Most entrepreneurs get into the game because they love the idea of running their own business. They like to be in charge. They love their team members. They even love the industry they’re in. But sooner or later, you’ll need to put together an exit strategy—and that often means selling your business.
If your business is thriving, you shouldn’t have a problem attracting a potential buyer. But the process of selling a business is complicated, and if you want to get the highest price and experience the smoothest transition, you’ll need to prepare for it proactively.
Get Your Marketing Strategy Together
First, you’ll need to think about marketing your business for sale. Your business may make a significant amount of money, and may be well-known in the industry, but that’s not a guarantee that it will independently generate its own buying interest.
Instead, you’ll need to put together a strategy for how you’re going to market your business.
- Who is your target buyer? What type of person would be interested in buying this business? Are you open to offers from family members, employees, and other people you know? Are you looking for anyone willing to pay a fair price, or would you rather target someone who wants to continue nurturing your business for years to come?
- What makes your business worth buying? What are the perks of owning your business? Would someone buy this for immediate cash flow, or for long-term growth potential? How are you going to position your business strategically?
- How will you spread the word? How are you going to let your target buyers know that your business is for sale? Usually, some combination of networking and listing the business for sale across various channels is effective.
Improve Your Fundamentals
In the months (and possibly years) leading up to your business’s sale, you can increase your chances of selling quickly and increase your final sale price by improving your business’s fundamentals. Buyers will often look at the following to evaluate the potential of a deal:
- Revenue. How much revenue has your business generated? How has that revenue changed over time?
- Profitability. What are your business’s operating expenses? What do your profit and loss statements look like?
- Team. What kinds of employees do you currently have? Will they continue working for the business after the sale is finalized?
- Clients. Who are your biggest clients, and how loyal are they? Can they be counted on as a source of recurring revenue?
- Assets and debts. What are the business’s current assets (including real estate), and standing debts?
Prepare Your Workforce
Next, consider preparing your workforce. These employees are likely important to you, so you’ll want to prepare them for a change in ownership. That could mean informing them about your intentions proactively, so they have time to prepare. It could also mean training them to work independently, enabling them to continue doing a great job under someone else’s leadership.
Get the Timing Right
Timing a business sale can be tricky. Do you think the business is going to see even higher sales in the near future? Do you suspect there may be an economic recession on the horizon? How are other businesses in this neighborhood doing? Depending on the circumstances, it may be advantageous to list the business as quickly as possible, or it may be better to wait.
Invest in Expertise
Selling a business requires consideration of a lot of complex variables, and the management of a lot of complex paperwork. If you want to be successful, you’ll want to invest in some outside help:
- Brokers. Hiring a broker will make it much easier to manage the transaction, though you’ll have to pay the broker a commission for their services.
- Consultants. A consultant will be able to help you determine the timing, positioning, marketing strategy, and other variables for your business sale.
- Lawyers. The right lawyer will help you understand the legal implications of your transaction, and provide you with important advice.
- Accountants. With an accountant, you can better understand the value of your business—and possibly, how to better position it.
Be Prepared to Negotiate
No matter how straightforward your deal may seem, you’ll likely have to negotiate to get it finalized. Don’t push too hard, or you might scare the buyer away; instead, be open to the buyer’s offer, and work together so that both of you end up satisfied with the deal.
Selling your business may be complicated and time consuming, but it could be the best strategic move for your business—and a massive personal windfall for you. Take your time, invest in the help of experts, and be sure to set realistic expectations from the outset.