What’s the ultimate goal for starting a small business?
It’s should be a no-brainer, right? Entrepreneurs want their small businesses to grow into big corporations turning millions of dollars in profits every year. Indeed, this is the goal for most small business owners, but some have a different goal.
Some entrepreneurs want to grow their business to a certain size, and then exit. You have probably heard of startups being acquired here and there, right.
If you’re this kind of entrepreneur and the time to sell a business has come, there are important things you need to know. In this article, we’re sharing handy tips you need to have.
Let’s do some selling.
Is Your Business Ready for Selling?
Technically, you can sell your business at any point after it opens up. However, it doesn’t mean you should sell it whenever you feel like it. You should sell the business when it’s ready for selling.
Think of a business as a product. You don’t start selling a product when it’s still in development, right?
The best time to sell a business is when it has reached maturity; when it’s sustainably profitable and preferably without any debt.
At this stage, you stand to make the most money from the sale and it won’t take a long time for the business to find a buyer. But if you’re selling the business before it’s ready to be sold, you could end up selling below your asking price – that’s if you find a buyer.
Know the Market Value of Your Business
Selling a business is like selling a house in some aspects. You don’t just slap a price tag on it out of the blue. Of course, you have your own idea of what you think the property is worth, but that’s not how it works. You must establish its present market value.
So, what’s the market value of your business?
There’s a formula for calculating the market value of the business and there are specialists at that job. If you don’t know much about business valuation, it’s in your best interest to bring in a specialist to handle the task.
Once you know the value, that becomes your asking price – give or take.
Get Ownership and Relevant Documentation Ready
There’s a lot of documentation that pertains to the business. Depending on the type of business structure, you need to provide business registration certificates and/or certificates of incorporation.
If the business has permits and licenses, you also need to provide those and ensure they’re up-to-date. No one is going to buy the business if the documentation is shady or incomplete.
Choose a Selling Strategy
There are a couple of strategies you can employ when you’re selling a business. For instance, you can elect to sell it on your own by leveraging on your connections or you can hire a business broker.
The latter is the most recommendable. Unless you’re an experienced broker yourself, it’s best to hire a broker who knows what it takes to sell a business. They have the networks to match your business with the right intermediaries, helping you exit quickly and at the highest price. See here to learn more about this.
Sell a Small Business the Right Way
When it’s time to sell a small business, it’s important to do it the right way. With the information fleshed out above, you now have handy tips that will enable you to handle the process prudently.
Keep tabs on our blog for more tips and insights.