How to sell a business
For many people, a “do-it-yourself” business is an integral part of their life, and the idea that an enterprise can move on to another owner leads them into serious confusion. Therefore, if you are soberly aware of the need (or just your desire) to sell the business, then you can be called a mature and reasonable businessman. If in your life the time has come when you decide to sell your business, you must thoroughly prepare for the sale itself.
Why do people decide to sell their company? The reasons may be different – both psychological and economic or organizational. Perhaps, the owner simply lost interest in this case and plans to open a business in another area (or has already opened and is in parallel with them). Another commonplace reason for selling a business is the absence of the desired profit, a disadvantageous ratio of income and effort spent on business development.
Also, an entrepreneur may not cope with the management of the company, which leads to a lack of customers, loss of market share, the departure of qualified employees or a refusal to cooperate with partners. All this may also give rise to the desire to get rid of the business by selling it.
It does not matter which of the reasons is fundamental to your decision, you must sell the business wisely. We will provide several useful universal tips on how to sell a company that are suitable for almost any business.
How to profitably sell a business
1. The need for sale
First you need to determine the reason why you want to sell your company. Justifying the sale of a business is extremely important, as businessmen often make a hasty decision and then have to regret what they have done. Perhaps your business is in excellent condition and your desire to sell it is due only to the fact that you overworked and tired? Then you just have to take a little vacation.
After a rest, you will take a fresh look at your business, and your desire to get rid of it will be removed by hand. If the reason is really serious and due to objective factors, then it is necessary to formulate it clearly, at least for oneself. So it will be easier to understand how to act in the next stages of the sale of the company.
2. Perspectives and business valuation
If you decide that you will no longer engage in this business, you have two options: either sell it or liquidate it. It is necessary to analyze whether the company has a way of further development, whether it is promising and whether it will be interesting to be engaged in this business to potential business buyers. If the answers to these questions are positive, then you can begin to engage in sales, if not – then you should think about the liquidation of the company. Often it is the second option that is more appropriate.
In order to assess the value of the company, attract a professional business appraiser. After analyzing the data, he will tell you what value a company can claim as an object of sale and how best to sell it – as a holistic business or in parts (you can sell assets separately). It is best if several different methods are used in business valuation.
However, remember that an expert’s assessment is just his opinion, and when you start negotiations with a potential buyer, he will most likely want to involve his own specialist and evaluate the business anew. And he has every right to do so. Perhaps, after re-evaluating the business, it will be a completely different amount of sale.
The conditions of the modern business market are such that often a company is bought at a much lower price than independent experts estimated it.
3. Preparing for sale
Here it is worthwhile to determine how expedient the sale of a business is right now, and what you can do to increase its value. Assess whether redecorating is needed, what its cost will be, and whether it is profitable for you to sell your business.
All necessary business assessments, including financial and legal audits, should be carried out in advance. Find out how long it will take and how it will pass. These activities need to be completed before you start negotiations with a prospective buyer.
It is quite useful to imagine yourself in the place of a potential buyer. When you placed an advertisement for the sale of a company on a special website, specifying all the necessary business parameters and the desired price, take a look at this announcement through the eyes of the buyer. You will immediately see what a lack of business immediately catches your eye, what is better to add to the ad, and what is better to keep silent about.
4. Collection of documentation
The process of selling a business is associated with a certain paperwork. Check the validity of all contracts that may be relevant to the sale, and extend them if necessary. These can be contracts for the supply of goods, for the rent of a room or equipment, for the supply of raw materials, a lease agreement.