business, setting an asking price that’s too high can signal to buyers that you may not be serious about selling. The first step is getting your books in order. Not being able to provide accurate financial statements in a timely manner can cause a deal to unravel. Be sure to have the following documents on hand before you actively start selling your business:
- Last three years’ profit-and-loss statements (or as many years as you’ve been opened if less than three)
- Last three years’ balance sheets
- Last three years’ full tax returns
- List of equipmentEstimate the value of the equipment you own. Believe it or not, your truck, stoves, grills, and refrigerators are highly valuable. Look up the price for these items from equipment re-sellers that sell the same brands or check out a full list of suppliers from Foodservice Equipment Distributors Association and estimate their current market value by determining their age and condition.
- List of inventories
Be ready to furnish other documentation, such as insurance policies, employment agreements, supplier contracts, trademarked or copyrighted recipes used, equipment leases, and bank statements. Prospective buyers want to know how much money they can make from their investment.
The value of your food truck business is based on its net income as well as its assets and liabilities. A food truck can bring in a lot of revenue without being very profitable. Although daily, weekly, monthly, and annual revenue of your food truck play a critical element in determining the overall worth of your business, you also have other factors to consider.
Food trucks are different than most other businesses, which is why determining fair market value is more complex. Being fair or neutral as the owner can be difficult when it comes to valuing the reputation of your food truck, which is why obtaining a business evaluation from a professional is so critical. Because a financial analyst isn’t vested in your company, he’ll be able to provide a realistic valuation that’s free from emotional attachments.
Due to the short length of the mobile food industry’s existence, your best evaluations will probably come from analysts who have experience in evaluating restaurant businesses.
Use a business broker to sell your food truck?
You’re an expert at running your food truck business, not selling it. In most cases a good broker can make up for his fee by increasing the value of your sales price. Even though you think you’ll be able to sell your business yourself, you’re better off hiring a broker who will handle the tasks involved, such as preparing documents, marketing, showing your business to potential buyers, and negotiating the deal. So where can you find these professionals?
- Through referrals
- From legal and financial professionals
- At your local chamber of commerce
After you’ve hired a broker, don’t make the mistake of disengaging from the selling process. Although your broker will work hard to market your business, no one has more motivation to sell (or inside knowledge about the business) than you do.
If you plan on selling your truck online, check out this article we wrote specifically for you.