The Keys To Successfully Selling Your Business
- Know the Value of Your Business. One of the first things you should do is obtain a realistic idea of what your business is worth from an objective, outside source. A professional valuation will give you a basis for gauging buyer offers and will give you an idea of what you can expect to net from the sale. It will also tell you your business's market position, financial situation, strengths and weaknesses (which you can hopefully correct prior to putting it on the market). Tucson Business Investments can provide you with a no cost valuation of your business. Our opinion of value will be an honest assessment of what your business could really sell for. For some business owners it is a rude awakening but it is something every business owner needs to know.
- Get your books in order. Buyers evaluating your business generally require at least three years' worth of financial information. The more complete your statements and the more up-to-date, the better the impression you'll make-and the easier the due diligence for a buyer. Tax returns, profit and loss statements and balance sheets are what is most important.
- Understand the true profitability of your business. Most privately held businesses claim a variety of nonoperational expenses. Make sure you have supporting documentation for these expenses. For example, your business may be paying for your personal automobile lease. In addition, there may be infrequent expenses you have incurred during the past three years that should be excluded in a buyer's analysis of recurring cash flow. There may be moving expenses if you've moved to a larger facility or unusual legal expenses. Our agents will review your information and ask the questions that will show the true profit of the business.
- Know what you are selling. Every business has assets whether it is equipment, inventory, vehicles etc. Have a detailed list of the assets of your business as well as an idea of the current replacement cost of the assets. Buyers know when you are valuing a piece of 20 year old equipment at what the item would cost brand new today and they feel you are not realistic about the selling price and value of your business. We can help determine a fair value of your assets.
- Location, location, location. Some businesses rely heavily on the location of the business to operate while the location of some businesses is a non-factor. Know how your location and the situations that surround it affect you business (have a copy of your lease, etc.) Our licensed agents will handle leases or the sale of your business property depending on your unique situation.
- Make a good first impression. Will a buyer visiting your shop for the first time see order or chaos? Buyers look for companies that show well, as an orderly shop is often indicative of an orderly management team and back-room operations. Think about what you would like to see if you were considering buying a business.
- Organize your legal paperwork. Review your incorporation papers, permits, licensing agreements, customer and vendor contracts, etc. Make sure you have them readily available, current and in order. Buyers feel most comfortable when they know a business has been operating in a proper manner in accordance with the regulations of the particular industry.
- Consider management succession. If you're absolutely vital to your business, who will a buyer be able to turn to for help running the business after you leave? You should have a succession plan in place before going to market.
- Know your reason for selling. Buyers are always curious as to why a seller wants to exit a business. (If it's so great, why are you leaving?) Be prepared to articulate your reasons.
- Keep your eye on the ball. Don't let your business performance decline because you're too focused on the sale of your business. This will only give buyers additional negotiating power to lower their offers. Selling a business is a full-time job and having an experienced professional who will not only find the right buyer but also handle the entire process is imperative.
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