Selling your business can be a rewarding and profitable decision, but it also requires careful planning and preparation. Whether you want to retire, pursue a new venture, or simply cash out, you need to make sure your business is attractive and valuable to potential buyers.
I’ve looked at thousands of businesses, spoken to hundreds of business owners, and closed dozens of business sale transactions.
Here are some steps you can take to get your business ready to sell:
- Educate yourself on the selling process. Learn about the different types of buyers, the common valuation methods, and the legal and tax implications of selling your business. You can also research how to sell your business online or hire a professional broker or adviser to help you. For example, you can read articles, books, or blogs on how to sell a business, or you can consult with experts who have experience in your industry or niche.
- Get organized and streamline your operations. Review your financial records, contracts, licenses, and other documents that prove your business’s performance and legitimacy. Make sure they are accurate, up-to-date, and consistent. You should also optimize your business processes, systems, and policies to make your business more efficient and scalable. For example, you can automate tasks, delegate responsibilities, standardize procedures, or update software.
- Get a defensible valuation of your business. You should know roughly what to sell your business for. Keep in mind that the market determines the price, not you! While you can hire a certified appraiser ($$$), you can use my basic valuation template to estimate how much your business is worth based on its assets, income, cash flow, and market conditions. A valuation will help you set a realistic asking price and negotiate with buyers.
- Identify your ideal buyer and target market. Think about who would benefit from buying your business and why. Is it a competitor, a supplier, a customer, or an investor? What are their goals, needs, and expectations? How can you reach them and convince them of your business’s value proposition? For example, you can create a buyer persona, conduct market research, or craft a unique selling proposition for your business.
- Assemble a team of experts to assist you. Selling a business can be complex and time-consuming, so you may need some professional help along the way. While I help you prepare and market your business, there is still an important need for a lawyer, an accountant, or an adviser to handle the legal, financial, and marketing aspects of the sale. For example, you can hire a lawyer to draft contracts and agreements, an accountant to prepare tax returns and financial statements, or an adviser to guide you through the process.
- Go to market and negotiate the deal. Once you have everything ready, you can list your business for sale on various platforms or contact potential buyers directly. You should also prepare a compelling marketing package that showcases your business’s history, overview, successes, and opportunities. When you find a serious buyer, you will need to perform due diligence, sign a letter of intent, draft a purchase agreement, and close the deal. For example, you can use websites like BizBuySell to list your business online or reach out to buyers in your network or industry.
There is a lot that can go into each item above, so treat this only as a starting point.
Selling your business can be a life-changing event that rewards you for your hard work and dedication. By following these steps and adding more examples as needed, you can get your business ready to sell and make a successful exit.
