People work hard for many years on building up their business. However, the time will always come when they are ready to sell their company. Unfortunately, selling a business will likely take much more effort than simply putting a for sale sign on the window. Even though it can be hard, there are measures people can take to make the task less difficult.
Always Start Early
Selling a company is more difficult than selling a property. A potential buyer needs to tick the 3 major boxes before making an offer, which are the industry, location and price. Therefore, it is important for a person to plan adequately beforehand in order to sell their business as fast as possible.
Adequate planning involves getting everything in order. This includes figuring out the company’s value, organizing financial details and deciding whether to sell privately or with a broker, just to mention a few.
Why Are You Selling?
There are many reason as to why a business owner has decided to sell, and this is usually the first question a buyer will ask. So be prepared to answer. Some of the popular reasons for selling include the following:
• Personal reasons (family, health, etc)
• Availability of buyers
• Dissolved partnership
• Selling the business at its peak
Before purchasing a business, potential buyers will want to see the company’s profitable financial returns. In order to sell a business, a person needs to have three years of financial statements and tax returns available to present to an interested party.
Not having this information in order and on hand will indicate to the buyer that you and your business are unorganised and could result in a lost sale.
Contact Appraisers and Business or Real Estate Brokers
If you decide ‘not’ to sell privately which seems to be the first choice for most business owners in today’s market, a broker will be your other option. These professionals have the capability to inventory all of the available equipment, appraise the value of a business and compare it to similar companies that have been recently sold and their purchasing price. People should also remember that a brokerage fee usually accounts for up to 10 percent of the final sale price, and up front advertising fees, but the help that they can provide may prove to be invaluable.
Always Research the Market
Aside from knowing what comparable companies have recently been sold, it is also important for a person to have a basic knowledge of the current conditions in their particular industry. This is because potential buyers always place emphasis on a business’s growth potential before purchasing a company.
This will also greatly affect the company’s sale price. Although it requires more effort on the sellers part, having some industry statistics and data will greatly aid them during the negotiation process.
People will have a much easier time throughout the sale process if they are properly organized. To achieve this, people need to keep a file of all the paperwork and contacts that are involved in selling their business.
At the same time, keeping a list of their potential buyers will help them maintain communication with other interested parties in case a particular buyer decides to cancel the transaction. They may also want to keep purchase and non-disclosure agreements, escrow information and any other type of important documents on file as well.
Always Try to Understand the Buyers
An interested party who is willing to purchase a business will be particularly interested in the return on their investment. People need to understand this when determining an asking price which will need to be justified. Being able to show a potential buyer that their investment will provide them a good return will lead to a faster sale.
Usually, buyers will have some previous experience within your niche, own a similar business or be a direct competitor. These people will have a greater understanding of your business and how the industry is performing. Having enough information about a buyer will provide an important insight about what these people are expecting.
Selling a business can be a very hard endeavor, but it doesn’t have to be. People can be on their way to selling their business hassle-free with market knowledge, proper marketing strategies and organization.
Above all, it is vital to maintain a productive and positive mindset. Eventually, the right person will come along, make an offer and close the deal!