Selling your small business can be a great way to make big profits in one move, especially if you are readying to retire. But the complications of transferring ownership to another person or group can often be too much hardship for a small business owner to handle. After all, the business doesn’t just freeze in time when you want to sell it – you will have to run a business and make a sale.
To create a respectable business plan that will increase your chance of sale success, follow these steps:
- Reasoning: Why are you choosing to sell off your business? Anyone interested in buying it will ask this question first, guaranteed. If you aren’t sure of your own reasoning, the buyer won’t be confident in the purchase. Are you retiring or moving onto other ventures? Have you fallen ill or just gotten bored? No answer is incorrect as long as you understand and believe in it.
- Initiative: Once you know you want to sell your business with total certainty, act upon that decision quickly. The sooner you start to prepare for the sale, the easier it will be. For many people, this means getting the ball rolling a year or more before any prospective buyers first appear.
- Evaluation: How much is your business worth, and are you sure about that number? Ask too much and no one will bite. Ask too little and you will short yourself, possibly right out of retirement. You can hire a professional business appraiser to determine your business’s value and put it in writing, something you will want to show to interested parties.
- Professional assistance: If you are too tied up in running the business you want to sell to actually take the steps to sell it, consider hiring a broker to do some of the legwork for you and find buyers. This is also the time to retain a business lawyer if you haven’t already; an attorney can make certain no contracts or business laws are being violated by the sale, as well as provide general legal guidance along the way.
- Paperwork: No business matter is complete without paperwork. You will want financial records, physical equipment lists, vendor agreements, employment records, and more all in one concisely organized place. Not only do you need to know all of this information but so will the next owner. You should also have your lawyer double-check your stack of documents to ensure nothing critical is missing.
- Advertising and selling: If you don’t have a broker seeking out buyers for you, advertising is key to finding a buyer. Look high and low and don’t rule anyone out just on your gut instincts. Taking time to interview potential buyers is well worth it. Don’t be discouraged if one deal falls through and keep looking. Remember: this could take a couple years. When you do find a buyer, get everything in writing.
- Profit: Now that you are going to be coming into some wealth after selling your business, it pays to plan ahead for what to do with your profits. Think about investment or savings opportunities that otherwise would not have been possible. It is also beneficial to understand ahead of time how taxes will affect your sale profits and your tax filings.
In conclusion, selling your business is not impossible but you certainly should not assume that it is going to be as simple as selling something at a garage sale. Team up with our Falls Church business attorney from The Strong Law Firm today to take the guesswork out of your business sale. We have 35+ years of legal experience to provide any guidance and counsel we can. Contact us today to learn more about our services.