What about for buyers?

Reeth: It's basically the flip side. First and foremost, buyers want to understand the customer base and what cash flow looks like. What money is really coming in? How much can they really rely on? They may be looking for ways to improve it.

Do you have contracts for business? Do they have repeat business? What processes have they used to engage customers? Do they have specific marketing campaigns? How are products and services priced? That's kind of a starting point -- looking at the cash flow of a potential business and whether you can rely on it.

What are some typical mistakes made by buyers before the transition?

Reeth: On the buyer side, one of the most compromising mistakes is not digging enough to understand cash flow base. You really want to press to understand the relationship between the business and the customers.

Yet so much of depends on the nature of the business. If you're buying a business with a lot of equipment and capital access, buyers are going to want to inspect those. For a retail establishment, how long is the lease? What does the insurance look like?

How is a smooth transition ensured?

Reeth: Legalities aside, be very transparent about your expectations. By doing that, that allows you to build trust with the person selling the business. Just make sure to protect yourselves and they deliver what they say they have.

One of the things that I've seen and heard that works particularly well is to not have just a straight handoff, but have the seller stay on to assist in transition. It's very hard for most business owners to hand it over, say 'I'm done' and walk away and expect that everything goes smoothly. Find a way to have the seller work with the buyer to cover things that you may have forgotten to address.

How can a program such as Outright help the business transition?

Reeth: Outright is designed for the smallest small businesses. It's for the business owners who are doing their own accounting and recordkeeping. We help folks get organized. The program can be used to show buyers how the business works.

To follow Laurie Kulikowski on Twitter, go to: http://twitter.com/#!/LKulikowski

To submit a news tip, send an email to: tips@thestreet.com.

RELATED STORIES:



Follow TheStreet.com on Twitter and become a fan on Facebook.
Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

If you liked this article you might like

The 10 Best Jobs in America for 2016

20 Best Colleges for Campus Food

10 Consumer Stocks With the Highest Earnings Growth Last Quarter

5 Stocks Dumped by Hedge Funds Last Quarter

15 Most Lucrative Jobs in the Tech Industry