There are many reasons why people decide to sell their businesses. Whether it’s due to burnout, wanting to explore new opportunities, or a decline in revenue, it may be time for you to say goodbye to your operation and hand over the reins to somebody else.
If you have decided it’s time to sell, there are several aspects that you must consider first. The timing of the sale and the strength of your company’s operation are contributing factors to a successful sale. To help you, here are seven steps to selling your small business.
Determine the Reason for the Sale
Once you’ve decided that it’s time to sell your small business, any interested buyers will question your motives for doing so. Whether you want to retire from the business world, become tired of the same routine or you are becoming overworked, you need to establish the reasons why you want to sell. Some business owners try and sell their company when it’s not profitable. However, doing so can make it far more difficult to attract buyers.
Factor in Plenty of Time
You must prepare for your business sale far in advance to get the outcome you want. Getting organised from the beginning will help you improve your company structure, financial records, and audience base to make your company more profitable. Making such improvements will ease the transition period for the buyer and help keep your company afloat.
Get a Valuation
Before you sell your small business, you need to work out the right price to set it at. If you aren’t sure where to start, you can visit sites like wabusinessvaluations.com.au that offer business valuations for companies across Australia. Whether you’re selling or handing it over to someone else, WA Business Valuations is a good choice as they have decades of experience as certified practicing accountants and chartered accountants. The last thing you want is to get a bad deal for your business, especially when you factor in how much time and money you’ve invested in your operation, which is why you must get it valued before going any further.
Consider Using a Broker
If you decide to sell the company yourself, this gives you more freedom and flexibility, not to mention the ability to save money and not have to fork out paying a broker’s commission. If you plan to sell to a current employee or trusted family member, this is the best path to take. On the other hand, a brokerage firm like Starwood Business Group can handle important tasks such as preparing your business for the sale, showing your company to potential buyers, and taking care of the marketing side of things. There are pros and cons to both options. So, you will need to think about what will benefit your business most.
Prepare Your Documents
There are lots of documents that you must get prepared and organised before selling your small business. Your tax returns and financial statements must date back three to four years. If you aren’t sure what to do, you can contact an accountant who will review them for you. You must also develop a list of equipment that is being sold along with your company. Other relevant paperwork that you need to prepare includes your current lease and a summary of how your company is conducted. You can look back at your business plan to help you determine what documents you need to sell your company.
Find a Buyer
The timeframe of a business sale will vary for many reasons, such as the nature of your business, its past success, and the time of year you sell. Finding the right buyer can prove difficult, especially if it’s your first time doing so. If you decide against using a broker, you will be in charge of marketing your business to potential buyers. Once you find prospective buyers, there are various tips that you can implement to keep the process moving correctly, such as by keeping in regular contact and having two or three potential buyers in the event that the initial deal falls through. You must be honest with potential buyers on all areas of your business, otherwise they will be hesitant to go through with the sale.
Handle Your Profits Wisely
Once you have sold your small business, you should take a couple of months before you start spending the profits. It’s advised to develop a plan that details your financial goals, and that you understand any tax consequences that are linked with your sudden wealth. If your goal is to invest your money, you should contact a financial professional who will help you get long-term benefits out of your cash. Whether you want to plan for retirement or get out of debt, a financial advisor can help you.
Selling a company can be a lengthy and detailed process. Preparing your small business for sale can take many months, and finding a buyer can take even longer. To help keep you organised and ensure everything runs smoothly, make sure that you follow all the steps above.