How to Sell a Small Business Successfully
If you are an owner of a successful small business, you must know the endless struggle and hard work required for running it. Therefore, after working for several years on it, if you are planning to cash out, there must be a strong reason behind it. Whether you are planning to work on something new or whether a personal emergency has forced you to sell your small business, there are a few things you must consider before finalizing the deal.
In general, putting a small business for sale is not an easy task. It involves various considerations such as finding a broker, an attorney, and an efficient accountant. Other major factors that will determine the extent of profit you might receive are reasons for selling, business strength, time of selling, and structure of the small business. Therefore, you need to ask yourself one basic question before deciding to place your small business for sale. The question is, “What is the value of my business?”
Once you have answered that question, it will be easier for you to estimate the profits you will be receiving from selling your business. When you will have that knowledge, you can go for a business plan for your future ventures or decide how you will be handling the profits.
You must also ask yourself the following questions before selling your small business. These will not only help you with putting your small business on sale and getting the right amount of profits, but will also aid you with using those profits for your needs later on.
Why to put my small business for sale?
This is probably the first question a potential buyer of your small business will ask you—the reason for selling. Therefore, you need to have a clear answer to it. Some of the most common answers to that question include reasons like becoming overworked, death or illness, partnership issues, retirement, and even boredom.
In some cases, people decide to put their small business for sale simply because it is not profiting anymore. However, this reason is not emough when it comes to impressing the buyers. Therefore, instead of focusing on that, you can highlight other factors such as business worth and value, income figures, and a stronger customer base. If you have figured out the answer to “what is the value of my business?” then selling a business becomes an easy task.
When should I sell my small business?
If you are thinking of selling your small business, preparing for it at least a year earlier is a good option. You should work hard to improve business finances, clientele, and business structure. This will increase your business worth. Moreover, the transition to the buyer will be easier as well and the business will run smoothly afterwards.
What is the value of my business?
Now that you know why you are selling your business and have improved its structure, you need to ask yourself another important question, “What is my business worth?” This is an important question since it will help you price your business appropriately. You can go to an appraiser and ask him, “What is my business worth?” and they will provide a valuation with details of your business worth as well. Having a document to back your claim will increase the credibility of your asking price.
How do I find a Potential Buyer
According to SCORE, selling a small business usually takes around six months to two years. Find a suitable buyer for your small business can become a challenge at times. Never limit your advertising since you need to attract more buyers. However, in moments of despair, when you might want to go for a less profitable deal, always ask yourself “what is the value of my business?” If your answer is more than what the deal is offering you, look for another deal. Remember that waiting is a better option than accepting a bad offer.
What to do when I find a Potential Buyer?
Once you find potential buyers, you should let the process move forward smoothly. The following suggestions will help you:
- Work with multiple buyers instead of focusing on a single deal so you will have other options if one deal fails.
- Always keep in touch with the prospective buyers and be available to them as well, to show that you are serious about the deal.
- Before you provide useful information about your business to the potential buyer, make sure that they qualify for financing. In case you are planning to finance it, then discuss the details with a lawyer and an accountant in order to reach an agreement.
- Most importantly, a little negotiation is healthy but never accept a deal that does not do justice your business. Ask yourself, “What is my business worth?” and plan the deal accordingly. Also consider the future worth of the company.
- Always document everything and make the prospective buyers sign an agreement of confidentiality that they will not disclose information about the company.
Other important documents you will be required to take care of are the lease assignment, a security agreement, and a sale bill for transferring the assets to the new owner. Moreover, the buyer can ask you to sign another agreement according to which you will not go for a new competing business, wooing away their potential customers.
How do I deal with the profits?
Now that you have successfully sold your small business, you need to decide what you should do with your profits. First of all, unless you do not need it for an emergency, do not spend it all at once. Instead, work on a plan for your future financial goals. Also, investigate about the tax consequences for acquiring so much cash. Most importantly, seek the help of a financial adviser on how to invest your money to take care of your long term financial needs.
Are you planning to sell your business? Are you wondering, “What is my business worth?” In case, you are, then make use of Kirksey Business Brokers’ services. They are available for help and guidance in various cities including Grapevine, Bedford, Euless, Mid Cities, Keller, Roanoke, Trophy Club, Southlake, Colleyville, Fort Worth, and Dallas.
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