If you’ve decided to sell your business, it’s no wonder you’re looking for helpful tips. It’s a complex venture that requires a lot of planning and preparation. This means you should give yourself plenty of time to do the legwork before the actual sale. Many businesses begin the planning process years ahead of time so that there are no surprises and everything goes as smoothly as possible.
Business owners sell their businesses for many different reasons. They might be nearing retirement, experiencing illness, having a dispute with a partner, or just becoming bored. Whatever your reasons are, keep in mind that potential buyers will want to know. Some truths should be handled honestly but delicately as they can affect a buyer’s decision. They probably won’t care if you’re retiring from a thriving business, but if you’re trying to unload a dying brand or having trouble making ends meet, that’s a very different story. Additionally, here are a few other tips to help you along the way.
1. Pay attention to aesthetics.
Selling a business isn’t all about money. While profit margins and balance sheets will probably be a buyer’s primary focus, first impressions still matter. As soon as you make the decision to sell, consider upgrading your business’s appearance. One of the best ways to do this is by upgrading your building signage. This can make a huge difference when it comes to publicizing a large or small business. Make sure the type of sign you use portrays the type of business you have. For example, you probably don’t want flashing neon lights on an exterior sign if you wish to be perceived as an upscale insurance broker.
Small details can also make a big difference. You might use hanging flowers, like petunias or begonias, on the front porch to give the entrance a more appealing look. Or replace your rickety old office chairs with some high-quality leather ones. You should also give the place a very thorough cleaning before showing it to prospective buyers. If you don’t have the time or skills to do these things yourself, consider hiring an interior decorator and cleaning service. Whatever you do, don’t neglect these seemingly small details.
2. Hire the right professionals.
Speaking of hiring others to do what you can’t, it’s often important to find someone who knows how to sell your business for you. This could include brokerage, valuation, banking, and advisory. You might think you have it all together, but if you’ve never sold a business before, you might be surprised by how much you don’t know. At the very least, it’s in your best interest to have a good CPA and possibly an attorney. You’ll have to show potential buyers plenty of numbers, tax returns, and a business valuation that you may or may not have recorded accurately. This information will also help you determine the sale price you’ll put on your company, and your financial statements and balance sheet will give prospective buyers a clear picture of how much revenue they can expect in the years to come.
3. Don’t neglect your business while you’re trying to sell it.
Once you’ve decided to sell, it can be tempting to focus on getting it ready to sell rather than continuing to build what you already have. That can have really negative results if you’re not careful. First of all, the right buyer will want to see that they are getting the maximum value for what they’re thinking of purchasing. Secondly, if your reason for getting out is that you’re not making enough money, you’ll need to take this time to figure out how to make it earn more. This may seem useless, but the sooner you can grow your cash flow, the sooner you’ll be able to land a qualified buyer. If you feel like you’ve already tried everything possible and it didn’t work, don’t give up now and let your revenue structure collapse altogether.
4. Tie up loose ends.
It probably goes without saying that you’ll need to tie up any loose ends before you sell your business, but in case you’re not sure exactly where to start, here are a few things to consider. First, it’s a good idea to hire an attorney to go over all your contracts. Even though some of those could pass on to the new owner, there’s a possibility that you’ll need to close some of them out. You’ll also need to review all your accounts payable and accounts receivable. These are some more things that may be passed on along with the business, but you will have to clearly represent them either way. Lastly, try to follow through with any promises you made or communicate what is happening with anyone you feel necessary. In other words, take care of your business relationships. Try not to leave employees, partners, loyal customers, or important business contacts in the dark about what’s happening with the business. Those loose ends could make things more difficult for the future owner.