Six Steps to Selling Your Business
It has taken you time and considerable effort to have your business become what it is today. It, therefore, makes a lot of sense to get the most out of your business when you finally see it.
Even so, selling your business can be a daunting task. It also involves a lot of things, and sometimes you may be required to get help from different professionals, including an accountant, broker, and even an attorney.
The process of selling your business will also require a lot of time and effort. Apart from preparing your business for sale, you’ll also need to prepare for your exit.
“How can I sell my business” is a question that most business owners ask when the time to sell their businesses come. Luckily, you have come to this post. Read along to learn about some significant steps of selling a business.
1. It Starts with Knowing Why You Want to Sell Your Business
One of the main things that potential buyers will want to know is why you are selling your business. Many reasons will make business owners sell their businesses, including boredom, retirement, illness, disputes, etc.
Some business owners also opt to sell their businesses when it is no longer profitable. Whatever the reason that makes you want to sell your business, ensure to have enough information to back it up.
2. Prepare Your Exit Strategy
Now that you know your reason for selling your business, then you should go ahead to prepare your exit strategy.
Among other things, ensure to have answers to some of the questions that might arise in the selling process. For instance, you need to ask yourself whether you will face any legal complications. How will you live without the income from your business? How will you invest the proceeds from your business sale? What other thing do you want to engage in after selling your business?
These are just a few things that might come up during the selling process. Depending on your specific business, you should be prepared to deal with any question that might arise. Selling your business can sometimes take a toll on you, especially if it was your primary source of livelihood.
To make things easier for you, consider consulting your attorney as well as an accountant.
3. Prepare the Necessary Documents
Potential buyers will also want to see critical documents regarding your business, for instance, financial statements, tax returns, etc. Ideally, ensure to have these documents dating back to at least three years.
Apart from that, ensure to have a list of what exactly is included in the business sale. What’s more, potential buyers might also ask for contacts of suppliers and sales transactions. Ensure to have copies of such documents so you can give to potential buyers on demand.
4. Get a Valuation for Your business
Business valuation is the single most component of selling a business. As such, you should let experts handle this part. After all, we bet you would not want to set a price that is too low or too high, right?
To avoid valuation issues, consider working with a business appraiser. The appraiser will examine your business sales, loses, profits as well as your business equipment to determine your business worth. This way, you can have detailed information to present to potential buyers, making your asking price more credible.
5. Consider Using a Broker
You may consider selling your business yourself if you are familiar with the buyer and want to avoid the broker’s commission.
However, you can make the process much easier and even more profitable by working with a broker. As a rule of thumb, choose a broker experienced in your industry or niche. Such a broker will make it easier for you to gather all the necessary information and can help you get the best price for your business.
With a good broker, you can dedicate your time to work on other important matters, while the broker deals with finding and vetting potential buyers.
6. Find the Right buyer
Finding the right buyer for your business will take time. Ideally, it may take between six months and two years to sell your business. As such, you should invest in marketing your business for sale.
Even so, before giving any critical information about your business to a buyer, ensure that they can finance the business sale. Also, involve an accountant and attorney in your negotiations. Finally, when you have agreed on the terms of business sale, ensure that the buyer signs a non-disclosure agreement. This way, you will be sure that your information is protected.