The Two-Minute Guide To Selling Your Small Business
Whether you're looking to retire on a white, sandy beach or start a new venture, you may be considering selling your small business. This process can be an arduous task, but one that's ultimately rewarding. Here's a glimpse
at what you should expect and what you can do to smooth the process. Start!
Deciding to sell
- Decide whether you're ready to sell. Small business owners decide to move on for many reasons, including: 1) It's no longer enjoyable; 2) They want to spend more time outside of work; 3) They're not concerned with
- Access whether your business can be sold. Does your business have elements that make it attractive to buyers, such as: 1) A large customer base?; 2) A record of profitability?; 3) A great location?
Prepping your business for sale
- Assemble your team. Gather a team of professionals you trust to help you. The most important are: 1) An accountant; 2) An attorney; 3) A business broker.
- Value your business appropriately. There are several common factors that affect valuation, which a professional can help you determine. These include: 1) market approach. Based on the influences of supply and demand,
the more money a business makes, the more money it's worth; 2) Adjusted net income. This includes the business's profits, owner's salary, and all other regular business expenses; 3) Deal structure and terms. How a price is
paid affects the final price. Sellers wanting cash transactions can expect roughly 20 percent less.
- Gather and organize your books. Being able to quickly provide potential buyers with up-to-date financial statements is crucial. Keep the following handy: 1) Profit-and-loss statements*; 2) Balance sheets; 3) Tax returns*;
4) Property lease or appraisal; 5) Inventories.
*Current and going back 3 years.
Marketing your business for sale
- Market your business to potential buyers. If you're working with a broker, much of the marketing broker's responsibility. Here's a simple: 1) First. Identify who would likely buy your business; 2) Second. Target
advertising efforts to reach that likely buyer.
- Buyers interested... Target buyers by where they look for business: 1) In a specific area. Often use local brokers; 2) In a specific industry or sector. often use online listings or trade publications; 3) In various businesses in
different areas. Often use business-for-sale websites.
Inking a deal
- Yet potential buyers to eliminate those who won't be able to go through with the transaction. Ask for the following basic info: 1) Education; 2) Previous employment.ownership; 3) Funds available and financing sources; 4)
Anticipated transaction time frame; 5) Reasons for interest in this particular business.
- Negotiate the sale. Once you've found a qualified buyer, work with the team you've assembled to negotiate a deal that all parties can agree to.
- Stay patient and realistic to be successful. Offers can be disappointing and deals can fall through, but setting realistic expectations and staying patient will increase your odds of ending the process with a successful sale!
Sources: National Federation Of Independent Business, New York Times, Wall Street Journal, Inc.com.