Selling a business is a run of the mill process for some entrepreneurs who make money from growing a company either from scratch or from a previous purchase, and then selling it on for profit. The reasons for selling a business may be for other situations, like a change in personal circumstances, a need to gain money for new ventures, or jumping at a rise in the value of your business while there’s extra money to be made. Whatever your reason for selling, the following factors will be important in the process of sale, and these tips will be very useful in ensuring you sell in the most efficient and profitable way:
Using A Professional Broker Or Going It Alone
A professional broker can ensure your business sale is flawless, but you might have to work to get the best deal. A professional broker does come with plenty of benefits like experience and expertise, and ensures you navigate the process of selling without any issues. They can also value your business properly. The problem is brokers cost a lot of money to use, and if you are a small business, you might not want to use any money up paying for those services. Going it alone is totally doable. You can negotiate the price yourself, list your business on sites such as Business Trade Centre for a small fee and you might feel confident in the valuation you would give your business. Think about your marketing and negotiating skills, and if you do go for a broker, do your research before committing.
Getting An Exit Strategy In Place
Interestingly, statistics show that nearly 100% of business owners agree an exit strategy is important and yet nearly 90% do not have an exit strategy in place.
The exit strategy is an incredibly important part of selling a business, and it is never too early to plan it out. Some business owners will start planning their exit strategy before they have even started to earn any money on a business. It is good business sense to have a good exit strategy because it maximises value and ensure marketing your business to buyers is successful. When planning your exit strategy ensure you:
- Have everything in place so the business can thrive without you
- Get the timing right, so you don’t end up reducing the value of the business
- Make the business as attractive as possible for sale, selling before patents expire, and before rental contracts run out, a bit like selling a car with more than six months MOT and insurance on it
- Give yourself plenty of time to prepare for the sale
Seek advice on your exit strategy if you need it, as it has a huge effect on the amount of money you get from the sale.
Sticking To Due Diligence
Due diligence is the most effective way of keeping everybody involved in the sale happy. It can be compared to a house sale, where you do everything you can to make it as marketable as possible, and to get the best price. Or you sell it as a project and make it clear that is what it is, so buyers know what they are getting. In all instances, honesty upfront is really important. You can find out more from this extensive Youtube video on due diligence problems with business sales, and in this article by The Telegraph.
When To Sell The Business
Knowing when to sell a business is tricky, and there is certainly a wrong time to sell. Selling when the business is losing money or suffering from other strains is a bad time to sell because it screams of risk and buyers will sniff those issues out straight away. Ideally, our business should be going well when you sell it, with good profit levels, happy employees and good future prospects. Of course, there isn’t always so much choice with timing if personal circumstances mean you need to sell the business quickly. And perhaps you are losing money in the business, and you know you’re not the one to fix the problem. If that is the case, work to cut costs and have the business doing ‘its best’ before you sell it so that things aren’t desperate at least.
How Much To Sell Your Business For
Price has a huge effect on how successful a house sale will be because a price too low means the sellers lose and out and it can look suspicious to buyers. Pricing it too high can lead to buyers being put off the and property sitting on the market for too long. It is very similar to business sale prices. Even before you sell, you should have some grip on your company worth. According to business magnate Warren Buffet, knowing the value of your business is essential to being successful.
Regardless, you must have a value to sell your business at all and, it is not easy getting to a price, particularly if you haven’t valued it before. There are lots of things you can do to value your business, and this article by Small Business is very useful in understanding how to do it yourself. If you really are unsure, seek professional advice because pricing the business incorrectly could result in an unsuccessful sale attempt.
Selling a business is not an easy process. However, with the right research and effort, it can ensure you get your business into the right hands, the value you deserve and the quickest and most convenient sale.