Selling a small business is quite a complicated procedure that requires many considerations. At some point, you might need an accountant, broker, or business lawyer. The profit isn’t always the top thing to think about.
Several factors determine if you will earn money from selling your business or not. The business structure, number of loyal customers, the reason for selling, and the company’s strength all play a vital role in the sale output.
Selling an operational business will require so much time. And once the deal is signed, you need to identify the best ways to manage the profit.
Why Are You Selling Your Business?
So you’ve finally decided to sell your business? The first thing your potential buyers will ask you is why. Most often, owners sell their businesses due to the following reasons:
- Preparing for retirement.
- Having issues with business partners.
- Death or illness.
- The company is becoming too demanding.
Also, owners sell their businesses because they do not earn much. But these reasons will make it hard to close a deal. Always put your business’s readiness, ability to sell, and timing. Apart from your reason for selling, other attributes would make the company more appealing to buyers, such as:
- High profits
- Consistent daily income
- Customer base
- Contracts with suppliers that lasts for years
If you’re planning to sell your business, it’s vital to prepare for at least a year or two before putting it on the market. Your preparation is crucial as it will help you improve your finances, customer base, and structure, making the business appealing. Also, these improvements would be of great help to make things smoother for the buyer.
Selling a small business isn’t always about gaining profit. The next thing you need to do is evaluate your business’s worth. Of course, you want to give it a high price. But as mentioned, there are many factors that you need to consider, so make sure you don’t price the business too low or too high.
Ask a professional for help so you can get a fair price for your business. Find a trusted appraise who can come up with a detailed explanation of your business’s worth. Often, the quality of the tools, machines, and equipment you have in your business will make a huge difference. Installed CCTV cameras are a great advantage too. These things combined will bring credibility to the selling price you want to get.
Is a Broker Necessary?
Business owners have the option to sell on their own or get a broker to do the job. However, there are drawbacks to both options. If you trade without a broker, you can save a lot of money, but that would mean you need to do the end-to-end selling process.
Meanwhile, having a broker makes things a lot easier, but it also comes with a price. In any circumstance, a broker can help you get the best price for your business. They can provide you with valuable advice so you will not end up selling your business at a low price because, after all, your broker will do anything to get the highest possible commission.
Gathering all the documents needed for selling your business is the tricky part. You need to collect your records for tax returns and financial statements and review them with your accountant.
Moreover, you also need to create a list of all the materials and equipment involved with the sale. Your buyer will also need to see all the contracts related to supplies and sales transactions. Overall you need to prepare all the papers and documents of your business and make sure that you have copies of them.
It would also be helpful if you had a summary of how the business works. Create a business manual stating the point-to-point process so your potential buyers will have an idea of what they’re getting themselves into.
Documents help in keeping your business presentable. The more organized you are in keeping your records, the more trustworthy you’ll look in the eye of your buyers.
Handling the Profit
After selling your business, you’ll need to take some time and think about how you will use the profit. Create a realistic financial goal, consider investing, and save some of it for the future. Also, don’t forget to study the tax responsibilities that come after a sudden wealth.
If possible, speak with a financial advisor so you can wisely plan how to invest and spend your money. Try to focus on your long-term goals and stick to your financial plans.
Selling a business begins with identifying your reasons. Before you put your business on sale, make sure that it’s in great shape and that it looks presentable. Always plan so you can get the best possible price and not end up losing your business to a meager price.