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If you have come to the decision that you want to sell your business in the near future then the last thing you should do is rush into it. It may have been a big conclusion to reach that involved a lot of soul searching if you built the business up from the ground. As such, there are many factors that you may have taken into account to reach your decision. However, you should also have done a little research on the elements that every business owner should know before selling the business.

If you have yet to do this kind of research, the tips below will help you to sell your business easier. Below are the 10 things that every business owner must know before selling a business:

1. You should prepare your exit strategy at least three years before finally selling your business. Whilst this is not always possible, whenever it is then you should take the time to prepare yourself and your business for the handover. It is essential to maximize the profitability level of your business, and you can only do that if given a lot of time to implement changes.

2.  A well-prepared business will achieve 10% more in terms of the sale price than an unprepared business on average. Taking the time to remedy any problems with your business and implementing new policies or training will enhance the profitability of your business, so make sure that everything is ready to improve your revenue and profits.

3. Your own valuation of the business does not matter to a potential buyer. It is difficult to detach yourself emotionally from your business but that is what you need to do if you want to make the sale smooth rather than problematic for you. Your valuation only counts if it is based on an official appraiser’s valuation.

4. You must have an airtight confidentiality agreement in place before any information is handed over. It will give you peace of mind and will protect your business should a sale fall through.

5. If there are any other shareholders in your business, or anyone else with considerable sway who could veto the selling of your business, then you should inform them of your decision before you even initiate the process of selling your business. If you fail to do this, it could cost you a lot of money and a sale further down the line because they could ultimately prevent the sale from going through. You would be left with the broker’s bill and the business.

6. You should have any conditions that are attached to the sale prepared in writing before you begin the sale process. This will lead to a good negotiating platform for you if you intend to have an earn out agreement in place whereby you are paid a yearly salary for performance of the company for so many years after the sale goes through. You are obviously paid after the sale if you opt for this agreement because it is impossible to accurately predict how a business will perform into the future.

7. Planning your own life after selling your business is essential. You will probably be at a loss at what to do after you sell your business so it is important that you spend time to think about your post sale strategies and retirement. This is one area that many business owners forget but this is crucial.

8. You should distinguish between the bids for your business not on price but on content. A cash sum that is 10% more than the nearest bidder may not offer you as much in terms of the final figure you would earn if that other bidder offered you an earn out. For example, a cash offer may not be as good as a lower cash offer with shares or a yearly salary could potentially be. Work out which option could generate more money over 10 years rather than taking the higher cash figure.

9. Warranties and qualification may save you heartache in the future. You should disclose as much information as possible to any potential buyer about the business and also ensure that your best interests are covered by qualifying your claims. For example, the phrase “to the best of your knowledge” should be included in the contract somewhere.

10. Finally, the deal is as important to you as the price. Many people are blinded by dollar signs and will not see where an individual deal could cause them to lose out. For example, is there a technology that could better serve you in your new business venture than if you sold it? If there is then it could make you more money if you retained it than sold it. This is why you should always ensure the deal structure suits you. Always check your assets with what could benefit you in the future in mind.

 Did you know you can sell a business for free at GlobalBX?