Steps to sell your business

Selling a small business is as important as starting a business. If not performed in a systematic manner then it may not give proper returns for your life time work. Selling a small business is a complex venture that involves several considerations. It can require that you enlist a broker, accountant and an attorney as you proceed. There are some considerations which can help you to sell your and make negotiation a success.

1.  Reason for Sale

Firstly you will have to ask ‘why?’Some of the common answers for the following question are
Retirement
Partnership disputes
Illness and death
Becoming overworked
Boredom
Non profitable business

Your sale will also be affected by the business’s ability to sell, its readiness and your timing. Increasing profits, consistent income figures, a strong customer base and a major contract that spans several years are positive factors that will help you to attract more buyers.

2.  Timing of the sale

If you are thinking of selling your business, prepare for it as early as possible. If you start preparing a year or 2 before ahead of time, it will give you an advantage as you can prepare your financial records, business structure and customer base in an improved manner. These improvements will also ease the transition for the buyer and keep the business running smoothly.

3.  Next, it is very important to know the worth of your business, so that you can charge the right amount, it should not be too high or too low. With the help of an appraiser get proper valuation of your business in the form of a detailed explanation of the business’s worth. The document will bring credibility to the asking price and can serve as a gauge for your listing price.

4.  Selling the business yourself allows you to save money and it’s the best route when the sale is to a trusted family member but it takes a lot of time and effort. Whereas, a broker can save your time and you can focus on your running business, he will keep the sale quiet and get the highest return. You can share your expectations, discuss advertisements and maintain constant communication.

5.  An information packet should be prepared, including the summary of how the business is conducted and/or an up-to-date operating manual. Last three to four years financial statements should be gathered after reviewing them with an accountant. In addition, a list of equipment that’s being sold with the business and a list of contacts related to sales transactions and supplies. Dig up any relevant paperwork such as your current lease. Copies should be created of these documents to distribute to financially qualified potential buyers. Any areas of the business or equipment that are broken or run down should be fixed or replaced prior to the sale. The business should be in a presentable stage.

6.  Finding the right buyer can be a challenge. A business sale might take 6 months to 2 years. You as a seller, should be prepared for a sale and do not try to limit advertising, it will attract more potential buyers.
Once you have prospective buyers, keep the processes moving along:

Get two to three potential buyers just in case the initial deal falters.
Stay in contact with the potential buyers.
Find out whether the potential buyer prequalifies for financing before giving out information about your business. If you plan to finance the sale, work out the details with an accountant or lawyer so you can reach an agreement with the buyer. Allow some room to negotiate, but stand firm on the price that is reasonable and considers the company’s future worth.
Put any agreements in writing. The potential buyers should sign a nondisclosure/confidentiality agreement to protect your information.

7.  Do not spend your profits from the sale at least few months, wait for some time. Keep in mind the tax consequences associated with the sudden wealth. A plan should be created outlining your financial goals and focus on long term benefits, such as getting out of debt and saving for retirement. With the help of financial professionals determine the ways how you can invest your money.

Selling your business is an exciting venture, but there is always the chance that it will be a long and arduous process. Finding a way to remove yourself from day-to-day trials and tribulations will ultimately go a long way in helping you to control your emotional reactions throughout the course of the deal. You hired an advisory firm for a reason, so let these professionals carry the ball for you. The last thing you want to do is have emotional reactions that depart from your well thought out intentions, arbitrarily throw a grenade into the room, and irreparably harm the transaction. Instead, be one of the sellers who deals with the seven factors we addressed above in an open and honest way; you will be far more likely to achieve a successful sale process, while simultaneously avoiding a great deal of unnecessary frustration and fatigue.