Sell My Business - 6 Steps to Sell a Business
Are you considering selling your business? If so, you need to start getting your business ready. The good news is if you take the time and get it ready, the business will attract buyers and sell for top dollar. Not taking the time to get the facility and accounting in proper shape will cost the seller money. A business will have greater value if a few details are taken into consideration. So how can you win when you sell the business? Here are a few tips that will head you in the right direction so the value will be the highest possible, (added value).
Importance of first impression. Looking at a business is the same as looking at a house, if the building does not have a clean comfortable look, buyers will not take a second look. Make some cosmetic changes and clean up, then you will enjoy showing your business off and buyers will respond in same.
Start your plan. There are two basic ways to start the process putting your business on the market, list on web, sell yourself or list with a Broker. Seek out and interview Brokers, until you are comfortable with the knowledge and ability of the Broker you choose. Brokers can be a valuable to coach and help with the process and will be worth their cost if you do not understand the process or if you do not have the time or feel comfortable with your knowledge of the process. If you choose to sell yourself, once you have your business in order, list it on more than one web site like Bizlocal.com. Chose at least two web listing sites and use the information on these sites. A seller packet can be found on these sites. The seller packets will provide the work sheets needed to work through the process of preparing a business for sale. These sites are designed to make selling a business yourself as simple as possible even though it is not simple process, large numbers successfully sell their business each week. Brokers list businesses on several web sites, giving maximum exposure. The more buyers that view your listing, the more likely a buyer will be found. There are two basic types of buyers. Those who are looking to buy a fixer-upper and those looking to buy themselves a job.
Research valuations for your industry or category. One way to get valuations is talking to a Broker that you feel understands your business. The Broker will guide the seller through the process of reaching a value. Evaluation charts and worksheets are available on the web that will work you through the process. The listing site usually has the worksheets needed. Each industry uses different multiples. Examples are multiples of revenue, profits or cash flow, or considering a computation of all. Make sure not to overlook all the different items that have value, your data base can be one of your biggest assets, some businesses where stock and inventory will figure in as part of the equation. Building the knowledge to work with, will give you the confidence needed to value your company. This knowledge can be found through a Broker or on the web.
Plan a sales packet. Two good ways to work on a plan are: One is contact a Broker, the Broker will guild you through the process step by step. The other is getting a packet from one of the on line listing companies. Also included in the packets from a Broker or the web will be an overview and inventory of your assets, equipment and physical components of your operations. Buyers will want and need access of this information as part of their own due diligence, and the more information you can provide, the better and easier the sales process will be and usually less price negotiating.
Work with team. The big decision is how and when to work with a management team. Does the team need to be told all or be part of the selling plan? Do you risk management getting nervous, upset and moving on or will they be of help? These are questions that need to be addressed. If you choose to share information with the team, be sure to talk about goals and objectives, your desired outcome and your reason for the sale. Most business owners prefer to keep the sale confidential up to a point, depending on the type of business. Keeping a sale confidential can be very beneficial to buyer and seller in most cases. Under communicating could create a sense of panic and over communicating could do the same which creates the tricky part of selling.
Your plan. After doing your research make a plan from start to finish. The plan should include: how to and where to list, what is included in the sell, financial and physical information, lists of items necessary to get to closing as well as check list after closing. There are numerous items to attend to starting with gathering of information for a seller packet, remember the packet with quality and correct information will look attractive to buyers and this packet will expedite due diligence and closing.
Finally, seek the advice of your accountant to assist in the decision making as it pertains to tax issues as a result of a sale. Also be patient, sales can take some time to accomplish and do not always proceed without some bumps along the way. On average, one in three deals fall through in the due diligence portion of the process. Getting a deal to closing can be difficult. All the prep work may be difficult and hard work but the better job done on the front end will pay off. This work will make for an easier and quicker sales process and more value in return. Best of all this will create a win, win scenario for seller, seller team and buyer.