You’ve decided it is time to sell your business and move on to other things. No matter what the reasoning is behind the sale, you still want to get the most money out of your business. You’ve worked hard and put a lot of sweat equity as well as cash into your business, and you want to cash out. In this article, we are going to talk about how to maximize the sale price of your business.
Being a business owner is no easy task, and when the time comes for you get money for the hard years of work, you want to make sure you get what your company is worth. Before you can start selling your business, you need to know how much to put it on the market for. Depending on the type of business that you own, it may be harder to value the business because people aren’t used to it.
Businesses like ecommerce stores can be a little on the tricky side since they are somewhat different from traditional commerce stores. If you aren’t sure how to proceed, you may want to look into a business broker for selling an ecommerce store.
Getting the Most Money Out of the Sale of Your Business
1) Sell at the Right Time
If your company is going through some challenges, now might not be the right time to sell your business. You want to sell your business when your company is on the upswing. You don’t want to sell your business when you age out and can no longer run the company. Preparing to sell your company well before you want to sell it is important. Potential buyers are going to want to see three years of financials for a company before they sign on any dotted line.
If you sell at the wrong time and potential buyers know you are a motivated seller, they are likely to use it against you and bargain for a lower price. Selling your business when it doesn’t make much difference to you, either way, is the best time to sell.
2) Be Clear About What Is for Sale
Before your business goes on the market, you need to know what all of the business assets are and decide what you want to sell. Will you be selling all physical assets? What other assets do you have available for sale? Company sales often include assets like trademarks, client lists, goodwill and of course, the physical assets.
If your business is a corporation, you need to decide if you are going to sell your company as an asset sale which means you sell everything in the corporation but the company itself or if you are going to make a share sale where you sell everything which includes your company itself.
3) Know the True Value of Your Company
Trying to sell your company without knowing its true worth leaves you in a very weak negotiating stance. While your business is worth as much as someone is willing to pay, you still need to know what price to put on your company when you put it on the market. There are different business valuation methods you can use, and while no one approach is the end all be all, you need to use one of them to determine how big of a price tag you are going to put on your business.
Besides for the different valuation methods, you also need to think about the current market and economic trends. A business that might be worth $1 million could go for twice that much in the right market.
Look into having a professional business valuation done before you put it up on the market. True, anyone can do a business valuation, but potential buyers are much more likely to pay attention to the valuation of a professional.
4) Make Sure Everything Is In Order
When you are selling your company, it is easy to get distracted and start to let things slide. Now is not the time to let things slide. It is important that you keep everything in order as you are progressing towards the sale. You need to keep your business in the best shape of its life as you march up to the date of handing over the keys.
Business records should be kept up to date, premises should be maintained, and anything else that needs to be done should be taken care of promptly. Reduce your liabilities as much as possible by settling lawsuits and ensuring tax payments are up to date.
5) Use a Professional to Sell Your Company
Unless you’ve completed successful business sales before, having a professional to help you sell your business will make it easier for you to get the job done. Asking a professional to help you through every step of the process will ensure you don’t leave anything undone.
If you own a small business, you are likely to be able to find a business broker that will work with you for a percentage of the sale. This can be helpful when you don’t want to spend a lot of cash on fees.
Understanding how to maximize the sale price of your business will put you in the driver’s seat. Now you can push forward with your business with confidence knowing your exit strategy all while keeping up your business and making sure everything is running at its best.