Selling Your Business¹
If your path to retirement or exiting your business involves selling it, then there are many things you should think about in advance. Here are some initial steps to take if you ultimately want to sell your business.
1) Outline Your Objectives.
Why will you sell your business? Some owners want to sell in order to get a lump sum for retirement. Others sell so that the service they provide to the community will continue. A potential buyer will have a specific strategy in mind for your business. In order to make sure that strategy aligns with your goals, you need to define them in the first place. Doing so will also help you make critical decisions along the way.
2) Evaluate How Saleable Your Business Really Is.
The key to understanding whether your business is saleable is looking at your business from the perspective of a buyer. Some of the key considerations are:
- How much money has your business made over the long term?
- What is the net worth of your business? (Taking debts into consideration.)
- Market position. How is your business performing in the marketplace and compared to your competitors?
- Who will continue to manage the business once you’ve exited, and can the business survive without you?
- How many customers do you have, are they diverse, and how loyal are they?
3) Assess What Your Business Is Worth.
It can be hard to put a price tag on your business because it’s worth so much to you. That’s why conducting an objective business valuation should be left to a professional. There are certified valuation analysts that can work with you to determine a fair price. If you’re looking to sell down the road, it’s a good idea to get a valuation well in advance so that there are no surprises when the time comes to sell.
4) Identify All Stakeholders.
Even though you’re the owner, you’re not the only one with a stake in your business. Whether legally or practically, there are other people who may have an interest in the sale such as family members, board members, or key employees. Discussing a future sale of the business with these stakeholders in advance can spare you from conflict later.
5) Research The Sale Process.
Understanding what’s involved in selling a business beforehand can help you prepare and set realistic goals. A knowledgeable business intermediary can help you understand what the process will entail. Then when the time comes they can help you execute your plan.
By taking these steps in advance, you will be better prepared to sell your business when the time comes for you to move on.