Selling a business is not an easy task. The process can be time-consuming and complex. Every business is different, so selling will be a unique experience each time. However, the fundamentals of the process are relatively the same. By learning more about the established steps to selling success, you can be prepared to earn maximum value for your venture.
Ideally, business owners should take a year or two to prepare the business before the actual transition takes place. This provides adequate time to get everything in order to ensure the highest sale price possible.
When selling your business for maximum value, the actual amount you can earn will be dependent on several factors. Such factors include the broker you use, the timing of the sale and why you are choosing to sell the business. Below are a few general steps to follow to ensure you make the right moves when working on selling your business.
Step #1: Professional Valuation
Understanding the full value of your business can be difficult. Hiring a professional valuation firm will help to determine the true value of your company. With a third-party in place to determine the value, you have more credibility when you establish an asking price. An appraiser will consider the sales, inventories, debts, and assets when determining the value.
Step #2: Financial Organization
During the process of selling, you will need to organize your financials within the business. A business-savvy potential buyer will want to see what you can bring to the table. They will be looking at real estate associated with the business along with equipment, inventory, etc. Organize this information to be able to show how well your business operates.
Step #3: Increase in Sales
One of the best ways to get top dollar for your business is to increase sales. If you can improve the overall performance of your business, then you can maximize the sale price. When you can show positive gains, then potential buyers will flock to the sale of your company.
Step #4: Time Your Exit
Experts will advise you that the timing of your exit within the company should be timed about a year or two in advance. You want to put your business on the market at the right time in order to gain attention. Timing the sale correctly will ensure a positive sale on your end in the quickest and most profitable way possible.
Step #5: Use a Third-Party Business Broker
To get the maximum amount for your business, hiring a third-party business broker is essential. When you work with a professional, they will find the right buyer, getting you the most for your sale. With a broker, you have assistance with the business valuation, negotiation and due diligence along with marketing and locating potential buyers.
Step #6: Qualifying Potential Buyers
With most business acquisitions, the purchase is funded with a third-party lender. Transactions to purchase businesses often fail due to the buyer being unable to secure loans once an agreement has been made to purchase a business. Because of this issue, it is important to ensure a buyer is qualified for the purchase before engaging.
Following these steps are necessary to ensure your time is not wasted during the sale of your business. Have the right resources at hand and take the necessary steps to ensure your business is sold for top dollar and the process is streamlined so you can move on to your next venture.
For more information, check out the infographic below provided by Business Brokers Denver.