Nearly 8,000 small businesses were sold in 2016. That means the process of selling is not unfamiliar to many Americans. However, for someone who may be going through this journey for the first time, it may feel daunting and perhaps even impossible. Do not fret – with the guidance of an experienced business broker and some research, you can find yourself on your way to sign on the dotted line. If you are still feeling overwhelmed, consider this concise breakdown of the upcoming steps needed to prepare to sell.
Financial Statements
The first step, as one might guess, is to organize the finances and financial records for your business. This may include cleaning up your financial statements, sharpening your balance sheet, and recasting your profits and cash flow to show your business in the best possible light. Quality and quantity of your earnings drive income multiples and your eventual value.
Obtain a Business Valuation
Once you have your financials at hand, your broker should be able to do a business valuation (broker opinion of value). The outcome of this exercise will help determine a potential listing price. This will allow you to begin marketing the business for sale, in a confidential manner of course.
Provide a Realistic Forecast
For all buyers, it is important for them to understand how your business will perform once they buy your company. In the process of organizing your financials and recasting your earnings it is essential to remember that showing past earnings is your way of predicting what will happen in the future. If the past won’t happen again, then you need to disclose what future income the buyer can expect. Perhaps in a future proforma. This step is key in being able to receive the value of your business in a sale.
Ready, Sale, Go!
Once each of these steps has been carefully completed, you are ready to put your business up for sale. Although it does seem easier said than done, a broker is your biggest ally during this journey. Hiring a business adviser from the beginning will allow for a swift process. Before you know it, you will be reading through offers and finding the perfect buyer for your business.
Deciding to work with a business broker takes the guesswork out of the preparation of your business for a sale. With years of experience both selling and buying businesses across many industries, you can rely on the Transworld Business Advisors team to walk you through the process of getting your business ready to sell. Contact Transworld Business Advisors to schedule your first consultation with our local team of expert business advisors. You are one step closer to selling your business.
