7 considerations. Selling a small business is a complex venture that involves several considerations. It can require that you enlist a professional service provider like us, who has experience in this sector. Every business has value in some form or the other. We simplify the process, and cover areas like due diligence which saves you from giving up much of your time. We also help to structure the process in the most tax efficient way which gives you some smart ways to handle the profit when the business is sold.
Review these 7 considerations can help you sell your business.
1. Reasons for the Sale
You’ve decided to sell your business. Why?
That’s one of the first questions a potential buyer will ask.
That is also one of the challenges we cover with the way we present the business to our buyers.
Owners commonly sell their businesses for any of the following reasons:
- Partnership disputes
- Illness or death
- Becoming overworked
Some owners consider selling the business when it is not profitable, but this can make it harder to attract buyers. We cover that as we have buyers out there who want to buy non-profitable businesses. There is always a good time to sell and that is now.
- Increasing profits
- Consistent income figures
- A strong customer base
- A major contract that spans several years
2. Timing of the Sale
This is only applicable if the objective is to increase what you want to achieve, as the final sales price for your business. Prepare for the sale as early as possible, preferably a year or two ahead of time. The preparation will help you to improve your financial records, business structure, and customer base to make the business more profitable. These improvements will also ease the transition for the buyer and keep the business running smoothly.
3. Business Valuation
Next, you’ll want to determine the worth of your business to make sure you don’t price it too high or too low. We provide you with a FREE business valuation. We will give you a valuation report also understanding and including your objectives to give you a FAIR VALUE. This will provide you with a selling price for your small business.
4. Advantages Of Using Us?
Selling the business yourself allows you to save money and avoid paying a commission however it won’t save you time. Secondly once a business owner lists their business for sale the tendency is to check out and start making plans instead of continuing to manage the business, until it is actually sold.
We free up your time so you can keep the business up and running, or keep the sale quiet and get the best price.
We prepare the sales process, documentation, numbers etc. We manage all the paperwork. We manage to actual handover of the business from the sales to the final closure of the handover.
5. Preparing Documentation
Gather your financial statements and tax returns dating back as least three and review them with an accountant to ensure accuracy. In addition, develop a list of equipment that’s being sold with the business. Also, create a list of contacts related to sales transactions and supplies, and dig up any relevant paperwork such as your current lease. Create copies of these documents as this will be used in compiling the sales pack to present to our qualified buyers.
Your information packet should also provide a summary describing how the business is conducted and/or an up-to-date operating manual. You’ll also want to make sure the business is presentable. Any areas of the business or equipment that are broken or run down should be fixed or replaced prior to the sale.
6. Finding a Buyer
Normally a business sale may take between six months and two years according to SCORE, a non-profit association for entrepreneurs and partners of the U.S. Small Business Administration.
Finding the right buyer can be a challenge.
We take care of this through our network which makes sure you are not faced with a lengthy business sale process.
7. Handling the Proceeds
Take some time – at least a few months – before spending the proceeds from the sale. Create a plan outlining your financial goals, and learn about any tax consequences associated with the sudden wealth. Speak with a financial professional to determine how you want to invest the money and focus on long-term benefits, such as getting out of debt and saving for retirement.
The Bottom Line
Selling a business is time-consuming and for many people it’s an emotional venture. A good reason to sell or the existence of a “hot” market can ease the burden, as can the help of professionals.