Why are you selling your business? Maybe you’re getting older and it’s the next logical step. Maybe you’re moving on to a new business opportunity. Or maybe you’re undergoing a crisis or an abrupt change in business conditions.
Whether you’re motivated by one of these, a combination, or a different reason entirely, you’ll need to identify what your purpose is prior to heading to the sales table.
Taking the First Step in Planning the Sale
Identifying your main motivational factor for selling your business is a crucial step in the earliest stages of the process. The steps you take before selling can vary widely based on your purpose, so ensure you understand them well before you proceed.
It all starts with talking to mergers & acquisition advisors, accountants, attorneys, and financial planners to find out about the process and what steps that need to be taken to get maximum value.
Establish Your Sales Goals
Most sellers want to sell their business for the highest possible price, but that isn’t the sole factor that motivates a business sale. There are several important factors that business owners need to consider. These influences have a high impact on the steps you take before transferring the ownership of your business to the next buyer.
For example, if you desire a fast, clean break, you may be willing to settle for a more modest price if it means that you will be rid of the business more quickly.
Or, you may be willing to take things at a much slower pace while you hold out for a high price.
Other Important Factors to Consider
In addition to the desired timing of your sale, there are additional items that need to be taken into account.
These include your preferred:
- Level of Involvement After the Sale: Are you looking to handle the business transaction as quickly as possible, or do you want to do everything you can to ensure the continuation of your legacy? If you’re willing to stay available for a few months in order to help your buyer, that can make a big difference in the type of buyers you attract, the price you obtain for your business, and how long it takes to make the sale.
- Financing Option: Would you prefer seller-financing or an all-cash payoff? You will need to decide before continuing in order to help ensure a smooth selling process.
- Level of Disruption to Clients and Employees: If you sell your business and sever ties abruptly, it’s likely that you will end up leaving chaos behind you. Is it important to you that you stick around to help facilitate a smooth transition?
Other Things to Keep in Mind
Before you start the sales process, you need to be ready for savvy buyers who will ask you why you’re selling your business. Be sure to come up with an honest answer to this question that is professional and has a positive spin.
Remember, a good broker is your best asset throughout the sales process. They are a valuable resource for helping you develop the most effective strategy that helps ensure you will meet your sales goals.
Also, if you own a business and aren’t currently thinking about selling, you really should! Having a plan in place early on will make the selling process much easier. Find out how much your business is worth.