As a business owner, you have likely spent hours, days, months or even longer agonizing over whether to sell your business. While in a perfect world the hard part would be over, the reality is making the decision to sell is simply the first step in a complicated process.
Fortunately, there are ways to simplify the experience. To start, it’s a good idea to have a checklist of what steps to expect. While each business may be different, when it comes to selling a business, the basic preparation will be the same. It can also be helpful to have a seasoned business broker or advisor to aid and support you in the sale. Transworld of Minnesota’s advisors have the experience and know-how to navigate the sale of your business, making the experience easier on you and maximizing your return.
Step 1 — Determine your reason for selling
People decide to sell their businesses for a variety of reasons. Some may do so because they are ready to retire and leave the working world. A serious illness or death may require someone to step away from their business. Others may need a way to extricate themselves from a partnership dispute. Some simply become bored and decide to seek out new opportunities and challenges in their work life. Whether you are considering selling for these reasons or others, the decision to sell a business is personal but should be acknowledged.
Step 2 — Confer with professionals
Perhaps the single most important step of all, in terms of making the sale of your business easier, is selecting an experienced business advisor to guide you through the sale process. A business broker or advisor can help you get everything in order, while screening qualified buyers and ensuring you get the highest possible price for your company, all while keeping the sale as quiet as possible to avoid upsetting your employees, vendors and clients. Best of all, an advisor frees up your time so you can continue to keep your business up and running.
Step 3 — Organize your finances and properly package your business for sale
Part of the assistance provided from an experienced advisor is connecting you to other professionals who can help you organize your business’s financials for the upcoming sale. It’s important for you to understand the financial position of your business, which requires knowledge of financial statements, projections and key metrics for your industry, such as:
- What’s the company’s relative growth in gross sales and net income?
- What adjustments need to be made to normalize earnings?
- Do you own or lease the property where your business is located?
- What is customer base and do you have any concentration issues?
- What about the value of tangible and intangible property?
- What equipment and inventory will be included in the sale?
- Are there any outstanding liabilities or legal issues?
- Who are your key suppliers and vendors. ?
Answers to these questions are needed, as well as ensuring your books are in order. Do you have your latest tax documents? You may want to consider an independent audit of your financials just to be certain.
Step 4 — Understand the value of your business
To sell your business, you need to understand how much it is worth. Remember valuation is an art not a science. Multiple factors will come into play as you determine what your company is worth such as the business’s financial health, industry trends, the current market demand and the location of your company. Transworld’s business valuation calculator can help.
Step 5 – Confidently market your business
The final step in selling your business is to get the word out albeit confidentially. But successfully marketing a company for sale has many nuances. Transworld of Minnesota’s business advisors are experts at creating competition for your business thanks to our ability to advertise your business to our worldwide network. We have access to thousands of buyers, and we spend more money on advertising than anyone in our industry.
Over the next few months, we will share more information about the actual experience of the sales process, as well as go into greater detail on how to properly market the sale of your business.
All in all, selling a business can be an exciting but long and stressful time. Learn more about how Transworld Business Advisors can help you speed up the process and sell your business by scheduling a free consultation today.