What You Need to Know About Selling a Small Business
Read to exit your business?
Here are great tips you need to know
You're ready to move on to the next venture. Start with this entrepreneur's guide to selling a small business as quickly and efficiently as possible.
Selling a small business
In 2018, there was a 4% increase in businesses sold from the previous year. The 2019 numbers are just coming in and it's clear this has been a banner year for business exits/sales.
The economy has been on a tear and business owners are cashing in on a market with active buyers and high price multiples. But don't believe that just because you have a business, and because you work really hard in that business, that you'll be able to sell your business quickly.
There are steps you need to take when selling a small business, and we want to share with you what they are. Keep reading our guide to learn how to sell your own business.
Figure Out Why You're Selling a Small Business
The first step to selling a small business is being able to clearly articulate why you want to sell. Most potential buyers will ask this question right off the bat.
Most business owners decide to sell for the following reasons:
Bored
Overworked
Retiring
Illness or death
Partner problems
Others decide to sell because their business isn't profitable and their soul has been accordingly crushed after years of slugging it out with nothing to show for it. Selling a struggling business is like trying to sell a rundown house with a crappy foundation and a frat house next door. It's harder to get a favorable transaction done and there are fewer buyers out there interested in dealing with the problems they'd be inheriting in a market with so many attractive deals for sale.
You're better off trying to fix any addressable problems before putting your business on the market if you can take the time to do it.
You Must Know The Real Value When Selling a Company
It's vital you know how much your company is actually worth in the eyes of a potential buyer. This will ensure you don't price it too low or too high.
Find a business broker to get a valuation. The broker will provide you with a detailed explanation of your business's worth based on real market comparable and professional experience.
A formal valuation can also help you back up your asking price. Most buyers will ask for the business to have a valuation done at some point in the process, so better to arm yourself with one before you start engaging prospects.
Prepare Documents
There are certain documents buyer's will need to take a look at regarding your business such as:
Financial statements
Tax returns (dating back three to four years)
List of equipment being sold with the business
A list of contacts of salespeople and suppliers
You should also include any relevant paperwork like your current lease. A buyer must understand exactly what he or she is getting if they choose to buy your business.
Find a Broker
Yes, you can sell a business without a broker but it's like selling a home without a broker. It's often more difficult, riskier, and leaves you vulnerable to making costly mistakes.
Selling your business tends to be a lengthy process. Being patient, taking your time, and being thorough will help you make smarter decisions.
Before choosing a broker, interview several before you choose which one to work with. A good broker will have a realistic approach. A bad broker will try to sell you a fantasy of what you can expect and it'll take longer for your business to sell it at all.
Put Your Business on the Market
Selling a small business doesn't have to be hard. You just need to surround yourself with the right team to help you find the right buyer. Use websites like BizNexus to match you with the right business intermediaries to help you sell your business on optimal terms at the right price.
Best of all, it's a free service. Click here to try it now.
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