Selling your business is as exciting and overwhelming as building the business to begin with. From determining valuation to understanding mergers and acquisitions to finding a broker to help you sell. So many decisions and planning that it might seem too much to bear.
Emotions and personal convictions aside, get everything in writing from the beginning. This makes the process smoother for you and any potential buyers who will more likely than not want to see said paperwork before committing to a sale. When you first sit down to research and outline your approach to selling a small business, here are some tips to keep in mind.
Planning to Sell a Business
For many business owners, selling their business is a sensitive topic. In fact, most of the preparation and paperwork leading up to a sale can easily be pushed aside. Much like selling your home and maintaining the lot while a realtor helps find potential buyers, teaming up with the right broker helps narrow down your focus and priorities. Get in touch with a business broker for an explanation and guidance on how to best plan on selling your business. This process can be cumbersome and calls for a certain level of preparation in order to make the most from it.
Preparing Paperwork
A pivotal phase to selling your small business is organizing tax and financial documents and any contracts tied to the business in the past one to three years of operations. Brokerage firms prepare documentation that determines how much a company is worth based on a few different factors, and this serves as insight when determining a listing price, as well as if negotiating price leading up to a sale. You can facilitate this process by keeping essential paperwork accessible.
Small Business Valuation
As much of an expert as you are in your business and related fields, maybe putting up your company for sale is not your forte. Like hiring an attorney to represent you in court for any number of legal matters, brokerage firms connect businesses with buyers and protect their clients’ credibility by representing the business professionally. Companies working with a business broker are valued higher than those selling independently.
If you want a rough estimate of what your business is worth, follow this formula:
Sales – Cost of Units Sold – Expenses + Wages = Profit
Benefits of Business Brokers
One overlooked aspect in selling a business is the ability to run your business while you look for potential buyers. Individuals looking to buy a business will consider the intangibles of an operation. For instance, having a company able to run successfully without you present day in and day out is something that would put a potential buyer’s mind at ease.
Working with business brokers keeps you operating while they research, outline, and market your business sale. For a detailed overview of what your small business is worth, get in touch with a business brokerage firm to properly plan for this process. Remember the journey requires several steps and a solid plan in place to execute a sale for maximum returns.
After Selling a Small Business
Be sure to get everything in writing from the beginning. Keep a folder with all required documents as this level of preparation speeds up finding and negotiating with potential buyers. Stick to the plan and stay focused on your goal amidst the process. If you are planning to sell your business and do not know where to get started, contact a business broker firm today.
