The Decision to Sell Has Been Made... Now What?
After much consideration and weighing the pros and cons, the decision has been made to sell your business. What’s the next step? First and foremost, shop for a business broker who is reliable, trusted, and experienced in these transactions. Often business owners choose the wrong type of company to represent their business when the decision has been made to sell. Many seek advice and often sign contracts with real estate agencies, and in most instances, this is not the best choice.
A business advisors’ firm that is experienced and has a portfolio of successful sales is the best choice when selecting a company to represent the sale of a business. Along with having their fingers on the pulse of the market in all kinds of environments, the business advisor often has contacts who are ready, looking, and able to buy existing businesses if the situation is right. Transworld Business Advisors of Indiana is just that – reliable, experienced, and poised to maximize the outcome of your transaction.
Preparing for The Sale of a Business
Transworld always recommends that after the decision to sell a business has been made the work continues as normal. Literally, that means keeping the business running on all cylinders as if it is not for sale. There is an old saying, “don’t sweat the small stuff”. When the decision has been made to sell a business, that is exactly what needs to happen.
Accounting & Finance
Of course, a primary focus is to have all the finances in order. In achieving the highest sales price top-line sales are just as important as bottom-line profits. Expenditures must be properly documented. This includes overhead, outstanding debts, cost of goods, services, contracts, and employee salaries. Any long-term outstanding loans and debts need to be reconciled or paid off. If the debt is to be a part of the sale, remember that it will come out of the purchase price often at a higher cost than if it was paid off before the sale.
The decision to sell was made today. From this day until there is a closing the business should be run as effectively and efficiently as possible. Keep key customers satisfied with their goods and services while reaching out to new ones. Don’t cut corners because there is a sale pending; instead, run the business in the best way possible so that a thriving, working business is for sale. Just as key customers have been essential to the success of the business before the decision to sell was made, so too are the employees.
Don’t hide the fact that the business is for sale. Discuss the decision to sell with key employees and learn who is willing to transition with the business to the new owners. Selling a business with key personnel in place who can perform without missing a beat is an asset. Buyers want to buy a business that is ready for liftoff immediately upon closing the sale.
Plan for the Future
Along with key employees, a plan for future growth should be in place. The new owner may not like the plan and change it, but presenting one shows the faith that you have that the business has potential growth opportunities.
Count The Assets
It is important that all assets of the business are properly accounted for when determining a price. Supplies, inventory, and infrastructure are all part of the assets of the business. Be realistic about the value of outdated equipment, such as older computers that can be replaced with new ones at a third of the price. Don’t deduct wear and usage on equipment or supplies and infrastructure that is obsolete. Count it for what it is, a zero. Be realistic if it is obsolete: there it has no value to the new owner. The same applies to inventory that didn’t sell and probably never will: either dispose of it at sale prices or count its value as zero.
The Business Broker
Reputable business advisors, like Transworld Business Advisors of Indiana, have brokered sales, mergers, and acquisitions and offer a wealth of knowledge in preparing a business for transition. A real estate agent can tell you if it is worth remodeling the kitchen when selling a home, but not about expanding the product offerings of a business when it is up for sale. Whether looking to retire, change careers, moving or whatever circumstances have led to the decision to sell your business, keep it running at peak performance for potential buyers and receive the best offer. Then, be sure to contact Transworld Business Advisors of Indiana and take the next step in the process of transitioning to your next chapter.