Nothing lives forever, even your business. A business has stages, growth stages from the Development stage to the Maturity stage. After maturity, there comes an exit from the business. The question is how and when to exit the business. Selling a business is one exit Strategy. Selling is giving up control of the business. It is not easy to sell a business, you need proper preparations before selling to ensure you do it right and be worth it. You need to have a plan of how to make the sale and to come up with a plan you need to ask yourself several questions. Below are 10 questions to ask before selling a business;
Why are you selling?
It is the first question you will be asked by the buyers and your ad visor. There are several reasons as to why you would sell your business. For one, it may not make economic sense to continue keeping it or you need more capital to expand it and you do not have the capital or machinery to do so. Perhaps that was your aim from the development stage, that you would get your business to a profitable stage and sell it. Maybe that it is no longer your passion and you are not giving it your best. Maybe you have found a new business you want to venture into and the sale proceeds will act as capital.
Is the business ready to sell?
Two years of preparation recommended before putting your business up for sale. Your documentations should be ready and should show 2-3 years of profitability. Align the selling time with the best performing time of the company. You want to get the best deal in the market, and you can only do so when your company is profitable.
Is selling the best option for your business?
Ensure you explore all available options before you settle on selling. A well-established business has its advantages that you may still wish to explore, maybe you need to hold on to it and it will do much better on maybe the best way for the business is to exit by selling. Be sure it is the best option.
What are your expectations from the sale?
Your expectations for the sale should be very clear. What price you are willing to take, payout options you are comfortable with and, how far you are willing to take your negotiation. Having clear expectations will help in the sale process.
Professionals that can help you with the selling process?
In such a transaction, you will need to sort out professional help to ensure the sale is smooth. You will need a lawyer for legal advice, Accountant for accounts preparation and tax implications, financial analyst advice of the funding options and business valuation expert who will help establish the value of your business.
Do you have the right buyers for your business?
Naturally, you want to leave your business in safe hands so analyze your buyers. The need to see your business in better hands would drive you to have an ideal buyer in your mind. Nevertheless, the more limitations you have on your ideal buyer the longer the selling process might be. However, take time to identify a good buyer that would steer the business in the same directions you envisioned.
Is there a need to use a qualified broker?
Search for a good buy is not easy. You can use brokers for the process. They will do the adverts for you and maintain confidentiality during the transaction. These will make your work easier
How are your financial statements?
You need to establish whether your financial statement can withstand a potential buyer’s scrutiny. Buyers dig into your business numbers and analyze all the figures. Have the financial audited to have a better chance with buyers.
Would I be willing to stay on if the new owners ask of you?
What are your after-sale relationship options? Would you be willing to stay in the business after you have sold if asked to? What else is required of you? Mostly you will be requested to stay on for a few months to help in the transition period.
The next step you must take?
What is your plan after the Sale of your Business? What have you planned? You need a clear plan on how to use your sale proceeds. How you intend to operate, what you have planned for your team and your future ambitions.