Once you have taken all the necessary steps to make your business more attractive, it’s time to start the process of selling.
The sales process can feel daunting, but by following these ten steps, you can easily navigate the process.
Step 1: Start with a Plan
To ensure a successful sale, you must have a plan.
Outline the steps needed, determine what you want from the sale, and decide who will be involved in the process.
Having an exit strategy in mind will help you to stay focused and organized throughout the process.
Step 2: Get a Current Valuation
A professional valuation of your business is crucial as it will give you an idea of how much money to expect from the sale.
A realistic idea of the potential value can help you set expectations for offers and negotiations.
As we discussed before, there are many different ways to value a business, so it’s important to consider each method and get as accurate a valuation as possible.
Step 3: Clean Up Your Financials
Your financial records will be one of the first things a potential buyer will look at, so it’s important to ensure they are accurate and current.
Ensure you have all necessary documentation prepared and organized to give prospective buyers an accurate picture of your finances.
Financial statements should be current and include any relevant tax returns.
Step 4: Streamline Processes
Review your internal processes and see if there are any areas you can streamline or automate to make your business more efficient.
By reducing overhead costs, you’ll present potential buyers with a more attractive business model.
Your business processes should be well-documented and easy to understand.
Step 5: True Up Business Contracts (If Applicable)
If you have any business contracts, make sure they are up-to-date and accurate.
Prospective buyers will want to know your current contracts and how they could affect their investment.
If you have contracts that expire soon, renew them before putting your business up for sale.
Step 6: Boost Your Sales
Increase your sales and revenue before the sale to make your business more attractive.
This can be done by focusing on marketing, acquiring new customers, and enhancing existing products or services.
By boosting your sales before the sale, you can show potential buyers you have a viable business model with room for growth.
Step 7: Find a Broker (Or Don’t)
Depending on the size and complexity of your business, it may be beneficial to hire a business broker or financial advisor.
Business brokers are professionals who specialize in buying and selling businesses.
They can help you structure the sale, negotiate offers, and guide you through the process.
However, if your business is small enough that you feel confident handling it yourself, then this might not be necessary.
In some cases, you might find a buyer, or a buyer might find you without the help of a broker.
What Does a Business Broker Cost?
A business broker will typically charge a percentage of the sale price.
This can range anywhere from 5-15%, depending on the size and complexity of your business.
You want to ensure you hire a reputable broker with experience in selling similar businesses.
Step 8: Pre-Qualify Your Buyers
When you’re ready to start talking to buyers, it’s essential to pre-qualify them to find the best possible deal.
Possible things to find out include:
- Financial situation
- Business experience and qualifications
- Motivation for wanting to purchase your business
- Potential conflicts of interest
- Plans for the company after the purchase
This will help you determine if they are a good fit for your company and if their goals align with yours.
Step 9: Due Diligence
Due diligence is an integral part of any business sale.
Once you’ve found a buyer, they will likely want to do their due diligence on the business to ensure it is what they expect.
This process includes financial audits, business process audits, and looking into all parts of how the company runs.
It’s important to provide buyers with all the necessary documentation, including financial statements, and answer their questions honestly during the due diligence process.
When you’re selling your business, it’s less time-consuming when you have all your financial documents ready.
Step 10: Finalize Your Contracts
Once you’ve chosen the right buyer and have agreed on a price, it’s time to finalize your contracts.
The buyer’s asking price should include any liabilities and assets that are part of the sale.
Your business broker or lawyer can help you finalize your contracts, as they can negotiate the best terms for the business sale.
It is important to be thorough in this process and make sure all details are covered.
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