How To Expedite My Business Selling Process
Reviewing these seven considerations will help you create a sound agenda and negotiate successfully.
The Best Way to Sell a Small Business
Reviewing these seven considerations will help you create a sound agenda and negotiate successfully.
1. Motive for the Sale
If you want to sell your business, one of the first questions a prospective customer would ask is – Why?
Owners often sell their companies for one or more of the following reasons:
- Disputes in the Retirement Partnership
- Changing market and economic trends
- Foreseeing a decline in future profits
- Illness or demise
- Inability to shoulder the burdens of running an establishment
- Dissatisfactions
When a company is not viable, certain owners consider selling it, although this will make it more difficult to find buyers. Take into account the company's position in the market, its preparation, and the timing.
There are several factors that can make the company look more appealing, including:
- Profit expansion
- A record of consistent earnings
- A sizable client base
- A large and critical long term deal that can fetch consistent and sizeable returns
2. The Timing
Prepare for the sale well in advance, preferably a year or two. The planning can assist you in improving your financial statements, market organization, and client base in order to increase the profitability of your business. These enhancements would also ease the buyer's transition and keep the company going smoothly.
3. Business Appraisal
Next, you will want to assess the value of the company. This is to ensure that you do not end up with an inconsistent report that results in the undervaluation of your business. Find a company appraiser to have a proper valuation. The appraiser will create a thorough description of the value of the company. The document can lend authenticity to the selling price which must be used to determine the listing price.
4. Do You Need a Broker?
You can save money by selling the company yourself to stop paying a broker's fee. It is a safer option to sell your business to a near family member or an existing employee.
In other cases, a broker can help you free up time to keep the company going or keep the deal secret to get the best offer (because the broker will want to maximize his or her commission). You must discuss the preferences and ads with the dealer, and keep in touch at all times.
5. Document Preparation
Gather the bank records and tax reports of the previous five years and go through them with an accountant. Create a list of the assets like equipment that is being sold along with the company. Have a list of suppliers, as well as all necessary documents, such as the existing contract ready. Make copies of these documents to provide to financially fit prospective buyers.
A detailed company file may also provide a rundown of how the company operates and/or up-to-date operations manual. You can also ensure that the company is presentable. Prior to the sale, all parts of the company or facilities that are damaged or worn out should be repaired or replaced.
6. Locating a Buyer
According to SCORE (a nonprofit organization representing entrepreneurs and partners with the US Small Business Administration), a business transaction can take anything from six months to two years to conclude. Finding the best buyer can be difficult. Here's how to keep the loop going until you've identified potential buyers:
- Gather two or three possible buyers in case the original offer falls through.
- Maintain contact with prospective buyers.
- Before disclosing details regarding your business, find out whether the prospective buyer is pre-qualified for financing.
- If you plan to fund the deal, consult with an accountant or lawyer to iron out the particulars so that you can negotiate an understanding with the buyer.
- Allow for any wiggle space but stick to a fair price that takes into account the company's potential value.
- Any deals should be in writing. To secure privacy, prospective buyers must sign a nondisclosure/confidentiality agreement.
- Try to bring the signed buying agreement into escrow as soon as possible.
Following the deal, the following documents will be applicable depending on the clauses:
- The bill of sale, which passes the buyer ownership of the company's properties.
- A lease agreement is a legal term that refers to the transfer of ownership under the mentioned clauses.
- A protection policy that allows a seller to keep a lien on the company.
Furthermore, the bidder can require you to sign a non-compete agreement, in which you promise not to start a rival company and woo away buyers.
7. Profit Management
Allow some time—at least a few months—before investing the selling proceeds. Make a roadmap detailing your financial objectives, and think about the tax implications associated with your sudden wealth. Speak with a financial planner to decide if you plan to spend the money and concentrate on long-term opportunities such as debt reduction and retirement savings.
Keep the momentum going by using checklists and timelines to keep both participants organized. Take steps in lieu of the end goal on a regular basis. We strongly advise any company owner who has never managed the task of closing a business to seek professional assistance. We are an online platform that assists in business selling/buying/investing. For further assistance, click on the link below.
