Selling your small business can be difficult, time-consuming, and overwhelming. Especially since, on average, over 4 million businesses are created every year. These businesses are carefully constructed based on the hopes and dreams of one individual (or a small group of people), and they slowly become strong and productive companies.
Building a business from scratch takes time, dedication, effort, and creative genius. After putting so much heart and soul into your company, you want to ensure you get your money‘s worth if you later decide to sell your small business. Below, you’ll find 10 expert tips to help you do just that!
Table of Contents
- Keep Up Business Operations
- Structure Your Business in a Way that it Operates Without You
- Wrap Up Any Loose Ends
- Know Your Value
- Put Your Best Foot Forward
- Take Steps to Increase Your Business’s Value
- Learn How to Negotiate
- Gauge the Market
- Find the Right Buyers
- Have a Plan for After the Sale Goes Through
Are You Ready to Sell Your Small Business?
1. Keep Up Business Operations
If you’re currently considering or are in the process of selling your small business, then this tip is crucial to follow. It’s far too easy to get caught up in the excitement of selling your business and forget to keep up your business operations. This can prove a fatal mistake, especially if your business suddenly starts to go downhill right as you attempt to close on a deal.
With that in mind, you must continue prioritizing your business’s operations until after you’ve already secured a sale.
2. Structure Your Business in a Way that it Operates Without You
Did you know that 27.2% of business owners start their companies independently and entirely from scratch? Considering the painstaking process, you’re likely an integral part of the business and have played a monumental role in the company’s success.
With that in mind, you may need to restructure your business before you consider selling it off. For instance, if you’ve been the company’s primary bookkeeper, you may want to either hire a new employee to take over that task or train an internal employee for the role before you depart. Otherwise, the business might suffer when you officially sell the business and stop participating in daily operations.
It’s possible that you might still remain a part of the company after you sell it, but it’s better to ensure it fully operates without leaning on you too much.
3. Wrap Up Any Loose Ends
Once you’ve got your business operating smoothly, and without your constant day-to-day checking in, you can focus on increasing the value and attractiveness of your small business. To do this, you’ll want to tie up any loose ends. Here are a few great tips to follow:
- Ensure your business’s finances are in order
- Verify that your business registrations and filings are up to date
- Keep your taxes up to date
- Make sure all your contracts or agreements are clear, stable, and ongoing
- Minimize expenses where possible
- Ensure employees are happy and productive
Another important thing to consider is whether or not your business is in debt. 63% of business owners reported carrying a debt balance in 2022. If you’re one of these owners, you need to have a plan to settle and pay off the debt before you sell the business or simultaneously with the proceeds from the sale of the business.
All these factors will help make your business look more attractive to potential buyers. If you fail to wrap up these loose ends, you may scare away potential buyers.
4. Know Your Value
Speaking of your business’s value, do you know what your company is worth? Chances are, you probably don’t, and considering how personally invested you are in your company, you may have a tendency to over or undervalue it. To get a better estimate of what your company is worth, it might make the most sense to contact a business broker, business lawyer, or appraiser for more help.
You need to have a good idea of your company’s value before attempting to sell it. If you don’t, then you could wind up undercutting your own potential profits or sitting on your business for far too long, thinking it’s worth more than it is.
5. Put Your Best Foot Forward
Once you know your business’s value, you may think connecting to an interested buyer will be easy. Unfortunately, that’s rarely the case. Only about 30-40% of listed businesses later result in a sale. You’ll have to put in some work to market your business and ensure you’re putting your best foot forward while trying to sell it.
6. Take Steps to Increase Your Business’s Value
If you’re still struggling to find interested buyers after you’ve put your best foot forward, it might make sense to increase your business’s value. It might be best to go back to step number three and research where you can improve upon your business’s operations. If possible, do what you can to start maximizing your profits, building your business even further, and making it as attractive as possible.
7. Learn How to Negotiate
You also should know your bottom line before you attempt to sell your small business. Know the minimum amount you’re willing to take. Why do you need this information? It will help empower you to negotiate fairly. If you know your bottom line, you’ll be more likely to push for a reasonable negotiation and get what your company is worth.
8. Gauge the Market
Of course, knowing the value of your company, how to negotiate, and how to increase the value of your company is only half the battle. You won’t get far if the market isn’t favorable, which has been more commonplace in recent years. Gauge the market to determine whether you need to sell your business for less than or more than what it’s really worth. You might also want to research potential trends in your industry or niche. Depending on the current market and trends, the value of your business could change. In some cases, it might make the most financial sense to sit on your business temporarily while it grows in value.
9. Find the Right Buyers
If the market looks good and you’re all set to sell, then all you need to do next is find the right buyer! This task is much easier said than done, though. To find the right buyer, you’ll need to put in the work. You’ll want to talk to brokers, network with relevant trade groups, and speak with other business owners and business lawyers in the area. You might want to use online marketplaces, where you can connect to buyers all over the globe.
10. Have a Plan for After the Sale Goes Through
Finally, make sure that you have a plan in place for what you’ll do once your business sale goes through. As a business owner, you’re privy to all the company’s profits, so you may need to rework your budget to account for this loss in steady income. You might also want to use the business sale profits to reinvest into a new business venture. Either way, set yourself up for success by planning what you’ll do ahead of time.
Are You Ready to Sell Your Small Business?
Founding and building your business took innovation, drive, patience, dedication, and skill. Selling your business will be no different! Now that you’ve read through the advice above, you should feel more empowered to move forward with your goals.
So, are you ready to sell your small business in the next year? If you follow the tips above, then you should be able to sell your small business successfully. Not only that, but you’ll also have a clear path moving forward.
