An Extremely Basic Guide to Selling Your Small Business
|January 29, 2013||Posted by Guest Author under Online Business Ideas|
It may be hard to believe as you start your business that you may one day want to sell it, but many do! It’s also a comfort to know that after all your efforts in building a successful operation, you can still profit when you decide to leave and tackle another passion. If you’re thinking of building your business so that eventually you can sell it for a hefty sum, read what business brokerage connoisseur & guest author Miles Hall advises…
Basics to Selling Your Small Business
Selling a small business doesn’t have to be hard. Here is how to do it in a nutshell.
Preparing to Sell the Business
Start preparing to sell the business early, up to a year in advance. This means a lot of things:
- Preparing documents, including current-going-back-three-years balance sheets and profit-and-loss sheets.
- Preparing tax returns for last three years
- Making lists of inventories and amenities, including equipment and furnishings
- Getting documents ready for the due diligence phase, such as information concerning insurance, employees, customers, bank statements, etc.
- Taking steps to make sure your business is operating at full potential and looks great too
- Making certain that you are also prepared mentally to sell.
Small Business Valuation
Hire an appraiser to evaluate the business and what it is worth. Have them draw up detailed documents that provide a quote and all of the details — this will ensure that the business is not listed higher or lower than it is worth, as well as further legitimize the price in the eyes of potential buyers.
Actively market the business, either independently or through a business broker. If choosing to self-sell, expect 10 to 20 hours of extra work, specifically on contacting and marketing to potential buyers.
After finding the number one potential buyer, have them sign a confidentiality agreement. This allows them to dig into and thoroughly scrutinize all aspects of the business including the documents listed above, employee interviews and statements, financial records, etc. This should last no longer than 6 weeks.
Negotiate and Sell
If everything is in place legally and financially, and all parties agree on the terms, sign the papers and complete the sale.
Miles Hall is an entrepreneur and blogger who loves writing about start-ups and small business. Miles created and sold his first start-up while attending Michigan State and has since become interested and active in the world of business brokerage.
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