You may be ready to sell your business—or perhaps you’ve been approached by an interested buyer. Either way, selling a company is not an easy task. You have to do your research and plan carefully so that you get the best deal for yourself and your employees.
We’ve found that many potential buyers for businesses ask similar questions about pricing and valuation, so we’ve provided this information below as a guide for sellers who are considering selling their company:
Determine Your Price
Before you begin shopping around for buyers, it is important to determine the value of your company. There are several ways to do this including:
- Analyzing Your Current Financials – The first step in determining the value of your business is to look at its current financials. This includes reviewing all sources of revenue (both recurring and one-time), expenses, assets and liabilities. Valuation firms can help with this process as well.
- Comparing Your Business To Others – You can also use benchmarks from other similar businesses in order to determine an appropriate price range for your company.
Know Your Business’ Value
You should know what your business is worth before selling it so that you can negotiate a fair price with potential buyers. This will also help you set a realistic deadline for selling your business.
Hire a Broker
A broker can help you find buyers who are looking for businesses like yours, but they’ll be able to give you information about how much your company is worth and what kind of offers might come through the door. They’ll also be able to negotiate with buyers so that both parties are happy with the final deal.
Strategic Planning
- Understand your business and its value.
- Know what you want to achieve.
- Understand the market conditions, including the buyers’ needs and how they will be met in the future.
- Determine if there are any potential buyers for your business today, who may be interested in buying it tomorrow (or later). This can help you plan for a future sale when an opportunity arises that is right for both buyer and seller alike!
Valuation & Pricing of Your Company
The first step in selling your business is to value it. You can do this by looking at the company’s financial statements and projecting future performance based on its past results, using industry data and other factors such as growth potential or market position.
Considerations include:
- Revenue and profit: What are your sales? How much profit do they generate? Can they grow? Do they reflect any seasonal fluctuations (e.g., retail businesses)? How much cash flow does the business generate? Is there an opportunity for expansion into new markets or products? Are there any liabilities that might hurt the price if disclosed publicly (like tax liens)?
Marketing & Selling the Company
Marketing and selling your business is a full-time job. You need to be prepared to do a lot of marketing, sales, networking, and negotiation.
Marketing: Make sure you have an attractive website with up-to-date information about your company. Also, include any awards or recognition that the business has received over the years (if applicable). Send press releases about new products or services when they are launched and promote them on social media sites such as Facebook, Twitter and LinkedIn.
Sales: If possible find someone who knows how to sell businesses well in order for him/her to help out with this task during this time period when there will be increased interest from potential buyers due to high demand caused by low inventory levels created by other sellers getting ready for retirement themselves!
Follow Up With Potential Buyers
If someone has expressed interest in buying your business, don’t just assume they will call back if they don’t hear from you immediately. Call them and follow up on their interest. It’s important to remember that not everyone who expresses interest will actually follow through and put an offer on the table — so don’t wait around for someone who might not be serious!
Negotiation with Buyers
Negotiation is a skill that can be learned and it’s a win-win situation for both parties. If you’re not prepared to negotiate, then don’t expect to get the best price for your business.
You must be ready to walk away if the deal isn’t right for you; otherwise, you might end up selling too cheaply and regret it later on in life.
Know Your Competition
Before listing your first business for sale, research what similar companies are going for and what they have on offer. This will enable you to set an appropriate asking price and give buyers an idea of what they might be getting themselves into if they buy your company. You should also look at their financial reports so that potential buyers can see how well or poorly each company is performing currently.
Closing On the Transaction
Once a buyer has been found and the transaction is closed, it’s important to remember that there is still more work to be done. You need to make sure that all of your obligations are met, including any warranties or guarantees provided in the contract. If there are any issues with the sale or closing process itself, contact an attorney immediately so they can help resolve them as quickly as possible.
Set Your Deadline
You should set a deadline for when you want to sell your business and stick to it. This is especially important if you have other people involved in the decision-making process (such as investors). If they don’t think that there’s any urgency to make a decision, they may not be as inclined to do so — even if you need them to agree on something quickly because there is an opportunity right now!
Network with Other Business Owners
Many successful business owners have decided to sell their companies when they get bored or feel like they’ve accomplished all that they can within one industry. These people often become mentors or advisers for other entrepreneurs who are considering selling their own businesses at some point in time as well.
We hope this article has given you some insight into what it takes to sell your business.
