You know that old maxim ‘the more things change, the more they stay the same’? Because we largely feature small and medium businesses on the rise in industries that are flourishing here at the magazine the topic of selling your business just doesn’t seem relevant, or requested for that matter, but it does happen and in fact, it can be part of your plan all along and a step toward something bigger and better! But, I caution you, people don’t change from the time they’re children. Remember your developmental psychology now: preschoolers begin to develop autonomy, or self-direction as well as initiative or enterprise. In a big way, the person you are in first grade is the person you are today. And that means hot lava.
Let me explain.
The hot lava game, for those of you who can’t remember or don’t have the constant reminder with your own children, is when a child is playing with a friend in a carpeted setting and all of a sudden one of them proclaims that the carpet has indeed transformed into liquid hot magma. This calls for immediate action and both playmates know innately the rules. You must jump up onto the nearest piece of furniture be it a coffee table or sofa and utilize only throw pillows to lily pad jump out of the danger zone. It should also be noted for the purposes of my analogy today that the most difficult games of “the carpet is lava” are played when a friend has been called home for dinner. They have abandoned what was a good time and the rules of childhood will not let that stand. The throw pillows will be placed at impossible jumping distances. Lava bombs in the form of hacky sacks and whiffle balls will bombard your every futile attempt. And missteps will be enjoyed with a pleasure unequalled in childhood.
The same applies when you sell your business.
You came! You saw! You conquered! You want to sell! Now it’s hot lava time as far as your buyer is concerned. You both many want to throw a few pillows, so these are the things to think about when selling your business.
Seek legal and financial expertise.
First and foremost, no matter what the reason behind selling your business, it’s crucial to hire the necessary financial, legal, tax, and business advising professionals to ensure the process goes as smoothly and you avoid as much lava as possible. There will be many details that come up for which you may be unprepared, so having the right pillows and proper resources in place will be essential.
Get the paperwork in order.
The legwork for the sale of a business starts long before you’re ready to put up a for-sale sign. All potential buyers are going to want to see taxes, financials and any existing contracts pertaining to your business. Take the time to get all these pillows organized and you’ll help ensure a smoother process from start to finish. Get all of your financial and tax records in order for the past three years, including a cash flow report.
Separate your personal expenses from the business.
Most business owners, at one time or another, run personal expenses through their business. When you’re ready to sell, it’s imperative that you stop doing this and separate things in order for potential buyers to get a clear and accurate picture of the revenue, expenses and net profits of your business.
Give your business some curb appeal.
This sounds like a no-brainer, but many people overlook the outward appearance of their business when it comes time to sell. Make sure that your location is clean and tidy, and that any necessary repairs have been made. Also, if equipment required to run your business, make sure it’s all in working order. Make any outdoor improvements to landscaping, signage, etc are done to increase your curb appeal.
Hire a professional business broker to help you with listing your business for sale.
A business broker will help give your business market visibility where you want it and will increase your chances of finding the best fit for you and your business. A broker can also help you set a realistic asking price and help you with marketing your business and contacting potential buyers on your behalf, which leads up to our next point.
Set a realistic asking price.
If your business is doing well, it can be tempting to set a very high asking price. In reality, there are many factors that buyers will look at when considering a purchase. Consider how all of these things will factor in and how you would view the business from all angles if you were the buyer. Consider profits, client relationships and the personal investment of time that will be required for the new owner to make the transition successful and set your asking price accordingly.
Loose lips sink ships and sales, so keep it quiet.
If you’re in a business where a sale may send your customers or clients into panic mode, it’s probably best to keep an impending sale quiet until you have identified a buyer and finalized the details of the sale. That includes determining how you will transition your customers to the new owner.
Always get your offers in writing, ALWAYS!!!
If and when offers start coming in for your business, it is important to have the details in writing to make accurate and proper comparisons. As is most cases price alone will not be the only factor that will have to be considered, so it is important to have all the details of each offer to decide which is the best offer for you and the business.
Will following these tips guarantee that you select the right buyer for the business? No, it will not but by following them you will set yourself up for success and increase your chances of finding the right buyer at a fair price for your business while avoiding the lava.
by Jamie Barrie