In the current upward economy, now is a good time to sell a business. Here's how to do it.
If you’re looking to sell a business, you’ve picked a good time to do so. Consumer confidence is high and successful businesses are fetching top dollar in the midst of an upward economic cycle. And low interest rates are making it possible for buyers to acquire businesses at a lower capital cost.
Despite this fortunate timing, the prospect of selling your business can still seem overwhelming. The way you feel about selling your business will most likely be tied to your motivation for doing so. If, for instance you’ve led the business to great success and you’ve decided you want to go out on top, or if you’re moving onto another venture, then preparing your business for sale and vetting potential buyers can be exciting. If you’re retiring, this can also be exciting, albeit probably a little bittersweet.
If however, an unexpected life circumstance, or poorer-than-expected profits are forcing the sale, the process of selling can be exponentially more stressful. Regardless of the motivating circumstances, there will certainly be some stress in selling your business. Selling your business will be a time-consuming process with many moving parts and details that you can’t afford to overlook. But there are some tips you can follow to make the process less stressful, and ultimately more rewarding and profitable.
1. Seek legal and financial expertise.
First and foremost, no matter what the catalyst for selling, it’s crucial to hire the necessary financial, legal, tax, and business advising professionals to ensure the process goes as smoothly as possible. There will be many details that come up for which you may be unprepared, so having the proper resources will be essential.
2. Keep it quiet.
If you’re in a business where a sale may send your customers or clients into panic mode, it’s probably best to keep an impending sale quiet until you have identified a buyer and finalized the details of the sale. That includes determining how you will transition your customers to the new owner.
3. Hire a professionalbusiness broker to help you with listing your business for sale.
A business broker will help give your business market visibility where you want it, and will increase your chances of finding the best fit. A broker can also help you set a realistic asking price and help you with marketing your business and contacting potential buyers on your behalf.
4. Set a realistic asking price.
If your business is doing well, it can be tempting to set a very high asking price. In reality, there are many factors that buyers will look at when considering a purchase. Consider how all of these things will factor in and how you would view the business from all angles if you were the buyer. Consider profits, client relationships and the personal investment of time that will be required for the new owner to make the transition successful, and set your asking price accordingly.
5. Get the paperwork in order.
The legwork for the sale of a business starts long before you’re ready to put up a for-sale sign. All potential buyers are going to want to see taxes, financials and any existing contracts pertaining to your business. Take the time to get all of these things organized and you’ll help ensure a smoother process from start to finish. Get all of your financial and tax records in order for the past three years, including a cash flow report.
6. Separate your personal expenses from the business.
Most business owners, at one time or another, run personal expenses through their business. When you’re ready to sell, it’s imperative that you stop doing this and separate things in order for potential buyers to get a clear and accurate picture of the revenue, expenses and net profits of your business.
7. Get your offers in writing.
If and when several offers start coming in, it will be imperative to have things in writing to make accurate and proper comparisons. Price alone will not be the only factor to consider, so it will be useful to record the details of each offer to ultimately determine which is the best one.
8. Tidy up your curb appeal.
This sounds like a no-brainer, but many people overlook the outward appearance of their business when it comes time to sell. Make sure that your location is clean and tidy, and that any necessary repairs have been made. If there is equipment required to run your business, make sure it’s all in working order. Make any outdoor improvements to landscaping, signage, etc.
By following these tips, you’ll set yourself up for success and increase your chances of finding the right buyer and fetching the right price for your business.