As a business owner, you have likely spent hours, days, months or even longer agonizing over whether to sell your business.
While in a perfect world the hard part would be over, the reality is that making the decision to sell is simply the first step in a complicated process.
Fortunately, there are ways to simplify the experience. To start, it’s a good idea to have a checklist of what steps to expect.
While each business may be different, when it comes to selling a business, the basic preparation will be the same.
It can also be helpful to have a seasoned business broker or advisor to aid and support you in the sale. Business advisors have the experience and know-how to navigate the sale of your business, making the experience easier on you and maximizing your return.
Step 1 — Determine your reason for selling
People decide to sell their businesses for a variety of reasons. Some may do so because they are ready to retire and leave the working world. A serious illness or death may require someone to step away from their business. Others may need a way to extricate themselves from a partnership dispute. Some simply become bored and decide to seek out new opportunities and challenges in their work life.
Whether you are considering selling for these reasons or others, the decision to sell a business is personal but should be acknowledged.
Step 2 — Confer with experienced professionals
Perhaps the single most important step of all, in terms of making the sale of your business easier, is selecting an experienced business advisor to guide you through the sale process.
A business broker or advisor can help you get everything in order while screening qualified buyers and ensuring you get the highest possible price for your company, all while keeping the sale as quiet as possible to avoid upsetting your employees, vendors, and clients.
Best of all, an advisor frees up your time so you can continue to keep your business up and running.
Step 3 — Organize your finances and properly package your business for sale
Part of the assistance provided by an experienced advisor is connecting you to other professionals who can help you organize your business’ financials for the upcoming sale.
It’s important for you to understand the financial position of your business, which requires knowledge of financial statements, projections, and key metrics for your industry, such as:
- What’s the company’s relative growth in gross sales and net income?
- What adjustments need to be made to normalize earnings?
- Do you own or lease the property where your business is located?
- What is the customer base and do you have any concentration issues?
- What about the value of the tangible and intangible property?
- What equipment and inventory will be included in the sale?
- Are there any outstanding liabilities or legal issues?
- Who are your key suppliers and vendors?
Answers to these questions are needed, as well as ensuring your books are in order. Do you have your latest tax documents? You may want to consider an independent audit of your financials just to be certain.
Step 4 — Understand the value of your business
To sell your business, you need to understand how much it is worth. Remember valuation is an art, not a science.
Multiple factors will come into play as you determine what your company is worth such as the business’s financial health, industry trends, the current market demand, and the location of your company.
Step 5 – Confidently market your business
The final step in selling your business is to get the word out albeit confidentially. But successfully marketing a company for sale has many nuances.
Business advisors are experts at creating competition for your business thanks to our ability to advertise your business to our worldwide network.
They have access to thousands of buyers, and we spend more money on advertising than anyone in our industry.
Selling a business can be an exciting but long and stressful time. Seek out a business advisor who can help you navigate the challenge.
Editor’s note: Ashley Kelsey is a Business Broker at Transworld Business Advisors of Eastern North Carolina. For more information call 910-302-6447 or visit www.transworldeast.com.
Photo: Deciding to sell a business is only the first step in a complicated process. Seek out a business advisor who can help navigate the process and maximize your return.