As you may be aware, selling your business can be a difficult undertaking. Despite which type of business you are looking to sell, the fundamental steps that can bring maximum value remain the same. In this article, we will cover navigating each to make the most of your time and give you the largest profit possible.
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Get A Professional Valuation
In order to sell your business, the first step is to hire the services of a professional valuation firm. Appraisers can review your business and bring more credibility to an accurate market value. The appraiser will take numerous aspects of your business into account to form a clearer picture of how much your business is worth, including inventory, sales, debts and additional business assets.
Once complete, the valuation firm will help you organize your business and minimize any factors that might ward off potential buyers.
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Organize Your Financials
At one point, potential buyers will want to look at the books or have their own professionals evaluate your business’ viability for purchase. Considering that buying a business is a long-term investment, buyers will review your financial documents in great detail. You’ll want to make sure your company’s books are up to date for the last 3 to 5 years, at least, depending on how long you’ve been in business.
Experienced buyers will consider everything related to the business, from equipment to real estate, business accrual-based financials, to how the company is run on a daily basis. You’ll want to be as transparent as possible. Any sign that you’re being deceptive or glossing over details, even if unintentional, can break a deal fast.
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Increase Your Sales
It should be obvious, but companies with healthy income streams and multiple revenue sources are attractive to buyers. Therefore, you’ll want to improve the performance of your business in order to maximize profits and ultimately your business value. This can be achieved by diversifying income channels, increasing the amount of customers and clientele, and showing a positive growth trend over the course of the life of your company.
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Time Your Exit
Selling your business is not an overnight decision. Most experts advise that business owners should deliberately plan their exit a year or two in advance. Being prepared will help you get things in order and prevent a significant down-swing, which can put you in a disadvantageous position when it comes to negotiating with potential buyers. As timing is everything in business, you’ll also want to take offers during the time of year that your business is doing well; for instance, selling a restaurant in February—normally the slowest months in the service industry—can put you in a disadvantage or make you desperate to accept a low-ball price.
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Find a Third Party Business Broker
The fifth step should be hiring a qualified 3rd-party business broker, as they are adept at maximizing the value of your business and finding ideal buyers. There are numerous benefits to using a business broker, including keeping the sale confidential, locating potential buyers, and listing the business in marketplaces to build hype and increase the interested audience. When it comes time to negotiate, business brokers bring real knowledge and their previously completed sales to the table, ensuring that you won’t get ripped off or not earn your due profits. Best of all, business brokers allow you to focus on the day-to-day operations and make your time more efficient.
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Qualify Potential Buyers
Last, once your business has drummed up a pool of potential buyers, you’ll want to consult with your business broker to qualify buyers. It can be frustrating to have a buyer ready to sell to, only to have the deal fall through because they aren’t able to secure the proper loans and funding. You’ll want to thoroughly vet buyers to determine whether they have the necessary capital and a working time frame when they want to take over the business. Depending on your needs, you can pick and choose buyers that are the best fit to purchase your business.
For more information, check out the infographic below provided by Denver Business Brokers.
