Selling a business doesn’t happen overnight. In fact, a business owner should begin this process long before they ever wish to sell. What steps must be taken to prepare for a sale of this type?
Know When To Sell
When a person first establishes a business, they should know the right conditions to sell. This will help them determine when to contact CGK Business Sales. Many entrepreneurs never take this step because they plan to run the business until they retire or pass it on to family members.
However, business owners should consider what they will do if they don’t enjoy the business anymore or wish to relocate. They also need to know what other factors may push them to sell, such as an outstanding offer they cannot refuse.
Prepare Emotionally
Selling a business takes a toll on a person. They put time and effort into building the business and need to ensure they are comfortable letting it go. If there is any doubt, now may not be the time to sell.
It’s frustrating when somebody backs out of a deal at the last minute. Avoid this by being emotionally prepared to let the business go. The easiest way to be emotionally ready is to find a buyer that will love the business as much as the founder did.
Price Bailey can help you prepare to sell your business, but first it is important that you know when the time is right as it is a huge emotional and financial step of your life.
Clean Up Financial Records
Ensure all financial records are in place, as this will help ease the sale of the business. Potential buyers will review these records as part of the sale process. Any mistakes or omissions will delay the process and could end up costing the owner money.
Work with an accountant to make certain all records are ready for review. Most buyers want a minimum of three years of tax returns and financial statements. In addition, they want a detailed accounting of the company’s income for that time period. Finally, have year-to-date financials ready to share with the prospective buyer.
Obtain A Valuation
The buyer and seller need an accurate valuation when negotiating the sale of the business. In addition, the owner needs to know how much they must make on the sale to move forward with life. An independent valuation provides this valuable information, and the owner may wish to speak to their accountant or financial advisor to ensure they have the money needed to fund the next chapter in their life.
Create An Exit Strategy
Every business owner needs an exit strategy. This strategy should include a succession plan and any potential pitfalls associated with selling the business. In addition, it needs to include information about pain points and how to overcome them.
Choose A Business Broker
A business broker will help with all aspects of the sale. This partnership could last for months or years, so choose wisely. Furthermore, ensure the brokers have experience in the industry and an established network, as this will help to ease the sale. You can check out Vancouver business broker Jason Brice
Know Red Flags
Sellers need to know which red flags to look for when speaking with a buyer. For instance, a competitor may say they want to buy the business simply to get insider information. Once information about the business is shared, they back out of the sale and use the information to their benefit. Research various red flags to avoid situations such as this.
Prepare A Marketing Plan
Every seller needs a marketing plan. A business broker is of help in developing this plan, but the seller should have input as well. They know the industry and can make suggestions regarding how to find the best buyer for the business. Only work with those brokers who encourage this input.
Selling a business doesn’t happen overnight. The process can take months or years. Preparation is key to minimizing the time needed to complete the process, so begin this preparation early. Doing so will pay off in the long run.