A 5 Step Guide to Selling Your Small Business
Are you considering selling your small business and taking some time off for yourself? This can seem like a daunting task to get underway, but here is an easy five step guide on how to sell your small business.
1. Make the Decision
The first step is making the decision that you are ready to sell. Small business owners of all kinds make the decision to move on for a multitude of reasons. Whether the business is no longer enjoyable or they want to spend more time outside of work; whatever the reason may be, the decision has to first be made.
Secondly, assess the industry and marketplace to see if your business can be sold. Does it have elements that may attract buyers? This could be anything from having a large customer base, a good solid brand and record that proves profitable, or a great location.
2. Make Preparations
Your first step to making preparations is to get a team together that include an accountant, attorney, and business broker. Secondly value your business appropriately. Common factors that impact your business valuation are market approach, adjusted net income, and deal structure and terms. This includes your salary, profits, and regular business expenses. Lastly, gather and organize all your financial books for the present and three years past. Providing buyers with up to date financial statements is crucial.
3. Market Your Business for Sale
If you use a broker, much of the marketing will be their responsibility. However here is a look at a simple strategy you can follow.
First identify who your likely buyers are. Next, target your advertising efforts by where they look for businesses to reach that demographic. For a specific area, use local brokers. For a specific industry or sector, use online listings or trade publications. For various businesses in different areas, use business for sale websites.
4. Put it in Writing
Qualify your buyers. Look at their education, previous employment, funds available and financing sources, transaction timframe, and reasons for wanting to purchase your business. Next, negotiate the sale with a team you put together for a deal that all parties agree on.
5. Stay Patient and Realistic
The last step is to stay patient and be realistic as some deals end up not going through. Patience in the end will increase your odds for making it through the process of selling your business.