Selling a business requires careful planning, strategic marketing, and detailed research. If you’re interested in selling your business, understand the necessary steps to guarantee success.
Here are 6 simple steps for selling your small business:
Plan Your Next Steps
Sell your business successfully by planning your next steps.
Selling your business is a time-consuming and emotional task, meaning completely preparing yourself is essential before putting your business on the market. Contemplate important questions to choose necessary and beneficial decisions.
Understand your reasons for selling. Are you ready to retire? Are you overworked and tired? Are you bored with your business? Are you experiencing family or personal problems, such as illness or death? Is your business struggling? Ask yourself why you want to sell your business to ensure you’re making the right decision.
Determine your business’s readiness for sale. Are your finances organized? Is your business profitable or failing? Will legal complications prohibit your sale? Recognize your business’s current condition to guarantee you’re able to sell.
Consider your specific future after selling your business. Are you prepared to lose your regular income? How will you spend your time? Grasping your future reality allows you to gauge whether you’re emotionally and financially prepared to sell your business.
Plan your next steps by developing an exit strategy to assure you’re ready to sell your small business.
Determine Your Business’s Value
Determine your business’s value to properly price your sale.
Pricing your business too high discourages potential buyers, but pricing your business too low costs you money. Obtain a realistic estimate to sell your business for the right price. Business valuations are complicated processes, involving estimating your assets, cash flow, gross sales, discretionary earnings, and much more. Your business’s estimated value doesn’t offer accurate results, but valuations give you a general understanding of your business’s worth.
Generally, small deals, under 3 million dollars in price, average 2 to 3 times your profit, medium deals, between 3 million and 20 million dollars, about 3 to 5 times your profit, and large deals, at least 20 million dollars or more, approximately 5 to 10 times your profit.
Determine your business’s value by analyzing your financials and contacting a professional to accurately price your business.
To learn and understand the basics of business analysis, you can enroll in a CBAP Training program.
Organize Your Finances
Organize your finances to guarantee your business sells.
Buyers desire transparent and profitable businesses able to provide clear financial statements demonstrating positive growth. Consult your business’s accountant and attorney to update your books and boost sales.
Prepare proper financial statements and tax returns for at least three previous years to prove your business’s legitimacy. If you’ve neglected paperwork and meticulous record-keeping, organizing your finances may require extreme research and assistance. Prospective buyers will check to ensure everything is accounted for, so do your due diligence.
Additionally, increase your business’s sales to attract buyers. Understand the updates, staff changes, and marketing efforts that’ll boost your sales and overall profits. Buyers desire profitable businesses, resulting in failing businesses being nearly impossible to sell for good prices.
Successfully sell your business by organizing your finances.
Find a Quality Business Broker
Find a quality business broker to manage your sale.
Business brokers are experts at assisting buyers and sellers of privately owned businesses during the buying and selling process. Brokers offer professional advice, valuable knowledge, necessary discretion, industry contacts, and negotiation skills to effectively handle business sales.
Recruiting a business broker allows you to concentrate on operating your business and guarantees optimized selling prices. Generally, business brokers work on a commission basis, requesting about 10-15% of the selling price.
Find an excellent option by researching reputable Minnesota business brokers near you.
Locate Qualified Buyers
Locate qualified buyers to initiate your business sale.
Finding buyers takes ample time, sales strategies, and assistance from business brokers. Patiently wait for prospective buyers to express interest in purchasing your business. Once you’ve located potential buyers, pre-qualify your buyers for financing, negotiate deals, and finalize agreements.
Find buyers for your business to start your sale process.
Prepare Business Contracts
Prepare business contracts to complete your business sale.
Contracts are essential for forming a legal agreement and ensuring a smooth transition. Numerous types of documents and contracts are necessary to prepare, including:
- Nondisclosure and confidentiality agreement
- Asset purchase agreement
- Security agreement
- Assignment of a lease
Complete vital documents and contracts for your business sale by consulting your attorney and business broker.
Sell your small business by following these 6 simple steps for success.