Steps to Selling Your Small Business
Maybe you’ve grown your business to the best of your ability and you are now ready for other opportunities. Perhaps you are in poor health or simply ready to retire.
There are many reasons why entrepreneurs sell their businesses. When it’s time for you to make that decision, you want to make sure it’s done right. Making the wrong decisions can cause you to lose out on a lot of money or create a huge legal battle. Here are some steps to take.
Determine Your Company’s Value
Don’t just estimate what you think your company is worth. Get a professional evaluation from a business appraisal company. It may cost several thousand dollars, but it will be worth it. Many companies underestimate their company’s value, so have a professional review your assets, debts, liens and sales. In any case, you can expect your small business to be worth 3-6 times your annual cash flow.
Get Financials in Order
Hire an accountant to get tax returns and other financials organized. Make sure all personal expenses such as family cars are removed from your documents. A prospective buyer may even want to see year-to-date sales, so it helps to be prepared.
Boost Revenue Before the Sale
While you might be tempted to sell your business when revenues hit lows, try to wait it out. Buyers are wary of buying companies that are experiencing declining sales. They want to see some upside. If business has been slow, improve your marketing strategy by enticing customers with promotions that will boost sales.
Consider a Broker
Using a broker is like using a real estate agent to sell your home. Brokers are experienced at selling businesses, so they can help you find buyers. This can be very helpful if you want to spend your time working on your business or you simply are not a good salesman.
Get Documents in Order
You will need numerous contracts and documents prepared for the sale. The purchase agreement itself may be 50 pages long and will include things such as employee agreements, noncompete agreements and asset listings. Gathering all the required information is the hardest part.
You will also need tax returns, financial statements, a contact list, a list of assets, your current lease and an operating manual. You should include everything the buyer will need to take over the business.
Make sure the actual business is presentable as well. First impressions matter. Nobody wants to buy a company with broken machines and outdated materials. Get equipment repaired or replaced before putting your business on the market.
Learn More About Selling Your Business
With a diverse population and so many tourists in Florida, you have a good chance of selling your business. Make sure you do it right, though. Seek legal help to ensure the transaction goes smoothly.
Orlando business purchase & sale lawyer B.F. Godfrey from Godfrey Legal can guide you through the process and help you avoid mistakes. Schedule a consultation today by calling (407) 890-0023 or filling out the online form.