What you need to know before selling your business
Many business owners find that selling their business, is their best exit strategy. This is usually done when there are no successors who want to continue the business; or it was always the business owner's plan, to convert the business into liquid assets, at a certain point. However, if you are a business owner, who is looking to sell their business, there are certain things you should take into consideration. Here is what you need to know before selling your business-
- Make sure you are selling at the right time and for the right reason. Sometimes the most common reasons, for selling a business, (such as illness or age), are also the worst time to sell a business. It is important to keep in mind that along with these circumstances, you will have to deal with the additional stress of selling a business and the buyer may use your circumstances as leverage against you. The right time to sell a business is when you are healthy and have a successful business to sell.
- Make sure you determine what your business is actually worth. Keep in mind that your business is worth as much as it will bring in the marketplace. However, determining just what that price is can be tricky. There are several different business valuation methods, ranging from asset-based to future earnings approaches. It is important to understand that no one approach can be used in isolation; the current market, economic trends and what other similar businesses have sold for also need to be taken into account. Most business experts recommend having a professional business valuation done. While legally anyone can do a business valuation, a business valuation that is done by a professional, will be regarded more favorably by potential buyers, and may save you legal hassles later on.
- Make sure you are clear about what you are selling. Before selling your business, you need to consider what all the assets of a business are and decide what you are selling. You should determine what physical assets you are selling, and what other assets you have to sell. It is important to remember that selling a business often includes assets such as: good will, trademarks or client lists as well as physical assets. The value of these will depend on their quality.
- Make sure your house is in order. If you are planning on selling your business, you need to be especially careful not to let things slide. Keep in mind that this is the time that making the extra effort to keep things in top shape can really pay off. Regardless of how you fell about running the business, you need to make sure that you are keeping the business's records up to date, the inventory up, and the premises maintained. You need to understand that people want to buy thriving businesses, not neglected ones. You will also want to be sure that you've reduced your liabilities as much as possible.
- Make sure that you get professional help when selling. It should be clearly understood that selling a business is an even more complex transaction than selling a house, and one that can have even more emotional impact. Hiring professional help can help you maintain the emotional distance and objectivity you need to successfully sell your business, while providing the necessary expertise to guide you through the selling process. A commercial realtor or business broker can be a real help in terms of finding and dealing with prospective buyers, of your business and helping you navigate the sales process. A lawyer can draw up and/or review the documents necessary to sell your business, such as the document that summarizes your business for prospective buyers and the purchase and sales agreement.
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