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Five Magic Steps
At some point in any entrepreneurial career a business owner will be compelled to say, “I want to sell my business.”  Whether he or she is a sole proprietor or the head of an ownership group, selling a business does not need to be a complicated affair.  There are a few simple rules to follow and a minimum of steps to take, so read on and sell your business with confidence.

1. Decide on a Valuation
Putting a price tag on the value of the company is the first and most important step you will take to sell a business.  There are various ways to figure that value, most of which involve looking at previous net earnings, the replacement value of existing equipment and inventory, real estate values (if property is part of the equation), the price at which similar businesses in your industry have changed hands (i.e., comparables, as they are known in the home real estate market), and formulas that calculate earnings factors based on capitalization rates and bank discount rates.  A number of professionals can help you put an asking price on your business for sale, including business brokers, accountants, or even real estate attorneys who specialize in handling the sale of small companies.

2. Tips on Preparing Your Business For Sale
Before actually putting your company on the market, it will pay serious dividends to get your business into optimal shape. This means cutting expenses, reducing the size of your debt load, and selling off excess stock and equipment.  The cash you gain or save by taking these steps will help boost your bank balance and increase your bottom line.  Streamline your business operations by settling any outstanding debts or legal issues, clearly document ownership of intellectual property, make sure that you are operating within the appropriate health and safety guidelines, and take inventory of everything that will become part of the sales transaction.

3. Market Your Business
You will never sell your business if no one knows that it’s available.  Take advantage of every possible outlet.  This would include newspaper advertising (both the print version as well as online), Internet postings on “business for sale” Web sites (some only charge for their services if you sell your company through them), contacts via the local chamber of commerce, listings with trade publications and organizations within your industry, and perhaps even putting a “for sale” sign in your front window.  A business broker, much like a Realtor, will list your property for a fee and lead potential buyers to your door.   He or she may also do some pre-screening to fend off tire-kickers who are unlikely to become qualified buyers.

4. Meet and Negotiate With Prospective Buyers
Once someone of substance shows an interest in buying your business, the next step should be a face-to-face meeting.  You will want to begin by having them sign a non-disclosure agreement, which legally binds them to keeping the terms of the transaction confidential.  If the sale of your business includes some sort of physical premises—a retail shop or a warehouse, for example—give them a tour without divulging too many trade secrets.  Prepare some brief marketing material that will include a description of the business, a quote sheet showing the asking price of the business and what it includes, and a basic profit-and-loss statement.  More detailed financial information can be provided during the next phase.  After initial meetings have taken place, which may involve competing buyers, you will want to entertain written offers that lay out how much they’re willing to pay, what the structure of their proposed deal looks like, and how soon they are prepared to settle the financial elements of the sale and take possession.

5. Complete the Legal Due Diligence
It is unwise to execute this step unless you have already agreed on a price and the terms of the sale with the prospective buyer.  Due diligence refers to the documentation you provide that shows the other party everything to do with the business.  This will include the past financial performance of the company (detailed profit-and-loss statements), bank accounts and balance histories, valuation of property and other tangible assets, proof that you are currently in compliance with legal and tax issues, and the details of any existing or pending customer contracts.

Closing the Deal
Once the buyer has completed the vetting process to his or her satisfaction, it is time for you to draw up the sales agreement.  This document will contain all details related to the sale, although there should be no surprises since it is the result of an iterative process whereby both parties negotiated the final terms to their mutual satisfaction.

Looking to sell a business? Did you know you can sell your business for FREE at GlobalBX?  Sell your business today!