Help yourself and your business thrive after the sell
You have decided to sell your business. Maybe you are ready for a new challenge. Maybe it is time for retirement. Perhaps you need a break from being overworked.
Regardless of your reason, selling your business can be a very emotional and exciting time that will involve a lot of work and preparation. Making some smart moves before and during the selling process can help the big change go over a little more smoothly and leave you secure with the money you were paid.
1. Plan a year ahead before selling your business. The first and most important thing you can do is plan, plan, plan. You should start planning one to two years ahead of when you want to sell to give you enough time to get everything in order.
This year of prep is to let you spruce up your business to make it as lucrative as possible and clean up your book-keeping before prospective buyers start poking around.
2. Get a third party valuation.Knowing how much your company is worth will help you set a realistic price without getting shortchanged. Additionally, having documentation of valuation will give some authority to your asking price when buyers try to talk you down.
According to Mercer Capital, small businesses are usually worth 3-6 times their annual cash flow but this price depends on variables such as industry trends, market demand, and the business’ potential growth. So, if the valuation returns a price lower than you wanted, maybe wait a bit for the market to change or make some tweaks to your business to increase its growth potential to make it look good. This brings us to our next point…
3. Boost your sales and clean up your books. Part of why you want to plan out a year ahead is because you need time to make your business look good. Boost your sales before the sell by implementing special promotions. A business that is trending upward will look much more lucrative than one that has stagnant sales performance or, even worse, a downtrending one.
It is also important to be transparent in your bookkeeping. Make sure all your financial statements and tax returns for the past 3-4 years are available and up to date for the potential buyer to review.
4. Hire a business broker. Selling a business requires a lot of work and time that you may not have. After all, you still have a company to run. Hiring a good business broker will make things significantly easier for you.
A good broker will help you find the appropriate asking price (they may even do the valuation), find potential buyers, and vet them to make sure they are a good fit for the company and have the finances necessary to make the buy.
No matter what, selling your business is a big change. Not being prepared, rushing through it, or not seeking help through a broker can result in disaster and loss when there should be cash and happiness. These tips will help both yourself and your business thrive after the sell.