- Date : 28/02/2022
- Read: 5 mins
Tips to sell business easily
Sell your business the right way. Don't make these mistakes.
Are you thinking about selling your business but getting palpitations just by the thought of it? Don't worry! You are not alone in this. Every seller experiences jitters, especially if it is their first time taking this step. However, don't let nervousness deter you from the great things you can achieve with the right business deal.
Selling a company or business might sound intimidating, but you can accomplish a profitable sale if it is conducted the right way. To help you with this, we have drawn up a guide on how to sell a business, paying special attention to the common mistakes sellers make and that you must avoid so that you walk away happier with the perfect price of sale.
Don't succumb to a "fire sale"
In its literal sense, a "fire sale" refers to the sale made when owners sell products left after fire damage. A fire-sale is made at the cheapest rate to salvage something from the heavy loss incurred. It also describes the situation when products are sold at a much cheaper rate than their original pricing or their true valuation. While selling their businesses, most owners may tend to undervalue their years of effort and thus incur heavy losses.
To avoid this, you should have a clear idea of what your business is worth. You could try doing this on your own but in the long run, it would be beneficial to bring in a professional appraiser. It will not only help you peg the right value of your business, but also provide the documentation and detailed report to support your asking price while presenting it to potential buyers. Refer to this writeup if you need help on how to value your business.
Keep an exit strategy ready
According to a UBS¹ study, 48% of business owners never draw up comprehensive exit plans from their businesses. An exit strategy may sound ominous when you are setting up and growing your business, but having one speaks of sound business and financial strategy because it means you have a plan even for unforeseen circumstances.
In order to do this, make sure that:
- Your financial books and records of at least the last 2 to 3 years are updated, accurate and presentable.
- You should not wait for the business to go down before deciding to sell because it will only lower its valuation and selling price.
- You should be ready for questions like the reason for sale, how it will be beneficial for the buyer, market conditions, and future value. Do you best to show that the decision to sell has been made not in haste and out of desperation but as a result of proper planning.
- Along with easing the transition before and during the sale, your planning must take into account activities after your sale by considering your financial options such as avenues to invest your money in if you are retiring or chalking out a detailed plan if you want to change your career or start another business.
Seek third-party help
According to a survey², over 50% of business owners try to sell their businesses themselves. Though this is not a bad idea if you are familiar with the process and its complexities, it might also present difficulties if you are a beginner. You are intricately connected with your business, so your emotions might cloud your thoughts and judgement. However, a third party would be able to view it more objectively.
Hiring brokers for selling a business might sound expensive, but you can sometimes get a better price for your business by taking this route. Remember, brokers get a commission for what they sell, so it is in their best interest as well to get the maximum price benefit for you. They can help you promote your sale, find potential buyers, and finalize the deal.
However, not every broker may be the right fit for you and your business. You should take your time, look into their past work experience and sales, and judge whether they have the skill to make the perfect deal for you. This way you can be as involved with the sale as you want, and at the same time benefit from different perspectives that can help and support you in your dream sale.
Take your time while making a decision
Selling a business needs you to share your trade and financial secrets, and sensitive details about your company. So never rush in your quest to find the perfect buyer. Negotiate with multiple buyers, compare their prices, their expectations from the company, the time they would take to pay you the finalized amount, and verify their authenticity. Only then, after considering every angle and perspective thoroughly should you consider which way to go.
No matter the size of a business, we know that for an entrepreneur, it is the fruit of countless sleepless nights and ceaseless efforts. As a businessman, you must know when to push for more and when to stop while you are ahead. It is best to think of a business sale objectively so you can cherish the hard work you've put in but at the same time, get the right value for it. Plan your exit strategy wisely so that you can reap the reward for your years of diligence and courage.