How to Sell Your Business ASAP
Does your business take a lot out of you? Do you want to shift gears and try a new career?
Before you do, you’ll have to figure out how to sell your business. Make back what you invested and make sure your business thrives in someone else’s hands. Learning the right steps also prevents any hiccups and guarantees you get the best selling price possible.
Ready to begin? Let’s start by organizing your finances.
1. Settle All Documents and Finances
Before you put your business in the market, you have to make sure all the financial documents are in proper order. Settle any remaining debt if you can. Make sure you have all the financial statements, tax returns, and records of inbound and outbound finances.
On average, you’ll want all the financial data from the previous three years. For bigger businesses or if your business involves a large volume of transactions, buyers might want data from the previous five years.
Not sure if you have everything prepared? Call in an accountant and let them review the books.
2. Transfer Remaining Assets
You can’t sell everything. There might be assets you need or want to keep, like the company car and any intellectual property in your name.
Transfer all of these to your name or to whoever should receive them. Always make sure you note these changes in your financial records. Otherwise, potential buyers might see a discrepancy due to missing assets and it could take a long while before you set things straight.
3. Determine Your Selling Price
Is everything ready on your end? The next step in learning how to sell your business involves figuring out your selling price. You have to determine the value of your business.
There are multiple ways to determine the value of an established business for sale. Multiplying your annual cash flow by 2 is the most basic way to get a rough estimate. Keep in mind the factor of 2 changes depending on the size of your business and the sum of cash flow.
If you want a more precise price tag, bring in a financial advisor and auditor. They can look at your books and determine how much you can sell your business.
4. Exit Strategy
Keep in mind that your business might depend on you. Some businesses flop as soon as their original owner departed. If your business relies on you, you have to come up with a strong exit strategy so it can thrive without your involvement.
Without this kind of exit strategy, buyers might get turned off. Why would they purchase a physical or online business for sale if it won’t profit them once you’re gone?
Before the business turns over to the new owner or before you put it up on the market, make sure to train someone who can do all the work you did. Train multiple people if you have to. Show them the ropes and conduct regular training seminars to keep the business afloat once the takeover happens.
5. Bring in a Broker
Not every business for sale needs a broker. A small business could change hands quickly without one mediating the sale.
However, it’s still a wise decision to hire one because of the work they get done. Yes, you do have to pay a commission for a broker but it’s worth it in most cases.
First off, a broker is the one responsible for putting your business up in market listings. They’re the ones that then discuss the details of the sale to potential buyers. They’re also the people responsible for handling the majority of the paperwork for the transaction.
Brokers can also guarantee you get the highest price possible. One common mistake business owners make is that they settle for the first deal that comes their way. Brokers are more diligent in this sense and tend to negotiate with multiple buyers until they settle for the best-guaranteed deal.
Hiring a broker also gives you free time to complete other tasks. You can focus on boosting revenue, collecting financial records, and training staff for turnover.
6. Boost Sales
Even when everything is in order and the broker is out looking for buyers, your work isn’t done. The next step is to boost sales.
Why boost sales when you’re about to leave?
Think of it like selling a used car. Most people buff up their vehicle before selling it. This makes the car look more attractive and helps justify the selling price.
Follow this same philosophy. If you work to boost sales, your business looks more appealing to potential buyers. They’ll feel more inclined to give your offer a look.
After all, who wants to buy a business if it can’t generate a steady income? You need to showcase your business at its best.
7. Get Contracts in Order
Did you follow these steps and got a buyer? You need to follow up and get several contracts ready.
You’ll need an asset purchase agreement, the deed of sales, and legal contracts for the purchase of a business and intellectual properties. You’ll need a lawyer to help you draw these up and to review all your accounting records too.
These contracts should list down all your assets, financial data, IPs, employee agreements, details and agreements for website use, and terms of sale.
Some businesses have sensitive data. For cases like this, make sure to implement an NDA (non-disclosure agreement).
Again, you’ll need a lawyer to get this done right. You can learn more here with this article.
Learn How to Sell Your Business!
Understanding how to sell your business isn’t as complicated as some make it out to be. Follow our tips here and you’ll already be on the right track. Take it slowly and work in tandem with your broker or advisor to get the most profitable sale.
But what’s next? What new venture can you dive into?
Read our other articles now and discover new things to try out today! You might learn about new businesses or start your own online venture.
