In a previous article, we discussed the trend of baby boomers selling their businesses upon retirement, and how this is a great exit strategy with benefits for everyone involved. If you missed that one, you can read it here.
If you’re ready to start thinking about selling your business, use this guide to help you. And yes, you do need help because planning for, preparing, and selling a business is harder than it may seem, and if you do it wrong you could get stuck with a terrible profit, or worse, not sell at all.
- Planning Means In Advance – In order for your sale to be successful, you need to start planning at least three to five years before you want to exit your business. This will give you time to not only better your business, but will also provide an opportunity to work on legal planning, taxes and investments.
- Learn Your Market Value – While it feels good to price your business high, overpricing can really hurt your sale. There are a few reasons why business owners overprice, including inflated expectation, a desire to fund retirement solely from the sale, and emotional attachment. No matter what your reason, you need to learn your real market value so you can accurately price your business and make a good sale.
- Go For Sustainability – A lot of business sales fail because the business is an extension of the founder. In other words, you need to make sure your business can run successfully without you in order to make it attractive to buyers.
- Boost Cash Flow – If at all possible, try and boost your businesses cash flow. A lot of young buyers are only looking for businesses that can meet their salary needs, and that means cash. Get some tips for this here.
- Be Prepared to Finance – A lot of young buyers also have trouble getting a bank loan with which to buy a business. Therefore, it’s a good idea to be in a position to finance the sale yourself if necessary.
- Do Your Due Diligence – One of the biggest sale killers is doubt, and doubt usually springs up when a buyer sees something off in an investment. You need to be extra careful in every aspect of your sale and organization, from properly coding financial statements to dealing with problem employees or customer complaints. You can also be proactive and openly discuss any potential issues with your business up front.
- List Outside the Box – Millennials and other young potential buyers look for purchase prospects differently than baby boomers and their contemporaries. Therefore, if you want to appeal to younger buyers, you need to list your business in some out of the box places, or at least alter them to your sale.
- Local Chamber of Commerce – Word of a sale spreads quickly in the business world, and your local Chamber of Commerce is a great place to alter to your sale so they can spread the word even faster.
- CPAs – CPAs have their finger on the pulse of lots of local businesses and their owners, in addition to those looking to buy. Alert your CPA to your sale to help get the word out.
- Craigslist – While it may seem unsafe or unconventional, younger generations use Craigslist for buying almost anything, including businesses. There’s even a Business tab under the “For Sale” section on the site.
- eBay – eBay isn’t just for deal on gadgets and jewelry. The site also has a Business page just for sales related to business.
Use these tips to effectively and productively exit your business through sale.
Here are some books to help you prepare:
- Walk Away Wealthy: The Entrepreneur’s Exit-Planning Playbook
- The Exit Strategy Handbook: The BEST Guide for a Business Transition
- The Smart Business Exit
- Exit Strategy: A practical guide to selling your business – How to sell a company for the best price and ride into the sunset
- 8 Figure Exit Strategy for HVAC and Plumbing Contractors: How To Grow Your Contracting Business Into An 8 Figure Empire In As Little As 24 Months
Have you sold your business? Share more tips below. Are you looking to sell? Keep an eye out for more helpful articles.