We imagine that you are reading this blog and are deciding to sell your small business. Are you aware of the steps?
It may be that you have received an offer from someone interested in buying your company. Or maybe those who are still confused about whether to take this step or not.
This blog will guide you in vending your business from start to finish. So let’s get started.
8 steps to trade your business
When you have decided to sell your business, it is a long and emotional process. You need to work hard to get a good deal locked. Here are some of the steps that can help you in finalizing your deal at a good rate.
Pre-selling stage:
- Understanding the reason to sell
Before you step into the process of finding the answer to how to sell business, it is important to know the reason behind making this decision. You have invested your life in setting up the business, and handing it over to someone is not easy. You might be taking this step due to retirement, pursuing new ventures, or maybe looking for a change. When you clearly state the reason for selling, your process will be smooth and easy.
- Look for good prices
No one sells their house without staging it and gathering deals from different people; the same applies to business.
You need to begin the process as early as possible, maybe a year before you sell it out. You must update and repair all the equipment and other assets that are being sold as part of the business before launching it in the market. Make sure all your assets and accountabilities are laid out for the potential buyers.
Manage a file where you can place together a few years of tax returns and work on them in detail with your accountant. These experts will be able to guide you toward the best course of action to take concerning equipment and supplies. Moreover, they will help you with other things that are in a lease.
- Set a value for your business
When you are free from all the documentation aligning process, start with searching for the value of your business. Make sure you set a price that is market competitive, which means not too high or not too low. You can get help from services like UK Business Plan or others whose guidance will help you decide a value that might be negotiable.
The hired appraiser from the plan company will gather a detailed explanation of the business’s worth. You can do this on your own by using some metrics. Engage yourself in the process of evaluating the company by determining the market capitalization, earning multipliers, book value, or other metrics.
- Join hands with a business broker
When it comes to getting our legal documents checked and reviewed, we hire a lawyer. In the same way, when it is time to retail your business, you will need the help of a qualified business broker whose dedication will help you achieve your goals.
These brokers charge a fee to provide you with quality value throughout the sales. In negotiation, a simple conversation between both the broker and buyer means the difference between you gaining or losing a handful of amounts.
So whom should you hire? Hire someone by viewing his experience and authorization.
- Gather all the documents
You must make the buyer feel comfortable by fulfilling their requests. They might ask you to show the documents before finalizing the deal. This can be best achieved by gathering the documents beforehand.
These documents include:
- Financial information (already gathered before)
- A list of all the equipment
- Permits and licensing agreements
- All corporate governance documents
Selling stage:
- Look for potential buyers
Learning the process of selling the business is just as much about marketing as it is about making sure that the quoted prices are true for your business.
When you have bought your business to be sold in the market, make sure that you are ready with the answers to why you are selling it and the reason to set these prices. You will have to spend up to a couple of years preparing for the sale, searching for solid prospective buyers, and moving smoothly through the transfer process.
Choose those marketing methods that you have already tried and tested. You will be able to find a good fit for your business as it is not just a matter of earning money after selling it. You will always look for someone who can take your business to higher skies.
Try to get connected with more than one possible buyer at a time. If, for instance, you are unable to lock a deal with one client, you always have the option to move to the next one without wasting time. Additionally, you need to have a non-disclosure agreement with the party to discuss details.
- Say YES to an offer!
The way you overcame the obstacle of growth marketing your business for sale, and now you have received a positive response from one of the potential buyers, say YES and sign an agreement with them.
Before you are ready to sign an agreement, sit back and think about your selling goals to determine the price and terms that you are comfortable with. If happy with the deal, move forward and check through all these documents:
- Indication of interest: This is a non-binding document that covers the basic financial terms of the deal.
- A letter of intent: This document will serve as a roadmap during the sale. It will outline the essential details, such as the purchase price, payment terms, and all the conditions that need to be cleared before the sale proceeds.
- Purchase agreement: A legally bound document that outlines all the aspects of the sales, the warranties from both the parties, representatives, and indemnities. Make sure you review this document carefully with your legal and financial team before you sign it.
Once you have successfully finalized each and everything, manage the transition period and hand over your business to the new buyer. However, you need to communicate with the employees, suppliers, customers, and other stakeholders during all these processes. Take them in confidence and tell them the reason to take this step.
Post-selling stage:
- Enjoy the change
Although selling the business is an emotional rollercoaster, you need to embrace the change and look for new setup strategies. The feeling of excitement and sadness is something normal. It will take some time to settle down.
When you have taken this step, look for the new opportunities and possibilities. Look at these changes as a chance for growth and exploration. Reflect on your mistakes and try to learn from them. The amount you have received, think of ways you can invest and earn profits.
FAQs
Why do business owners sell their private businesses?
Some owners prefer selling their businesses as they consider that the company is not progressing as it should, or maybe they lack the skills and experience to handle and manage a large company.
Is selling business profitable without the help of a broker?
You can vend your business without a broker, and people do it to save the commission that these brokers charge. But this is equivalent to taking a risk. If you wish to do this, prefer someone you already know or use your internal resources to find an authentic person.
How can selling business benefit the seller?
One of the biggest benefits of selling a business is gaining financial stability. Receive the amount you have invested and worked for a long time. These investments can be the amount for a comfortable life, a retirement fund, or a penny for new investments.
How can an owner sell a share of a business?
When you give away your business share to your partner, this is a common ownership transfer practice. This is often found in small businesses. You can do this, but be aware to have an agreement with your partner before the sale to make the process smoother.
A closing note
We know that locking a deal and moving forward is challenging and emotional. With enough support and clarity throughout the process, you can move on and take a well-deserved break by learning new things.
Follow these steps as outlined, and you can secure the future of your family and smoothly move into the next chapter of your life.