How to Go About Selling Your Business | Business Broker in Dallas, TX
Selling a business is a lengthy and complex process. It requires thorough market research, assessment of your strengths and weaknesses, evaluation of your business’s position, and all the stakes involved in it. Selling a business entails many steps into it before you can make a good sale. Following are the steps that you need to perform while making this decision.
Incentives to take this decision
Reasons precede every decision we make. When selling a business, there can be many reasons that have compelled us to take such a decision and those reasons have the power to affect the price that the business will be sold at.
It is not just about selling something here; it is about selling something that you have built over the time with your efforts and now you are about to hand it over to someone just like that.
- You are selling your business because it is time to retire now.
- You are not getting well with your partners and need to split.
- You have exhausted yourself and now you need to take a break.
- You are suffering from an illness.
- Family responsibilities or your lifestyle has changed.
- It is not making much profit.
- You want to try something new.
Start preparing ahead
You have to prepare for the exit a year or two before. It is not wise to take the decision right away and start with the selling process. As simple as the process sounds, it is complex and bound by legal procedures. It entails a lengthy process and you should start preparing yourself for the process prior to closing the deal. This will give you a chance to start working on the finances of your company, the profit it makes, the liabilities it has, and ongoing contracts. You will also be able to inform everyone who has a stake in your business and polish the financial records to have something presentable in the end.
Calculate your business’s worth
During this time while you prepare, you would need to start working on the valuation of your business. It is important because this way you would know the true worth of your business and will be able to price it fairly – not too high or too low. It also lets you have an idea about the market value of your business. To do this, you will need to get an appraiser so they can correctly do the calculations for you. You can do it yourself too, but it is always better to get professional help.
Deciding if you need a broker
The most important part of the process is to decide whether or not you need professional help to sell the business. If you are selling the business to someone inside the company or someone you personally know, then it is better that you handle the sale yourself. This will save you the unnecessary expense of hiring a broker. However, if you want to sell it to someone completely unknown and from outside the business, then getting a professional help is a better option. This is because the professionals you hire will deal with the technicalities, saving you your time and energy, and also because they know where to place the offers. They will price them right and make sure you get the highest bet. If you choose broker services, make sure you stay in the loop and keep explaining them the expectations you have with this sale.
Gather all the relevant documents
Your potential buyers would want to see the financial records of your business, dating five to six years back so they can have an idea about the business’s potential in long run. This is why you need to collect all the financial statements, receipts, tax payment, bills and the contracts you have previously made. This is so the buyers can calculate the impacts of past years business activities on the future outcomes. Along with this, you would need to give them a written format of how you have been running your business for the past years, and a comprehensive insight into operations, transactions, policies, and the summary of the organizational culture that had prevailed over time. This is important because it would let the potential buyers take decisions in future related to the business.
Looking for a buyer
When finding a buyer, you need to maximize your promotions as much as you can to attract potential buyers. You need to have more than 5 or 6 potentials buyers at least to decide which one makes the right offer. And because sometimes buyers agree on the offer and then disappear, this will make sure you are not left on hold. Once you have narrowed down your choices, be ready to negotiate. Do not be too stiff in your offer, however, do not undervalue it either. Once an agreement is done, make sure you get it in writing.
Other than this, the buyer will make you sign a contract, which will state that you will not compete against him once you have sold the business. You will not start up another company in the same industry. This being said, here’s what attracts a good buyer:
- Steady income over time
- Steady profits
- Good customer base
- The goodwill of your business in the market
After the sale is done, the contract is signed, and you have received the payment, you need to be not too hasty in spending all that newly accumulated wealth. Get yourself a financial advisor. They will guide you on how to use your wealth smartly and how to invest somewhere that can help you in your retirement later on.
Business is like a child that needs your help to grow up and become something that you are proud of. And giving it away to someone else is never easy. It is an emotional thing, something that consumes not only your time but also the sentiments you have built for it over the years. This is why, having a solid reason to sell the business is very important, as it makes it easy for you to come to terms with the process.