Selling a business is rarely an easy decision to make and there can be a great deal of complexities involved in the process. Most importantly, before finding a qualified broker to proceed with the transaction, you'll need to take several important preliminary steps to prepare yourself and your business.
Timing is Everything
Selling requires careful planning and Transworld is here to help. We will help you consider the business's ability to sell, its readiness, and your timing. The old saying that the early bird gets the worm is also true when it comes to selling your businesses. Preparing for the sale as early as possible will help you improve your financial records, business structure, and customer base. These improvements will also ease the transition for the buyer and keep the business running smoothly. Ideally, owners should begin getting their businesses ready to sell before they hope to close a deal, to slowly wean themselves from the day-to-day responsibilities and getting it in tip-top financial shape. Unsurprisingly, there can be a fair amount of bureaucracy involved in selling a business of any size, so preparing the necessary documents far in advance can save you headaches down the road.
Decide Why You Want to Sell
One of the first questions a potential buyer will ask is why you want to
sell your business. Owners commonly sell their businesses due to retirement, time for change, business is in demand and new opportunities. What is your reason? Are you ready to retire or want to cash out? Sometimes, however, it's just a matter of desire, but be prepared to have an answer to this inevitable question.
Determine the Value of Your Company
Determining the worth of your business can help you make sure you don't price it too high or too low. Find a reputable business broker to get a good idea of what the market will bring for your business. They will draw up a detailed explanation of the business's worth using comparable reports. Having a professional conduct a business valuation analysis will bring credibility to the asking price and can serve as a gauge for your listing price. You could also choose to get a full valuation report from a business appraiser. But most often a networked business broker can provide a realistic estimate of what your business is worth. A professional broker can also review a business's financial status and its competitive environment. The review typically considers everything from sales to receivables, inventories and other assets, as well as the resulting profits and seller discretionary earnings (SDE). They will also help you identify business threats and opportunities that define value. Valuing a small business typically depends on their overall financial health, industry trends, market demand, location, and other factors. The analysis itself relates to how risky the business is and how much growth it has in front of it.
Get Your Financials Organized
It's time to do some spring cleaning and organize any sloppy books or tax records. It's best to prepare up to five years' worth of your financial statements and tax returns. Dig up any relevant paperwork and review your profit and loss statements, bank statements, tax returns, your current lease, supplier and vendor contracts, and customer data with a qualified professional such as an accountant or business broker to ensure all of the papers are in order. Be sure to create copies of these documents, since you'll need to present them to potential buyers, valuators and lenders as the sale process proceeds. You'll also want to make sure the business is presentable. Any areas of the business or equipment that are broken or run down should be fixed, discarded or replaced prior to the sale.
Choose a Qualified Business Broker
The most important step during the sale of your business is finding a qualified business broker. Preparing a business for sale is an incredibly time-consuming job, so hiring a business broker can help you continue dedicating your time and effort to the continued operation of your business. In addition to helping free up time for you to keep the business up and running, a qualified business broker will also allow you to carry out the sale more discreetly, and you will have a better chance of keeping the sale confidential. At Transworld, we take pride in ensuring there is competition amongst buyers which can help you get the highest price. As a seller, it's important that you discuss expectations and advertisements with the broker and maintain constant communication. A qualified broker will also spend the time vetting buyers and answering questions so you can focus on running your business.
Transworld Business Advisors is the world leader in the marketing and sale of businesses, franchises and commercial real estate. Whether you are a seller, buyer, represent an acquisition-minded corporation, or are personally interested in owning your own company, Transworld offers the professional services that successfully bring buyers and sellers together. An
experienced business broker like Transworld Business Advisors can assist you throughout the sale or purchase of your business to ensure the entire process goes smoothly. Call us today at
(800) 205-7605.
