10 Tips on How to Sell Your Business
Having one’s own business is a great deal of work. It could get overwhelming to the point that you want to let it go. Selling a business is an important event where you have the opportunity to reap financial rewards for your hard work and sacrifice. You need to put just as much preparation into the sale of the business as you did when you started it.
How to Sell Your Business
1. Resolve outstanding problems within the business. Spruce up the place. Dispose useless or outdated inventory and equipment.
2. Get all financial documents up to date and accurate. Be ready with the profit and loss statements, balance sheets and tax returns, dating back at least three years. Present other documents that the buyer will require during the due diligence phase of the selling process.
3. You may promote the sale through local business organizations or networks. Advertise in local newspapers and regional business magazines or newspapers. Join trade associations – they usually offer members free advertisement placements in their publications. Other members can also spread the word around.
4. If you do not have experience with selling a business, ask other entrepreneurs to recommend the right business broker for your needs. A professional who makes a living selling businesses can sell your business in a timely manner. It will be less stressful for you. A broker has a network of buyers who are qualified and seriously looking for a business to buy. He or she can match your business to a client for a quick deal, or list your business on GlobalBX.com and promote it through his or her network.
5. A business appraiser can help you come up with a fair and realistic asking price for the business. Among the factors to take into account are the current economic conditions, market trends, the terms of payment, the history of profitability, the company’s assets, opportunity for growth, etc. Without professional help, you may inflate the value of the company. Setting a very high price may signal that you are not serious about selling. Consider similar businesses that sold and how they were valued. You cannot come up with a figure unless you have all the accurate numbers and information ready. Be realistic about your price expectations.
6. Will your current clientele or customers be affected by the news of the sale of your business? What about your employees and vendors? If so, keep the sale of your business quiet to prevent fallouts or for your competitors from taking advantage of this development.
7. Make your business appealing to the buyer to increase your odds of selling it. It pays to put yourself in the shoes of the buyer. Write down as much information as you can, i.e., lists of vendors and important clients, company procedures and systems, etc. Express your willingness to train the new owners after the sale.
8. Do not show your financial statements to everyone who asks about your. Require prospective buyers to make a written offer contingent to reviewing the business’ financial documents. Qualify potential buyers; separate the serious buyers from the “lookers”.
9. All sellers hope to get paid at once in full, but this rarely happens. Usually buyers make a down payment and pay the remainder in installments. Be flexible and creative with the terms of transaction.
Terms can be an effective negotiating tool for the business to be sold.
10. While waiting to sell the business, keep running the business efficiently and profitably. It is harder to sell a business that has flat or negative sales or that ceased operations. Remaining in business is critical to selling the business. Thoroughly plan and be patient. On average, it takes 6 to 18 months to sell a business. You could wait for the right time to sell. If your business is not performing favorably, try to wait until it picks up. You could also wait until the economic climate is rosier to maximize the returns you except to make.
Be up front and honest about the business. Set realistic expectations and hang in there. It can be a long journey but once you’ve sold your business, you can savor the accomplishment and enjoy your rewards. Are you ready to sell your business?