Are you looking to sell your business? Selling your business can be a challenge, a daunting task, and often very intimidating endeavor. You have poured your heart, blood, sweat, and tears into this business for many years, or perhaps you have taken over a family business, or maybe you built your business from the ground up. No matter how you acquired your business, one thing is certain; you have invested more than time and money in this entity – you have literally poured yourself into making this business successful. Now, you are looking forward to retirement, or maybe you are considering a new venture – whatever your reason is for selling your business – you want to make sure you pass it on and give your business and the new owner the best chance of success.
At DHJJ, we know how hard you have worked to make this business a success, and we know that it is bitter-sweet to surrender the reigns and move on to your next adventure. Because we know this is a daunting task, we have created a guide for you to help you step-by-step, learn how to sell a business.
Six Steps to Follow when Selling Your Business
- Determine your Why and Prepare – It may seem silly, but the very first thing you should do before deciding to sell your business is to make sure you have a concrete why. This reason can be anything that you value. You are ready to retire; you want a slower pace, you want to move, you want to focus on relationships, you want to focus on your health, you are ready for something new – whatever your reason – be sure you know why you want to sell.
- Locate the Necessary Documentation – After you have made the decision and know why you want to sell your business, the very next thing you should do would be to locate and organize all of your necessary documents. Some professionals recommend preparing for your sale up to a year in advance to ensure you have everything you need. These documents include your tax forms and papers, lists of investors, articles of organization or incorporation, payroll forms, revenue forms, inventory lists, documentation of loans, liens, or other financial obligations, bills representing your overhead, expenses, and output, your lease agreement, your list of buyers and sellers for inventory, and anything else a new owner may need. You will need these documents periodically throughout the business selling process. These forms will help prepare you for the next step, and that would be your business valuation.
- Business Valuation – the very first step in selling your business is to conduct a business valuation. This is a process in which your business is given a top to bottom, line-by-line scan. Everything is given a thorough review and evaluated using the documentation you have collected. The business valuation is created by referencing your tax forms, income, output, loans, liens, market data, etc. to determine the health, strength, and weaknesses – as well as projections – of your business.
- Familiarize and Hire Professionals that must be included in the Process – Selling a business can be a scary and overwhelming process. We highly recommend familiarizing yourself with some of the professionals who will be helpful to you as you move through this transition. Lawyers, accountants, brokers, valuation specialists, and of course, financial planners are all common players for this process. An accountant should review three to four years (some recommend up to seven years) of tax forms, revenue, and operational expenses with you. A broker can be incredibly helpful to ensure you get the best price for your business. Of course, our team of experts will be available to help guide you through this endeavor to ensure you have what you need, who you need, and feel informed throughout the sale.
- Finding and Solidifying a Buyer – your business sale could take a few months or a few years. There is no doubt that it can be a challenge to find the right buyer for your business. There are exceptions to every rule, but generally, you will not want to sell to the first person or entity to make you an offer. This does not mean you say no, but you will want to communicate a decision-making timeline and maintain contact with all potential buyers. To help you with this, set your expectations that this process will take about two years. Of course, if you are offered a deal you cannot refuse, then you will have to make that decision in real-time, but try to pace yourself and sift through potential buyers until you find the best fit at the greatest price.
- Negotiation and Tactics to ensure Owners Receive a Fair Sale – Here are a few tips to keep in mind as you wade through the negotiations:
- One key tactic is to make sure you continue to advertise. Advertise the sale of your business, but also advertise the sale of your inventory.
- The best deal for you is going to depend largely on whether you decide to sell to a family member, friend, co-worker, or an unknown individual.
- Do not flippantly accept the first offer; try to garner two or three potential buyers.
- Set your goal price, know your bottom line, and do not compromise. You want some wiggle room when you sit down to negotiate, but after the business valuation, you will know what your business is worth. Do not settle.
- Put agreements in writing!
Let’s do this!
At DHJJ, we exist to make your business stronger and your life simpler. We know that your business has been a major part of your life, and we know that the decision to sell is not one to be taken lightly. We are excited for you and the new adventure you are about to begin. Our team of highly trained experts is here to guide you through this process, step-by-step. Click here to contact us and submit any questions you have regarding the sale of your business. Call us at 630-420-1360 with any inquiries or to start the process of working
