So you’ve decided the time has come to sell your business. It’s important that you do things right so that you maximize your profits and sell your business quickly. Here are great tips for selling a business and walking away happy with the outcome.
When you started your business way back when you probably weren’t thinking about the day you are going to sell. After working hard for years and building a successful business the time has come to turn your interests elsewhere. No matter what type of business you have these tips for selling a business.
1. Determine a value – the very first thing you have to do is determine what your business is really worth. There are a variety of formulas that can be used to value your business. At least part of the value is based on assets, gross revenue, cash flow, growth, and a host of other factors.
No matter what the factors are at the end of the day it really is about profits. The sale price is almost always a multiple of the business profit. The multiple depends on the industry and the business.
2. Reflect True Financials small business seldom shows a profit that’s great for tax purposes what it’s not so great when you are looking at a value for your business for resale. That’s why it is important to do what is called tax pros recast profit which backs out all your legitimate right offs like auto expenses, health care, your salary, and things such as depreciation.
3. Don’t wait For The Cash – almost half of all small business that sell are financed by the owners up to 70% with terms that can vary in payoff terms ranging from 2 to 5 years and interest rates set by the seller.
4. Hush – Don’t broadcast that your business is for sale. When suppliers get word that a business is up for sale too often lines of credit are closed down and deliveries are on a cash only basis. So keep it quiet!
Often the key employees are told when the business is put up for sale and even though they are told in secrecy suddenly the whole world knows as they tell one person in confidence and that person tells someone else in confidence. Suddenly the world knows.
5. Go through a broker – a good business broke can help you come up with the right price and one that’s realistic so as to generate a sale. Your broker will qualify people before having all your personal information and financials exposed. This is private information that you don’t want to be sharing with every body that comes along.
Analyze your business – when you’ve been running your business for some time you tend to forget many of the things about your business that might actually be selling features. So take some time and grab a pen and paper and start making a detailed list about all the benefits of your business as well as any perks that come to mind. Just write away. You can fine tune it after.
The tips for selling a business will get you on the right track to success and soon you’ll be involved in a new life adventure.
