Selling a small business is a complex task. To make all of your hard work and investment in developing your small business come to fruition, you should have a plan ready well in advance, and you ought to consider hiring an accountant, attorney, broker or all of the above. Whether you profit, and how much you profit, will depend on why you are selling, when you are selling and the strength of your business’s operation and structure.
According to business author Debbie Allen, it takes an average of two to four years to sell a small business. “Waiting too long, or not planning in advance, can cause many business owners to miss their window of opportunity,” she warns. There are a number of key aspects to take into consideration when selling a business: sustainable profitability, financial documentation, lease issues and staffing problems. You will want to address these areas before listing your business for sale, as these will impact its salability and the price it demands in the marketplace.
Remember that as a business owner, your specialty is running the business, not selling it. Mike Handelsman, general manager of two business-for-sale marketplaces, says that too many business owners are too averse to hiring business brokers to help sell their business because they don’t realize that brokers are capable of adding more to the sales price than their cut. “Most owners are better off hiring a broker to handle important tasks like preparation, showing the business to potential buyers, marketing and negotiation,” Handelsman writes in an article for Entrepreneur.
Allen concurs that finding the right broker or consultant is a crucial step toward selling your business successfully and advises against going with the first person you meet to list your business. Consider interviewing various different brokers. It’s time consuming, but, with something as important as the sale of your business, it’s worth it.
Appraise your business
As the owner, it can be difficult to appraise your business without bias. “Far too many sellers go into the selling process with the confidence that they will get top dollar for their business simply because they believe that is what it is worth,” Handelsman says. It’s important to avoid this mistake because valuing your business too highly can make it difficult, if not impossible, to sell. Conversely, you’ll end up with more in your pocket if you avoid pricing it too low relative to what it’s actually worth. To avoid these two pitfalls, hire a business appraiser to get a valuation and a detailed explanation of your business’s worth, which has the added benefit of bringing credibility to your asking price.
Just because you hired a broker doesn’t mean you no longer need to do any work in promoting your sale. You are still the best promotor for your business — nobody has more knowledge and passion about it than you. Though your broker can find you leads, it’s important that you continue promoting yourself as well. “Have a conversation with your broker about how you can proactively market your business without stepping on his toes,” Handelsman advises. Once your broker finds qualified buyers, your involvement in the sale can have an important impact on their confidence.
Selling a business is difficult. Just like you started your business with a strong plan, you should sell it with a strong plan. That’s easier said than done, but with the right help, you’ll be on your way to a successful sale — ultimately getting the most out of the business you worked so hard to grow.