Selling a business can be quite overwhelming, especially if you’ve never sold a company before.
But regardless of your experience level, and whatever your reason for deciding to sell at this particular moment, you want the sale to be extremely profitable.
However, to carry out a successful sale, there are a lot of things you need to take into consideration.
You need to find the right approach to selling your business to ensure that you make enough profit to fund your next venture or to give you the financial freedom you desire.
On that note, we’ve provided a few steps you can follow when trying to sell your business.
Following these steps will make the selling process so much easier and more profitable.
So, if you’ve ever wondered, “How do I sell my business?”, this article is for you.
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Steps to Take When Selling Your Business
Here is a guide that can help you to successfully sell your business.
#1. Assess your company’s value
There is a chance you may not truly know how much your company is worth. That’s why it is important that you discover the actual value of your business before even trying to sell your company.
This will prevent you from setting your sale price too high or too low. If you introduce a third party who is a valuation expert, they will be able to provide a realistic estimate of your company’s value.
#2. Put your financials in order
Upon determining what your business is worth, the next line of action is organizing your finances.
Selling your business draws a lot of attention to your financials. You will likely have prospective buyers, lawyers, accountants, brokers, and some other professionals combing through your statements. To make the selling process easier for yourself, you must understand your financials perfectly.
In many cases, you will need to provide three years’ worth of tax returns, your profit and loss account statement and your latest balance sheet to start with.
Any discrepancy in any of your financial statements could discourage a potential buyer. Also, inconsistencies in your book could attract suspicion, even if it was an honest mistake.
If you are having problems putting your financial statements in order, it is advisable that you hire an accountant. An expert will be able to clean up your books before you list your business for sale.
#3. Find a broker to sell your business
In the process of selling your business, you can decide to do everything yourself, or you can hire a broker.
If you are selling to a friend or family member, you may not need the services of a broker, and this may help you to save money.
However, if you do need to hire a broker, it is always in your best interests to hire someone who has had years of experience in selling businesses. Although an expert business broker will charge a fee, you are almost certain to get the best price and to sell faster than you could on your own. Most of the time, considering all the effort that goes into selling a business and the risks associated with the process, you’ll even end up saving some money when you use a broker’s help.
This is possible because brokers have the experience and the resources needed. Even better, most brokers work on commission; as such, their gain lies in selling your company for maximum value, which obviously benefits you greatly as well.
#4. Market your business
This is the part where you look for buyers. If you hire a broker, you don’t have to worry about attracting buyers because brokers are experienced when it comes to creating effective campaigns that can speed up the sale process. They can also advertise the sale of your company without disclosing confidential information about your organization.
But if you have decided to market your business on your own, then you have to be aware of some key tactics. In the process of trying to attract buyers, you will typically receive multiple offers. Sometimes these offers are not genuine, so you need to vet buyers carefully.
Selling your company also requires that you reveal some sensitive information about your company. Be aware of what you reveal, as this information could be of worth to your competitors. In a bid to view your financials, competitors might make an offer or get someone to make an offer on their behalf.
So, if you are selling on your own, you need to ascertain that the offer is genuine before disclosing any sensitive information.
At Zoom Business Brokers, we have created a strategy to screen offers to ensure you only receive genuine ones. This also makes the selling process faster, as we can cut down on the number of offers that might be unproductive.
#5. Finalize the deal
After you have found a buyer and accepted the offer, you will need to finalize the deal.
If you have a broker, you need not worry about this step because the broker will assist you in completing the transaction. Professional business brokers are licensed by the DRE (Department of Real Estate). Since experienced brokers have completed so many sales, they have access to standard forms to use in the transactions that would cost you significantly if you hired an attorney to draft them for you from scratch. Although it’s always advisable to use an attorney to review the agreements for you, using a business broker saves you a great deal of money in this step.
If you are without a broker, you will need to get a lawyer. The lawyer will handle the vast majority of this stage and will assist in drafting legal documents and contracts. Among these documents, the purchase agreement is the most important.
Drafting a purchase agreement is not something that you can do by yourself. It’s always advisable to allow someone experienced in that area, like a broker or your lawyer, to handle it.
Tips to Successfully Sell Your Business
Here are some tips to help you make a high profit from selling your business:
- Increase sales – The process of selling a business takes time. It is almost impossible to list your business for sale today and get an offer the next day. During the period while your business is listed, you must ensure that your company’s productivity doesn’t drop. Strong sales make your business more appealing and ultimately increase the value of your company. This is one major reason you will need all the help you can get so that you have enough time to focus on your company. Thankfully, this is where a broker comes in. When you hire a broker, you automatically shift the responsibility and the stress of selling your company to them, allowing you to focus on the smooth operation of your business.
- Train your employees to work without you – Changing heads in a company can be quite difficult, especially if the employees are reliant on you. That is why it becomes crucial that you train your employees to carry out certain duties without your input. This will ensure a smooth transition of managerial positions since there is a greater likelihood that the more experienced workers will be retained. When potential buyers notice that the employees can work on their own, it makes your company more appealing to them.
- Learn when to sell your business – Timing is everything when it comes to selling your company if you desire to make a high profit. The perfect time to sell your company is when your productivity is at an all-time high. This is when you can most easily attract buyers, because buyers are always in search of companies that have the potential for growth and expansion.
- Learn how to negotiate – If this is your first time selling a company, then it is important you learn how to negotiate. However, we recommend hiring a broker to help you handle this aspect since there is a lot to lose here if it’s not done properly. During negotiations, you could make a high profit or end up with less profit. It all depends on your negotiating skills. Thus, having someone between you and the person you’re negotiating with always helps. There are times that both parties seemingly reach a dead end, and only a middleman can help move you further. The broker’s most important role is guiding the negotiations, and that’s what experienced brokers do best.
Hire a Broker
Selling a business is an art. It is a skill honed through experience. If you plan to undertake the task of selling your business on your own, then there is a lot for you to learn.
Selling your business could be a one-time affair from which you hope to make the most profit. That is why it is advisable not to risk your potential profits by trying to sell on your own. Your best option is to contact a business broker.
At Zoom Business Brokers, selling companies is what we do best. Once you contact us, we’ll immediately take on the responsibility of selling your company. You can rest assured that in no time, you will get the results you desire.