As a business owner you’re often head down in your business. But when you come up for air, you may realize that you’ve begun to wear out, or you’re ready to retire. “Is it time to sell my business?” you might ask yourself. This is a great question that we will help you consider more in depth in the following article.
Selling your business is a personal choice, for which there is no real answer for. When you’re ready to sell your business that will be the appropriate time. Perhaps, however, there is a better question to ask that will help you when you’re ready to sell and that is, “Have I built an exit into my business plan?”
Planning for a business sale from the start of your business is always optimal, but there is of course still time to prepare for a future strategic exit. When you begin the sale process, your broker will ask for the last 3 years of profit & loss statements and tax documents. This information will give your business broker insight into the health of your business and will allow them to evaluate the price. Getting your books and records in order so that when the time comes, you will be able to share at least 3 years of documentation with your business broker is one way to prepare. And we always suggest using a professional CPA to keep your books.
Another aspect of building an exit into your business plan is having good process documentation and standardization. Documenting processes, putting together employee manuals, making sure that repetitive tasks are completed the same way each time will add value to your business. This value add is also great for the buyer of your company, who will be able to rest assured that the proper knowledge transfer will occur when the business transitions to their ownership.
Our final piece of advice for knowing when to sell your business is considering a sale at the peak of your business. This will allow for a high valuation so you can achieve a good return on investment, forward momentum for the new business owner, and plentiful financing options to close the deal. If this article brought up questions about your own business, we invite you to schedule a free consultation with one of our brokers, or visit our website for more information.
Rachael Holstein has been the Marketing Manager for Transworld - Rocky Mountain since 2016. Her work experience has been largely focused on business development and marketing in business brokerage, finance, architecture, property management, and information technology. A long time resident of Cleveland, Ohio, she attained her undergrad from John Carroll University and her Master’s Degree from Cleveland State University. In 2013, she relocated to Denver with her husband, Joe, and her furry companions to explore the mile high lifestyle!
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