Selling your business may rival starting your business as the most exhausting and stressful undertaking of your life. But with a sale can come a tidy profit, and a chance to see your business survive into the next generation. This is no small undertaking, and it requires significant planning. It’s not something you can decide to do on a whim. Indeed, exit planning should be a part of every owner’s business plan. Here’s what you need to know when you’re ready to sell your business—and how to do it.
Know That Buyers Are Everywhere
The right buyer might be somewhere surprising. Many businesses are sold to key staff, since they know the business in and out. So it’s important to think about this when making hiring decisions, and when grooming your staff for their future.
How long a sale takes depends on who the buyer is. The more they know about the business, the more quickly the sale can move to closing.
Plan Your Exit
Leaving your business requires you to know it in and out. You need to know its value and total worth. This may require multiple valuations, in addition to plenty of documentation supporting your claims about profit and value. Well-maintained records and books support the process of due diligence, and can prevent unpleasant surprises. A reputable business valuation expert can help you gather the documentation you need, while offering a credible estimate of your business’s worth.
Negotiate Your Obligations
Many owners stay with the company for a period of time following the sale. In some cases, the total value of the sale may depend on how well your business does after it changes hands. So you need clear details on the length of the commitment, as well as the expectations you must meet. You must understand these benchmarks, and ensure they’re clearly memorialized in a well-worded contract.
Build a Financial and Future Plan
What do you want to do after you sell your business? This is an important part of the process. Without a clear vision for the future, it’s easy to feel overwhelmed by regret. Your future plans can also affect the extent to which you are able to shepherd the business into the future.
You must also know how you want to spend the proceeds of the sale. Do you want to retire? Start a new company? Fund your child’s college? You need a vision.
Don’t Go it Alone
You may be an expert entrepreneur, but you’re a novice when it comes to running your business. Rely on the expertise of people who are skilled advisors. They can help you determine what’s normal and what’s unfair, offer insight that can support a healthy negotiation process, address any unreasonable expectations you may have, and act as an intermediary with the buyer. By surrounding yourself with a diverse group of competent people, you can accent your strengths, address your weaknesses, and ensure you have an able team of people who will willingly provide insight—even when they’re telling you you’re wrong.