Fantasizing about sitting on a beach in the Florida Keys with a mai-tai in your hand, not a worry about employees or inventory in sight? Or maybe you're so busy with all the day-to-day work of keeping your business afloat that you haven't had a single moment to think about what comes next.
Well, take this article as a sign: even if you have no interest in selling your business today, you should keep it as a possibility in the back of your mind.
Why should you think about selling your business?
You may be ready to sell today
For some small business owners, the desire or need to sell strikes at an unexpected time. Perhaps you've simply had enough of the daily grind and want to move on to something new. Or maybe an unmissable opportunity, like an early retirement after a lucrative offer, has presented itself. Whenever the motivation arises, it's wise to have selling as an option.
You may know you want to sell eventually -
Many entrepreneurs envision an exit strategy years down the road, where they can eventually cash out and embrace a new chapter in life. By preparing well in advance - getting operations, financials, and mindset in proper order - you'll be poised to maximize the value of your business when you are ready to sell.
You may not want to sell, but find yourself in a situation where you need to sell
Unforeseen circumstances can force even the most committed business owner's hand. Drastic changes in market conditions, personal health issues, partnership fallouts, and other surprises may necessitate selling something you had no intention of parting with. Having your business sale-ready provides options during tough times.
Making your business as robust, viable, and transferable as possible has benefits beyond saleability. Viewing your operations through the scrutinizing lens of an outsider buyer illuminates areas of potential improvement. Optimizing for an eventual sale translates into a stronger, healthier business today.
What should you do to make sure your business is sellable?
Preparing operationally: Are your processes documented so they can be replicated without you? Are employees cross-trained with up-to-date procedures? How much of the business' operations are siloed solely through you? An independent operations manual and workforce familiar with all roles is crucial for a buyer.
Preparing financially: Maintaining organized books and records is a must. Understand valuation methods such as earnings multiples that buyers apply in your industry. If you wish to receive maximum value, be prepared to help during a transition period and potentially roll over equity to validate earning projections. Have a plan for the potential windfall proceeds.
Preparing psychologically: Selling a business to which you've poured your heart and soul can be an immense life change. How will you fill the time once removed from leading your entrepreneurial baby? What personal sources of fulfillment must you develop? Mentally mapping out your next phase prevents drift after closing a sale.
I want to sell my business - what should I do next?
So you've prepared operationally and financially, and decided selling is the right move. What are the next steps?
Prepare an information overview about your business: Gather materials that objectively showcase your company's products/services, market position, financial history, growth prospects, and other key insights. Think of it as marketing your business with full transparency to prospective buyers.
Decide: do you want to work with a broker or banker? Weighing the pros and cons of professional assistance versus self-representation comes down to complexity of your business and personal capacity. Brokers and bankers offer expertise but take a piece of the sale. Going solo avoids commissions but requires substantial dedication. You should also consider listing your business on marketplaces like Acquire.com, Flippa, and BizBuySell
Decide: what do you want financially? Get clear on your expected sale price and see how it aligns with valuation estimates. Then define the absolute minimum you'd accept, and the point you'd feel underwhelmed. Knowing your financial boundaries beforehand avoids rash decisions.
Prepare yourself for a long, difficult process: Selling a business tends to be arduous and psychologically draining. Many prospective buyers will request reams of documentation, nitpick your business, and retrade terms. Maintain endurance and protect your patience reserves.
Don't be afraid to negotiate for what you want: At some point, you'll need to advocate firmly in your best interests while compromising graciously where appropriate. This delicate balance comes through preparation, defusing emotions, and focusing on your defined goals.
There's a good chance that, even after reading this article, you're not ready to sell your business today. But hopefully you better understand the reasons to keep that as a possibility, what you should do to make sure your business is one that's able to be sold, and know where to go if you decide to take the next step. Good luck!
