How To Sell A Business
5 Things to Consider When Selling a Business
Selling a business can be a daunting and complicated process, especially when it has been your livelihood for so long. It can even be emotionally taxing because of all the years you’ve put into it.
You’re reading this because you’re considering it, and probably for good reason. Whether you’re retiring or just simply looking for a new challenge, the rewards of selling a business can be incredible, and, of course, life-changing.
The key things you’ll want to achieve are maximizing your return, preparing adequately for the future, and a seamless sale.
Before selling your business, you need to consider the state it’s in. If it’s on a downward spiral, then don’t sell. In order to reap the most rewards, you should sell your business when it’s at its peak.
How can you tell if this is the case? By looking at your profits over the past 3 years. If you aren’t turning as good a profit as you once were, then try to wait it out for another year and reassess.
If your business is at it’s prime, and the economy is doing well, then it’s likely that potential buyers will have excess money to invest, and so you’re likely to sell quite quickly. The other side of this coin is that when the economy isn’t performing well, major players look to buy businesses that are turning a profit, too.
Potential buyers simply aren’t phased by revenue figures. The only thing that truly matters to a buyer is profit. Profit is king when it comes to the factors involved in selling a business.
The price of your business when it comes to the sale is ultimately dependant on how much money it makes, or how much it’s potentially worth. If you’re not turning much of a profit, then the value of your business may also lie in your assets.
Your assets may be any of the following:
Often overlooked when selling a business, intangible assets are things like your businesses reputation within the industry and among your clients/customers, your know-how, and recognition.
These can, in fact, add to your business's credibility and equate to a higher valuation.
As you’ll already most likely be aware of, tangible assets are things like property, vehicles, and equipment. These can easily be valued, and easily sold.
Assets such as property that isn’t being used are considered high-liquidity assets and can be turned into cash quite quickly.
Another form of asset that must be taken into consideration are things like trademarks, logos, patents. These can be of high value too.
All the above adds to the overall price you should be selling your business for, the overall value. The simplest way of determining a figure is by involving a business appraiser. They will look at your assets, your potential growth and the profit of your business.
They will recommend a realistic price after carefully considering every single aspect. By hiring one, you’ll also stay ahead of the pack. A buyer will usually request one or hire one themselves, so by having this sorted already, you’ll add to your credibility in the eyes of your prospective buyer.
Furthermore, you’ll have a professional opinion of what your business is worth to add to your arsenal when negotiating.
You’re going to be asked a lot of questions during this process, so our advice is to be transparent from the word go. Don’t be ashamed or embarrassed about past mistakes.
Prospective buyers are experienced business people themselves and have a deep comprehension for the ups and downs of establishing a successful company.
Why be transparent? To prevent a deal from breaking down at an advanced stage. The last thing you need is for the buy to uncover something that wasn’t mentioned before. They could end up assuming there are other areas worth looking into.
Honesty is the best policy, and successfully selling a business is built on transparency and trust.
Secure your future
So, you’ve successfully sold your business. Now, what are you going to do with the money? The profits you have now gained should be used on planning for retirement, or for your next business venture.
Whatever your reason for selling, you’re likely going to need investment management help. It’s imperative that you prepare for months, maybe even years without a regular income so that you and your loved ones are covered financially.
At Intrepid Wealth Partners we couple advanced and robust technology with our collective expertise to build you an actionable plan for your future. We leverage fully tailored financial & investment plans to help you preserve and grow the wealth you have worked so hard to create.
How do you start? First identify all the things you love in life as they will ultimately direct how you manage your money so you can do all the things you wish to do. Then, you simply need to find someone you can trust to help you put together the financial roadmap to help you do all of them.