The day you decide to sell your business is the day you embark on one of your most important business ventures. The process may try your patience, and if you’re not careful, it can eat away at your time, your finances, and your sanity. One of the best ways you can start the journey of selling a business it is to familiarize yourself with the process. These seven steps will get you well on your way to a successful and pain-free exit.
Step 1: Clarify Your Goals
Your exit plan will hinge on what you think a successful outcome will look like. Be explicit with what you want. Think about your goals with respect to the following:
- Your legacy
- Your needs in retirement
- Your future association with the business (if any)
- How involved you want your family to be in the organization’s future
- Your employees’ experiences during and after the transition
- The organization’s continued relationships with its clients and vendors
These goals will influence every other step you take when selling a business.
READ MORE: Selecting the Best Exit Strategy for Your Business
Step 2: Define Your Ideal Purchaser
You do not need to identify a specific business or individual, but know what type of buyer you want to acquire your business. Think about the traits you want the buyer to have – business size, temperament, potential for growth, experience in the industry, reputation – and weigh those traits against your goals and aspirations for your organization after you exit.
Step 3: Get Your Accounts in Order
In other words, clean up your records. The value of your business will be determined based in large part off your financial records, so they should be reliable. If a potential buyer discovers you’ve made accounting errors, they may lose interest in acquiring your organization. You want the sale to go smoothly, so earn the trust of your buyer by reporting accurate numbers.
Check out our Records Retention Guide here.
Step 4: Update Your Processes and Protocols
The buyer should be able to see themselves in your shoes. If they anticipate the transition will be simple, they will be more interested in moving forward. Update your processes and write down your business protocols so the next owner can easily pick up where you left off.
Step 5: Enlist the Help of Professionals
Selling a business yourself may save you money upfront, but there’s no guarantee it will be the best decision in the long run. There are a few professionals you can – and should – reach out to for help. A valuation consultant can show you how to boost the most important performance markers in anticipation of the sale. A lawyer can give you the peace of mind that the sale documents are comprehensive. A broker can free up your time by finding potential buyers. An accountant can help you clean up your books and tax filings. A business advisor can make recommendations about asset sales or business restructuring that can boost sales price. Professionals are professionals for a reason. Trust they know their stuff.
Step 6: Make Yourself Redundant
Prepare your organization (and your psyche) by letting go of your responsibilities. Your business must be able to survive without you, so work out the kinks before you legally step away. Delegating your tasks to your trusted managers and leaders will also show future buyers that you are ready to walk away, and that the transition will be smooth and efficient.
Step 7: Perfect Your Sales Pitch
Your story is important, your story is interesting, and your story may be the thing that sells your business. When pitching your business, tell your story so the buyer can see how you got started and how you’ve grown. Buyers want to know what they would be walking into, and you can make your organization appeal to a certain audience by crafting your sales pitch to pique their interests.
Landmark offers business advisory, tax and accounting services and performs business valuations to prepare small business owners for selling a business. If you’d like to learn more, reach out to us soon. We look forward to hearing from you.