Have you been thinking about selling your business? There are all sorts of reasons owners decide to do so. Sometimes they get other jobs, or are simply tired of all the responsibility of operating a small company. Others love all the trappings of running their own show but face stiff competition and are unable to stay afloat financially. Regardless of the reason, it’s important to adhere to a few time-tested way to sell your business. Depending on the size of the enterprise, what goods and services you offer, local demand, and the asking price, the entire process could take anywhere between a month and a year. There are several choices along the way, too, like deciding to work with a broker or complete the sale alone. Here are some of the most essential points to keep in mind as you get ready to put up the “For Sale” sign on an entity you currently own.
Lower Your Personal Monthly Expenses
In many ways, transferring ownership of a business is like putting an exceptionally large home on the market. There can be multiple up-front expenses that you won’t recoup until the deal is finished. It is important to have your own finances in order, and to have access to as much capital as possible. For example, if you are currently paying on a student loan, give serious consideration to refinancing through a private lender. Not only can this move help you cut years off college loan debt, but it can reduce your immediate cash outflow significantly. That translates into more cash you can use to cover expenses like attorney fees, costs of dealing with a broker, hiring a CPA to do a final audit, and more.
Decide on the Sales Price
The sales price is perhaps the single most important of all the details in the entire process. There are a couple ways to arrive at a specific figure. First, make an estimate based on what you would be happy to get out of the deal. Base the number on the value of any inventory, how much you’ve invested into the enterprise, and what similar companies are going for on “businesses for sale” websites. A much more precise way of deciding is to hire a CPA who specializes in making such estimates. If you have been the owner for more than a few years, it can be tricky to come up with your own figure because there are all kinds of intangibles involved, like intellectual property valuations and the monetary value of a customer list.
Seek Professional Help as Needed
While you might be able to avoid using a CPA to arrive at a selling price, it is hard to avoid at least one or two consultation sessions with legal experts. Conveying ownership is a complex process in most cases. Also, if you want to side-step other hassles that go along with the DIY approach, simply contact a professional business broker. Selling your business is not the same as other big-ticket sales you might be familiar with like selling your home or selling your car. By consulting these experts, they can virtually do it all, including help with setting a realistic selling price, covering legal issues with their own, in-house, lawyers, and finding willing buyers.