Selling a business (whether big or small) is a complex venture that involves several considerations. It can require that you enlist a broker, accountant, and/or an attorney as you proceed. Whether the entrepreneur will profit from the venture will depend on the reason for the sale, the timing of the sale, the strength of the business operation, and its structure.
Selling a business will demand a significant amount of your time. After the sale, you’ll also need to find effective ways to manage your profit. The seven considerations outlined below can assist you in establishing a solid plan and negotiating a successful transaction.
Another necessary step while an entrepreneur prepares his/her company for sale, is whether to sell the company himself/herself or seek professional assistance.
Selling Your Business Yourself
Selling a business is far more complicated than selling a home. Determining a home’s worth is not too difficult, but not for a business.
When a house owner posts a sign advertising his/her house for sale, everyone knows it’s for sale, which is the last thing an entrepreneur wants when trying to sell his/her business. The person risks losing important clients and employees if the staff, suppliers, and consumers find out the business is being sold.
Additionally, your suppliers might shorten their credit terms if they worry about not getting paid. Typically, a roof and termite inspection are part of the due diligence process when selling a home. With a business, however, you must negotiate a lease assignment, deal with intricate contracts, and demonstrate your revenue and expenses.
Selling the business on their own might be a better option if the entrepreneur doesn’t care about the news getting public. Either websites that advertise businesses for sale can be viewed or listing services such as Facebook Marketplace can be sought. You might wind up spending a few thousand dollars, but by avoiding commissions, you could save more money.
The issue with the do-it-yourself method is that you will be asked to divulge your private financial information to individuals who might not be eligible. In addition to asking for your address so they can stop by, potential customers may also question your staff and otherwise disrupt your business operations. Buyers are also searching for deals from independent business owners, much like when they purchase a home from an owner.
Once you settle on a price, you’ll face several potential obstacles that could derail the deal. These include demonstrating your financial figures during a lengthy due diligence process, assigning the real estate lease, and securing an asset purchase agreement with all the necessary schedules signed, among other requirements.
Using A Broker To Sell Your Business
The majority of business owners sell their companies to business brokers. The International Business Brokers Association, the internet, or recommendations from your accountant, lawyer, or coworkers can all help you locate brokers. Most business brokers charge fees that start at 15% and decrease as the business’s value increases.
The main advantage of working with a broker is confidentiality. A broker will market your company in a non-specific way, requiring potential buyers to sign a confidentiality agreement and show proof of funds to ensure they can purchase your business. This approach reduces the risk of disruptions to your company during the selling process.
The more prospects you have, the more money your business will make. Brokers advertise on numerous websites, through state-specific multiple listing services, via email and direct mail, and through their diverse networks of contacts. Your chances of selling your company faster and for more money are higher if there is a wider pool of potential buyers.
By working with a broker, you can focus on what you do best—managing your company. Many business owners attempt to sell their companies without considering their profitability, which can ultimately lead to a decline in the business’s value.
The process of finding a potential buyer and completing the sale can be challenging and fraught with potential pitfalls. To ensure a successful sale, you’ll need all the support you can get. Your ideal team of experts should include a business broker, an accountant, and a lawyer, all of whom will work together to help ensure a successful transaction.