There comes a time in every business owner’s life when the question of selling the business comes up. Whether it’s to retire and live off of the hard work you put into building your empire, or to cut your losses and move on, selling is a gigantic step into the next phase of your life. Selling your business is like making it to the Superbowl: it’s the most important part of your career and you only have one shot to get it right. When selling, there are rules and regulations which vary by state. Employ a business law lawyer to traverse the oftentimes complicated process of transferring ownership. Preparing to sell your small business is the first step along the journey toward a brighter future. Here are some tips that every business owner should consider when preparing to sell their business.
Consider the other players
Regardless of your share structure, you should be fair to your partners or business stakeholders, even if you own the business outright. There are a lot of things to consider when making the big move, and this should be at the forefront. If there are other partners involved with your business, then you should determine the impact that selling your part will have on their parts. Consider the business formation and how best to transfer ownership. Get the approval from the other stakeholders before you bring potential buyers into the mix. If you are the sole owner, then this is much easier, but there are still other people whose livelihoods could be affected if the business changes hands. Make sure that all the major players know what’s going on and what to expect after the sale.
Get yourself out there
Selling your business isn’t any different than selling your products; it’s just a different product. Of course, many of the same guidelines apply. Advertise. Spread the word that you’re looking to sell. No one is going to ask you to the dance if they think you’re not going to the dance. One of the hardest steps in selling one’s business is actually finding buyers. If you’re lucky enough to have people knocking down your door with generous offers, then you are in the minority. You may have the best business in the world, but that doesn’t meant that someone wants to buy it right now. Make it known that you not only have a great business, but that you are willing to part with it for the right price. A good place to start is by hiring a business broker or business lawyer that has a better feel for the state of the marketplace than you do.
Get to know the buyers
It doesn’t hurt to know who is going to be taking up the mantle once your business is sold. You can bet that any serious potential buyers are checking you and your business out from stem to stern, so it’s not a bad idea to do the same with them. They are, after all, going to be responsible for the future of your business. It’s important that you not only get the best and fairest price for your business, but that you get the best future for your business as well. Even though you won’t be at the helm anymore, your reputation will be forever linked with your business, so making sure that your reputation is just as protected as your retirement account is important.
One of the best ways to know your buyers is over dinner. Outside of the negotiating table people tend to let loose and show more true colors. Invite your buyers out to dinner and get the straight dope. If you get a good gut feeling about your potential buyers while at dinner, then you can be more confident that handing the business over to them will be a good idea. A night out at dinner can be a small price to pay for the peace of mind that comes from knowing your business will be in good hands.
Evaluate the marketplace
Put some feelers out there and compare the state of the market at this moment, compared to how it will be in a few years. Not only should you evaluate the state of your business in order to fetch a fair price, but you should evaluate the state of the marketplace itself. There are many calculators to assist you in generating financial figures to give you a better idea of what is needed for a comfortable retirement. You, of course, want to get the best price for your business, so you want to make sure that the market will support your asking price. If it won’t, then it may not be time to sell, unless you are willing to take a hit now in order to get it done faster, which could be a benefit in and of itself.
Set the price
You may be an expert at selling your business's products, but selling your business is much different. You can’t very well do a web search on the average value of a business like yours, so you’re going to have to do some legwork. There are many law firms that specialize in business valuation, helping you set a fair market price. One of the first steps in determining your asking price is figuring out how much your business’s assets are worth on paper. Once you know that, you can base your estimates on your current value plus the projected value over time.
Most people put their blood, sweat, and tears into their businesses. Saying goodbye to the daily workings of your business is a bittersweet time, regardless of the price you get for it. Selling your business is one of the most important milestones in life and it can have a lasting impact on the quality of the rest of your life. There are no do-overs, so you want to get it right the first time. Any disputes over shareholders or partners can make or break a sale, make sure you have dotted your I’s and crossed your T’s to avoid losing a sale. Keep these critical considerations in mind and you will be well on your way to making the transition from business owner to retiree a smooth one. There’s no reason that the end of your business life can’t be the beginning of a beautiful life outside of the business world.