Selling your business is a difficult decision to make. Despite knowing that it is the wisest step to take at the moment, it can still be a tough decision to sell something that you’ve not only put so much blood, sweat and tears into but also something that you’re passionate about, which is why considering a professional business brokerage can make the process smoother and more manageable.
While you have taken the first step of deciding to sell the business, there is a lot of prep work to be done before selling your business. It is a multi-step process that ensures that you are maximizing your potential returns.
Here’s how you should prepare businesses for sale.
Table of Contents
Create A Timeline
Businesses cannot be sold in a hurry since there are a lot of loose ends that need to be tied up. Achim Neumann, an expert on the M&A process and President of A. Neumann & Associates, a business brokerage, says, “Whatever the ultimate motivation or timing is for the sale of a business, what is most important is setting the planning into motion with as much lead time as possible – ideally, at least three to five years ahead of the planned transaction time.”
To ensure that a potential buyer would want to purchase, you need to get your business in order which includes but not limited to the following:
- Balance sheets
- Financial statements
- Employment contracts
- Property review
- Tax records
Creating a timeline will help you work on increasing your business’s profitability while sorting through these matters. If you have your records straight, it will be easier for your broker to sell your business.
Try to stick to the timeline so you can sell your company when it is yielding the most profit for you.
Determine The Value of Your Business
Knowing the worth of your business will help you negotiate the price according to market rates. A business broker will be excellent guidance in determining the value.
A broker will be able to identify issues in your business that need immediate attention. Once problems have been solved, they will evaluate the value of your business according to current market rates and place the company up for sale at a reasonable price. In many cases, an independent business valuation may also be recommended to ensure an unbiased and accurate assessment of the company’s worth. This independent business valuation provides an additional layer of credibility and transparency, which can attract serious buyers. Having both the broker’s expertise and an independent valuation helps set a fair and competitive asking price for the business.
Understand that most of your buyers will want to see a proven cash flow to analyze whether the business has room for growth. If your business is not in its ideal state, it will be wiser to hold the sale, add revenue, and then pivot back to selling your business.
Present Your Business Professionally
There needs to be a list of benefits and features to show potential buyers that will be advantageous. Similar is the case with selling a business.
Professional marketing can help alleviate the feel of your business while listing all the necessary information for the buyer. Through such marketing, you will be able to attract serious customers rather than those who are just scanning the market.
Assigning your broker to deal with prospective buyers can ensure that your confidentiality remains, but the business goes into the hands of the highest-paid bidder.
Prepare A Future Plan
You might consider selling your business to retire; however, you should still have a personal goal and a plan.
Whether you plan to invest in a new business, property, or even form a trust fund, you should know your next step so you do not make hasty decisions.
Limit yourself when it comes to enjoying the profit that the business has provided you and put together a solid plan that benefits you for an extended period of time until you can either start something new or make the transition into another career.
Bottom Line
Selling a business should not be a hasty decision. Prepare for the sale so you can enjoy the highest profitability and attract buyers that won’t try to slip out at a cheaper rate. Consult professionals and make decisions that are beneficial for you.
