5 Important Tips for Selling a Business

About 48% of business owners don’t have a formal exit plan.

What does this mean? It means they haven’t established what value their business is worth or the selling price for their company.

How can you begin to look at selling your business without knowing how much it’s worth?

Whether selling a large company or a small business, the process requires planning and effort. We’ve outlined important tips for selling a business below.

1. Determine the Reason for Sale

The selling process is as unique as the type of company and situation you’re in. Before you begin, determine what exactly it is that led you to consider selling your company.

Is the sale necessary for personal reasons? Do you want to hand over ownership to another member of your family? Are you retiring and looking for an exit strategy?

These factors will help guide how to sell a business because they affect how much money you can expect from a sale.

2. When To Sell a Business

Time can be of the essence when it comes to selling a small business.

How long is a business owner willing to wait for offers? Are you in a rush to sell now, or will you consider those who express interest over the course of several months?

You should prepare your business for sale before listing it on the market and begin to collect LOI’s (Letters of Interest) so that you have a pool of potential investors. Don’t spend too long collecting LOI’s, but don’t take offers from anyone who doesn’t fit your ideal buyer profile.

In other words, don’t be short-sighted or impatient.

3. Get Business Valuation

Before you list your business for sale, have an expert review its value. Most buyers won’t shell out cash without knowing that the company will be profitable and worth what they paid.

An informed decision is a good one. If the business valuation shows low value, consider changing the design or marketing of your products, services, structure, or employees to increase profits.

4. Prepare Documents

Whether it’s aerospace companies for sale or a small grocery shop, you’re going to need documents. Get sales contracts drawn up, detailing what sales price you’ll be paid and any other details of the agreement.

A contract protects both parties involved in the sale. You don’t want someone taking advantage of you after they’ve invested in your company’s future, and neither do they.

5. Prepare for Buyers’ Questions

Buyers are going to ask questions. They’ll want to know more about the numbers behind your company’s success, why now is a good time for them to invest, and why you started or chose this company (or industry) in the first place.

Be prepared with answers that showcase strengths rather than weaknesses so that you can accurately pitch your company to potential investors.

Top Tips for Selling a Business

Be informed and prepared. Having the right information before you begin selling a business will ensure that you make the most out of it. Planning and preparation improve the likelihood of making a profitable sale.

We hope you’ve found these tips helpful. Learn more by checking out our other posts.