When you became a business owner, you knew that you’d need to sell it one day and for a profit. But how do you go about the sale? What is the process of getting your business ready to sell, and how do you get the right deal? In this article, we look what to expect when preparing to sell your business starting with timing.
Timing the sale right to attract buyers is important. For example, selling when your business is trading well, and it has a healthy profit is great timing! 🙂 But there are other considerations to timing it right and people that know how to do it.
Working with business brokers will elevate your understanding of selling a business. Still, you may not be ready to sell just yet, so let’s look at some of the conditions and information you need to avoid going into a sale with ignorance.
Before running ahead with marketing your business for sale, clue up on the following pointers.
You will want to think about why you want to sell your business. Are you of retirement age? Is there sickness in your family, or are you having disputes with partners? As mentioned earlier, the best time to sell is not when you’ve had enough, but when the business is trading well.
Understand the ‘why sell’ and give yourself ample time to get your books and business in order.
You should prepare for the sale at least one or even two years in advance. This will also give you time to do market research and set expectations for the shareholders.
Most business owners will have a reasonable understanding of the market value; however, a business broker will present sales data that proves its worth to a motivated buyer. Pricing it too high or too low will only make the business more difficult to sell.
You can try to sell your business yourself, but remember, you will have to continue to run the company during the year or two it will take to sell it. Hence, a business broker is well worth the investment. Remember it’s their role to market the business to the right audience and get the best deal for you.
You will need to get together the last 5 years or so of your tax returns and financial statements. You will also want to figure out how much money the furniture and equipment you are selling with the business are worth.
A potential buyer is likely to want to see a copy of your current lease. Be sure to make copies of your assets and liabilities, so you will have them ready to show to prospective buyers.
Attract the Best Buyers
There are many ways you can take action to attract the best buyers. Using an investment banker or business broker tasked with presenting multiple potential buyers will relieve you of the marketing.
Your focus is on how the business presents to prospective buyers, for example, do you have enough staff and are the books in order?
Know your company’s strengths and weaknesses. Plus where is the business going – i.e. what opportunities are there to grow and what may threaten that growth or your business’s existence.
Knowledge is power, and you need to have answers for the team representing your business sale and the prospective buyers.
You may also want to write a letter to potential buyers, letting them know the story of your business. Tell then how you started the company and how you eventually achieved success. When potential buyers hear a relatable story, they are more likely to want to be a part of that story.
Not every business owner knows how to sell a business and this article has pinpointed some of the knowledge you need at your fingertips to get your business ready to get the best buyer and deal for you. To avoid an unplanned impromptu sale plan ahead, sell your business with ease and allow you to move on to your next adventure.
Before you’re ready to sell outright, consider selling shares in your business to grow or expand it further or help you adjust to slowly stepping back from full ownership.