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10 Need-to-Know Tips for Selling Your Business in 2020

business.com editorial staff
business.com editorial staff

It's important to follow certain steps to ensure the sale of your business is successful.

  • Whether you are planning to sell your business now or several years from now, the most important thing you can do to have a smooth transition is to have a plan from the beginning.
  • Keep in mind that you may not always get the price you want. You may have an unrealistic price in mind, but in many situations, the price you want doesn't always match what a buyer is willing to pay.
  • Selling a business is a complex process, you have to keep your emotions aside and separate your personal expenses from the business and get everything in writing.

The prospect of selling your business can seem overwhelming. The way you feel about selling your business will most likely be tied to your motivation for doing so. Whether you've led the business to great success and you've decided you want to go out on top or you're moving onto another venture, preparing your business for sale and vetting potential buyers can be exciting. If you're retiring, this can also be an exciting, albeit bittersweet time.

1. Determine your business value.

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.

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.

3. 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. 

4, Hire a professional business 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.

5. 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.

6. 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.

7. 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 for potential buyers to get a clear and accurate picture of the revenue, expenses, and net profits of your business.

8. 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.

9. 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.

10. Tie up loose ends.

It's essential that you make sure you have made good on all payments, late payments, defaults and promises. For instance, if you promised a team member shares in the company, even if you are selling, it's time to reward the person you promised the shares to. Having any loose ends may cause problems when you are trying to complete the deal, so make sure you tie up all loose ends, even the small ones.

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.

Image Credit: Dutko / Getty Images
business.com editorial staff
business.com editorial staff
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