If you are considering selling your business it is most likely for one of two reasons; because the business is doing well and you want to try your hand at something else, or because the business is not doing very well and you think another owner may have better luck. Whichever situation you are in the things you should know when selling your business are the same. Look over the tips below to inform yourself of the major factors in selling a business successfully.
1. Timing is everything
The first thing that you should know when selling your business is related to timing. You need to be aware of the situation of the property market, and the market for your business so that you can sell your business successfully to potential buyers. There will be less interest from potential buyers in a slow market, so you may wish to wait until the market picks up again, or you will have to be very clever with your marketing campaign.
2. Get your business in order
Aside from the question of the market, it is also very important that prepare and have in order all the necessary documents that pertain to your property. Potential buyers of businesses, more than any other type of property, will be interested in the details of the day-to-day running of the operation and will want to know that everything is in order and will be easy to take over.
3. Seek legal help
On a related note, another thing to know when selling your business is that it may be necessary to engage the services of a lawyer, especially during negotiations. The lawyer’s role is to give you advice on legal matters pertaining to the sale and purchase of a business.
4. Prove your worth
One of the most off-putting factors for potential buyers is to do with credibility. They need to be shown that you are selling a viable and legal business, which they will be able to take charge of and start earning money from with ease. In order to ally their concerns you need to present them with proof that the business is viable. All the necessary documents and papers to do with the day-to-day running of the business must be made available, as well as any other plans, recent renovations, financial evaluations, insurance and stock details which you have in hand.
Dison Arnibal has contributed a lot of business related articles with the purpose of building a community of business owners who want to a sell a business online.
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Trevor Hartshorne, Director at Rothlake Business Services
Good points, Dison. Additionally, if you are thinking of selling your business you should start preparing it for sale early - years in advance if you can. Buyers like to look at a number of years of financial statements to makes sure that a whole lot of 'income' has not recently been put into the business and some expenses paid externally to bump up the profit for the sale. Also consider what expenses are coming out of the business that relate to you as the current owner that would be a benefit to a new owner? For example if your business pays for you to go to an annual conference that costs $,5000, either the new owner will have this benefit or can increase the profit of the business by $5,000. If the selling price is a multiple of the profit, that $5000 might turn into an extra $10,000 to $15,000 at sale time. As always, I recommend that you get professional advice early. The money you spend on early advice will be repaid many times over at sale.
Denise Hall, SME Business Value Analyst. Business Broker. Exit Strategist at Xcllusive Business Sales Melbourne
Whilst timing is everything, there is a more important number 1!
Know what the business is worth from a saleability and indicative price range point of view is actually the best place to start. This in turn informs all the other well thought-through points.
To do this, pay for an Appraisal from an informed source, who plays in the business sales market all day, every day (like myself for example). This provides a line-in-the-sand about your business at a point in time, enabling better decisions to be made from a timing and financial, and what to do next perspective.
Typically sellers sell for one of three reasons; payday, freedom, legacy. Payday is generally where the conversation starts, with the other two factors providing weight to the decision. To not be truly informed about the position of your business in the market place may mean that subsequent decisions are somewhat flawed from the outset...