Running a business can be a welcome challenge and a great source of income; however, when you’re ready to sell your business, it can be a completely different story. Due to various reasons, it can be difficult for many business owners to maintain longevity and pass their companies on to the next generations. Therefore, it’s more common to sell your business, than to keep it going.
If you find yourself in this situation, and you need to sell your business, take a step back to make sure that you are considering all the aspects for selling. There are many different factors that should be considered before you sell your business. The following are five of the most essential ones that deserve careful scrutiny:
1. Have A Good Reason To Sell Your Business…
Before you make any rash decisions, you must have a solid rationale for selling, and be sure that there are no regrets. You may need to sell your business because you are ready to retire, or because so much has changed in your industry that you may not be prepared, or have the necessary expertise, to make the necessary adjustments and bring forth further growth. In that case, it’s easier to sell your business to an investor who is well equipped to take it to the next level.
Perhaps physical and mental stress, and other health issues have taken their toll on your well-being, and this might also cause you to rethink the option of selling your business. Moreover, today’s business owners are venture capitalists who quickly get bored with a business and lose interest, ready to take on the next big challenge.
After decades of work, and as long as you are not too attached or emotionally vested in the business, it may be time to let others handle it so that you can have the freedom to do the things you’ve always wanted. You’ll be able to travel the world, start a new venture, or simply spend more time with your family. All of these are great reasons to sell your business and move forward.
2. Get Help With Valuation & Offers…
Now that you’ve found a good reason to sell your business, you need to make sure that you know what it’s worth. In order to consider the price that you are going to ask the buyers to shell out, consulting with a professional broker to assist you would be a very wise consideration. Brokers are great assets for helping you sell your business; they help you determine business valuation, prepare the paperwork, as well as set a solid asking price in order to be taken seriously. It would be prudent to get the services of an appraiser that specializes in your type of business.
Brokers look at the financial statements for the past few years to see the profitability of the company. He or she will check out all the assets, including machinery and properties. Liabilities will be considered as well. Anything that could affect the overall value including intangibles like brand awareness will be scrutinized.
Brokers will also have a book of business to help you properly advertise your sale, and take away stress so that you can keep running the business. In response to the asking price, potential buyers will present their offers and counter-offers. Brokers will have you consider multiple offers and counter-offers in selling your business; and maintain constant communication with potential buyers before negotiations. Their demeanor during negotiations may be just as important — if not more – as the sum they are willing to provide.
Awareness of the worth of the company and projected future earnings will provide you with a strong case. Market shifts can have somewhat of an effect on when you are preparing to sell your business, so a broker will make sure that you get an excellent deal no matter what. Click Here to sell your business.
3. Utilize Your Business Networks & Relationships…
Anyone who has ever tried to build a business from the ground up knows that it can be a highly emotional process. You need to be passionate about it in order to endure all of the sleepless nights, multiple failures, and back-breaking work. Then you will eventually benefit from the success of your creation.
So when you are ready to sell your business, you want to make sure that your labor of love will not go to waste. Therefore, it’s important to find buyers who have the capacity not only to purchase it, but also to run the business in a competent manner, and treat is as well as hoped.
Being a standing member of business networks, and building a rapport with former business partners, or even competitors, becomes quite crucial if you plan on selling part of the business but retaining some stake in its future. In this scenario, you will have to work with the buyers on a long-term basis. They should share your vision of the company’s future and be the kind of people that you can truly get along with.
4. Business Readiness
Enhance your chances of getting the business sold at a good price through early preparation. Put everything in order so that interested parties will have nothing to worry about or point out as a reason for a lower bid. These include the financial statements, tax returns, and other pertinent documents. Realistically, it may take at least 2 years to sell your business, so you must be ready to consider timing and keeping the business ready for sale at the right time.
Make your company more attractive to outsiders by showing them that you have gotten increasing profits each year. Keep record of good data and stats that that demonstrate your business’ ability to obtain steady income levels. This assures them that the business is a low-risk investment. Present proof of a strong brand and following. This is another reason to hire a broker to help you sell your business.
5. Have A Profit Usage Plan…
Another thing you might want to consider after you sell your business, is how you will handle the profits from the sale. Think about what you might like to do with this kind of money in advance, and understand that you will most likely not be able to cash in on your profit for several months. This will prevent you from being tempted to spend it all recklessly once you have it. After you sell your business, it would be prudent to use profits to pay off additional debts or fees. Overall, try to make sure that the money will last and be put to good use, thus developing a solid plan for spending can help ensure future financial freedom.
The decision to sell your business will have a big impact on your life and those around you. Weigh these considerations carefully, and you will see great success. Contact Del Lingco International to get started today!