Issues to Consider When Selling a Business
There will probably come a time when you want, or need, to sell your business. Selling a business that you have worked hard to build can be an emotional and challenging experience. There are many issues that you must consider. Here are some tips to help you deal with the issues involved with selling your business.
The first issue to consider is why you are selling the business. Good reasons to sell a business are retirement, relocation, illness, and divorce. Selling a business because it isn't doing well is hard. You should be aware that the first question prospective buyers would ask is why you are selling the business. Once you have clearly defined your reasons for wanting to sell your business, the next thing to consider is what you will do once the business has been sold, and how the proceeds from the sale of the business will be used or invested. Have a plan.
It can take a great deal of time to find a buyer for a business. You should also note that the actual process of completing a sale is time consuming. During this time period, you still must conduct business as usual, and make sure that the business is turning a profit. Otherwise, your chances of selling the business are decreased, and your business becomes less valuable.
You must determine who to tell, and who not to tell when you are considering selling your business. It is best to keep this information from your employees, customers, and vendors as long as possible. Many people mistakenly believe that a business is in trouble when the owner puts it up for sale. Even though this isn't the case, the business suffers. Valuable employees leave, vendors enforce stricter credit terms, and customers start looking for new places to shop.
Next, you must consider how you will sell your business. Will you sell it yourself, or will you use a business broker? If you will use a business broker, which one will you use? Using a business broker will take up less of your time, enabling you to continue to run your business as usual for the most part. Click here to view our Business Broker Directory. You will also need to place a value on your business. The emotional value that you attach to your business may not match the actual market value of your business. Be prepared for this. You also must determine what assets will be sold with the business, and place a value on these assets as well. Work with your broker to set your selling price, but be prepared to negotiate with potential buyers.
Another important consideration when selling a business is how you will be paid for the business. Will you sell it outright, or will you be willing to finance the business for the buyer? If you plan to finance the business, seek the advice of an attorney and an accountant to help work out the details of the financing agreement with the buyer.
Finally, you must prepare your business for the sale. Begin by gathering and preparing all of the documents potential buyers will want to see, such as financial statements and other documentation. Make sure that the businesses structures, such as the office building, are in good repair, and that the equipment you are selling with the business is in good shape. The more work that you do in preparation of the sale, the better your chances are of selling the business.
The actual process of selling a business can be hectic and stressful, but if you prepare well, and think things through clearly, you will experience less stress while trying to sell your business.
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