Selling a business is not an easy task as a lot of factors affect the sales of a business. In this time and age, a large number of people are involved in one business or the other which makes the competition real.
If you do not have the support required to push your business, it might end up sidelined.
According to statistics, the most successful business owners are those who prepare their business for sale before venturing into the market. For better sales, familiarity with the 10 steps to successfully sell a business is a necessity.
What is Selling?
Selling is a transaction that happens between people where a good or service is traded for money.
In other words, it is the process of persuading, convincing a person organization to buy a product or a service.
Selling is an activity that takes place all over the world. It is exchanging something of value with money or another item of value. The object in question must serve a purpose. Not all sales transactions are equal.
Some sales don’t require persuasion such as buying fuel for your car. In this case, it is a matter of necessity.
Reason Why Business Owners Give Up Business For Sale
The following are the reasons why business owners sell their businesses
- Retirement
- Partnership dispute
- Climate Change
- Bad Personal health
- Business decline
- Boredom
- Becoming overworked
- Buyers market
- New opportunities
- Bad location
Some owners consider selling the business when it is not profitable, but this can make it harder to attract buyers.
Consider the business’s ability to sell, its readiness, and your timing.
See Also: 20 Easy Things To Make and Sell
Below are the 10 steps to selling a business
#1. Choose Your Deal Team
Deciding whether or not you want to sell your business affects the selection of your deal team.
Assemble a deal team to help you In the sales of your business because no one has all the training and experience necessary to sell a business. Include in your team members with experience.
Make sure that your team is always on the same page. Encourage communication between all the individuals to make the sales successful. This is a group of your most trusted people.
Your deal team should comprise your spouse, any direct business partner, an experienced business transaction attorney, CPA, and business broker.
#2. Acknowledge Your Company’s Worth
Selling your business is a tough decision to make because it means selling the future cash flow of the company. No one wants to buy a business estimated to fail in the next few years.
The Earnings Before Interest, Taxes, Depreciation, and Amortization, and the Sellers Discretionary cash flow which means the method the owner can pull money from the business are two aspects buyers would study.
A business with a more robust system, processes, and management will sell for a higher value.
#3. Prepare For Sale
Preparations should start two years before the sales so the paperwork is well organized.
The document needs to have a three-year federal tax return, contracts, lease, agreement, lease, Total company debt with monthly payments, payroll information, and employee resume.
These are things potential buyers would like to know. If your document is in order, you’ll be able to answer any question from the buyer.
#4. Marketing Phase
Marketing is another important factor in the sales of a business. If a business isn’t properly marketed then prospective buyers won’t get to know about it.
So, it should be properly advertised but too much information should be avoided. Have more than one interested buyer and stay in contact with them in case one falters.
Consider widening your horizon by reaching out to competitors, customers, and suppliers. Local and industry publications can be a good way to go.
See Also: 10 Best Digital Products To Sell In 2022
#5. The Interview
As soon as a buyer shows interest then an interview is conducted. The buyer and seller need to meet up, assess the deal, and get to know each other.
Negotiate with potential buyers but have a price in mind that is reasonable and considers the company’s future worth.
Prospective buyers might ask questions about the financial performance, pipeline of future work, clients, and employees.
#6. The Offer
It is mandatory what is included and excluded in the offer to purchase your business. The offer should include information rate, number of hours, length of time, job function, benefits amongst other things.
The offer may be for a fixed dollar amount or it may include a percentage of future sales.
It will also include the timing and amounts of the initial and future payments.
Business owners should not be confused when it comes to accounting receivables and cash as these are business assets.
#7. Confidentiality
At this stage, you need to share more information with your buyer after the deal has been finalized such as names of clients, corporate records, contracts, and access to select key employees.
This will further strengthen the relationship between buyer and seller. A final decision to purchase your business will be made once secrets have been shared.
Be entirely honest about your business, its flaws, and strengths. The buyer would make his findings and you don’t want to lose a potential buyer over a mistake.
This is to avoid distrust or cancellation if the sales process.
See Also: How To Sell Gift Cards Online In 2022
#8. Purchase And Sale Agreement
This is also known as Audit. A purchase and sale agreement is will be created if you are satisfied with the buyer’s offer.
This carefully seals the agreement and it is often done by the attorney handling the sale.
During this step, the buyer will start the process of obtaining bank financing if needed.
#9. The Closing
As soon as the deal is sold. The attorney and clients meet for the closing then the document of the sale will be reviewed and remaining edits will be made.
Once the documents and reviewed edits have been accepted by both parties, the buyer and seller will both sign the contract and the sale of the business is complete.
At this stage, redrafting the document until both sides are satisfied is not farfetched.
#10. Post-Closing
After the sale, the introduction begins. The seller would have to inform your employees, introduce the new owner to your client and vendor, and also bring the new ownership to their knowledge.
In case your sale has an employment agreement where you would stay on to help for some time. You will need to fill that duty as well.
This will also be the time you begin collecting the payment for your business.
As a seller, create a plan dictating your financial goal and learn about tax consequences associated with a financial professional to determine how you want to invest the money and focus on long-term benefits such as getting out of debt and saving for retirement.
See Also: 10 Places To Buy Gift Card Online With Checking Account
Frequently Asked Questions
The broker commission is either 10% to 12% if your business is under $1 million. Keep in mind that other fees might be involved such as attorney fees, marketing fees as well as the cost of making the substantial upgrades to your business. You may have to pay other fees for transferring a lease to the new owner of your business.
If the buyer interested in your business happens to be remote then the negotiations, bargaining can be done using apps like zoom or skype. can also be used to hold business meetings and important documents can be uploaded.
To sell a business idea, you need to conduct your research, prepare a presentation, and approach potential buyers. It is possible to approach a company with a business idea but make sure to have your idea protected by a patent or get the company you want to sell to agree to a non-disclosure agreement.
Selling a business requires one to be careful and thorough. It will not be advised to rush through a sales process. This is to avoid future crises. However, if a relatively quick turnaround is needed, hire a business broker to speed up the process.
Selling your share of a business to your other partners or partner is a common ownership transfer method, particularly for small businesses. Having an agreement in place with your partners ahead of the sale will help smooth the transition, increasing the likelihood that both the staying and exiting partners benefit.
Conclusion
Selling a business is a difficult task. It requires planning before executing for it to go well. It’s not a one-man job which is why business owners must be sure they want to go through with selling before seeking professional help.
Apply the strategies, know your strength and weaknesses, and don’t settle for less than your company is worth.
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