Things to Do When Selling Your Business
When it comes to selling your business, it is not a simple task. It is a complex process with a lot of different facets to consider. Not only that, but if you have poured your blood, sweat, and tears into building up the business, then you are very likely to be extremely emotionally attached to the sale. This can cause a lot of issues too. In some sense, you need to detach a little bit in order to see clearly. What you need is a clear strategy to ensure that you get the best possible price for your hard work and toil. You also need to be realistic and look at things through a lens of reality rather than emotions. So, to help you out, below are a few things that you need to consider to ensure you sell your business and get what it’s worth.
Why You are Selling
The reason why you are selling your business is one of the first thighs any potential buyer will want to know. So, you better have a good story. Perhaps you wanted to hand the business down to your family, but this is no longer going to happen, and you are retiring. Maybe you just want to move on to another venture and have grown bored with the business. Maybe you are someone who enjoys building businesses up and selling them at a high point; it gives you that sense of achievement. Whatever your reasons, you need to have a good story for the potential buyers. Things to think about that increase your sale price are that profits are increasing, consistency, a lot of loyal customers, and long contracts. If you have a great brand that is recognizable, this also helps. So, have a good selling story ready to tell your potential buyers.
It may be a good idea to create a business sell plan. This is essentially where you go around your business and work out what needs to be sorted in order to sell your business effectively. It is a good idea to start these preparations as early as possible, probably around two years or more, before you intend to put the business on the market. One of the first things you should do is seek advice from a lawyer just to make sure that you think of all the things that need to be sorted from a legal standpoint. Some of the preparations you need to consider are improving all your financial records, upgrading your business structure – you may need an entire business plan to sort this, and taking a look at ways you can highlight your great customer base to make the business more profitable. You need to bear in mind that when the new owner takes over they are not going to ‘just know’ how things work. You need to make it all understandable to someone not in the know. So that means everything needs to be logical, coherent, and thorough. So make all the changes needed to your balance sheets. Take a look at your assets, processes, and contracts. Gio through everything with a fine toothcomb and clean it all up. Remember everything you do in the preparations process will increase the price, help with the transition process and ensure that your baby is running the entire time smoothly.
Different Lines of Business
As part of the preparations, you should try and separate your business up into separate lines of business. If you can do this, it may make it easier for a potential buyer to determine what they perceive as the value of your business. It may even make your business a viable option for a variety of buyers, and this may even make you more profit. By unpicking the different threads of the business, you are creating more assets to sell. If you can show its value in more simpler whys by doing something like this, a buyer is more inclined to make an offer.
Get a Valuation
Once you feel the business is up to scratch to sell, you should get a valuation. An appraiser will draw up an evaluation of your business to determine its value. Remember, you need to be realistic; if you are overprotective of your business’s worth, then you may find it difficult to go through this process. So, be aware of all the weaknesses of your business and go into this process, eyes open. The document the appraiser will create will make the valuation seem fair and just, bringing credibility to it. It acts as a measure toward the price you list at.
Using a Broker
If you are selling your business to someone you know and trust, perhaps you don’t need the services of a broker. This will save you money in the long run. But, if this is not the case, using a broker is probably the best course of action. A broken can help you focus on the job of running your business while you go through with the sale. They are also able to keep the sale from being made public, and this may help you get the highest price you can. It is in the broker’s best interests to do this too. When you work with a broker such as cedar park business brokers it is important that you discuss all your expectations and the adverts you want and that you keep the lines of communication always open.
Getting a Buyer
It may take around six months to two years or more to find a buyer for your business. So it is by no means a quick process. You may need to consider having a few potential buyers just in case one sale falls through, and it is important that you stay in contact with your buyer. It may also be a good idea to make sure that the buyer is approved for financing before you go ahead. Ensure that everything is good front he legal perspective as well as the accounting perspective too.