Selling a business can be a complicated and overwhelming process. Whether you are selling the firm to venture into something else or retire, preparing the company for sale and vetting prospective buyers can be quite exciting. One of the most important things you can do to ensure a smooth process is to have a good plan from the onset. The tips below will also set you up for success and even increase the chances of locating the perfect buyer and getting the best price for your company.
1. Know your business worth
The first idea that should come to your mind is your business valuation. You need to calculate and estimate your business’s value. First, consider the assets and liabilities in your company. Next, evaluate the profitability of your business by comparing your annual revenue with your monthly profits. It can be helpful to compare your business with similar firms in the market by checking their worth. Knowing your company’s worth will assist you in determining your selling price.
2. Work with financial and legal experts
Financial and legal experts can help handle technical business aspects that may seem complicated to you. Legal professionals will ensure that your business meets all the legal requirements. Financial experts will handle everything to do with your business finances. Seeking help from professionals will allow you to have a smooth selling process.
3. Know the professional brokers in your industry
Engaging a professional broker should be a priority to increase your chances of finding the best buyer. They can also help in marketing your business to potential buyers rather than selling your company blindly. The brokers will also advise on the right selling strategies, such as setting a realistic selling price. For example, if you are asking yourself, “how do I sell my pharmacy?” then you should know there are professionals that can help you find a prospective buyer. A professional broker will help you market your pharmacy and locate the best fit for you.
4. Be prepared to answer several questions about your business
Your prospective buyers will likely need to know why you’re selling your company. Therefore, be prepared to give your reasons. Please give honest answers as one question can lead to another. Questions like revenue and profitability of the company over the years will emerge during your conversations. Be ready to answer all the expected questions in the selling process to have an easy time.
5. Know the right time to sell
To get good cash from your company’s sale, you need to know the right time to sell. The best time will help you sell at a more profitable price, while poor timing can lead to lower prices. If possible, consult your financial consultant and brokers on the best time to sell your company.
When to sell your business
Selling your business at a perfect time will bring the right buyer and also fetch you good prices. Such appropriate times include:
- When you have a good objective for selling the business. For instance, if you encounter a lifestyle shift like wanting more time with your family or shifting to a more profitable niche.
- When the business is at its peak, allowing you to attract buyers at higher prices.
- When there’s a viable economy that gives confidence to your prospective buyers.
- When there’s little competition from similar companies. Little competition is a desirable investment consideration for prospective buyers.
When not to sell your business
Selling your company at the wrong time can cost you a lot. Some of the instances you should not sell include:
- When you are undergoing a personal breakdown – a life moment when you’re feeling so low. At such times, you wouldn’t have the energy to negotiate for a good price. Hence, you end up selling at lower prices.
- When your business is experiencing losses. You may think of this moment as the best to sell your company to avoid further losses. However, that will only make your potential buyers take advantage of the company’s situation.
- When you lack a concrete objective for selling your business. This case can make you look at the money from your business’s sale only as a source of excitement. Consequently, you end up wasting the money from your sale.
Selling a company is not a simple or easy process. However, the results can be great and life-changing. Therefore, if you decide to sell, the tips highlighted here will help you prepare adequately and increase your chances of a smooth transition and success.