An Extremely Basic Guide to Selling Your Small Business

 

 

selling a business

Arianna Huffington sold the Huffington Post to AOL for $315 Million.

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.

 

FOR SALE!

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.

 

Due Diligence

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.

 

business brokerage expertMiles 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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2 Responses to An Extremely Basic Guide to Selling Your Small Business

  1. Basic still powerful list of items. Good job in summarizing the most important and critical items. Throughout the process, counting with an advisor is a must, things that seem simple can get complicated pretty quickly.

  2. Thanks for the feedback Lucas and emphasizing the importance of an advisor.