The BizFilings blog covering business tips and trends.
What To Do If You're Planning To Sell Your Business
Published on Nov 5, 2013
Read our article, 'What To Do If You're Planning To Sell Your Business' at 'Time to Start Up,' the small business blog by BizFilings.
Whether you want or need to sell your business, its important to remember that, unlike the many business decisions you have probably made in your career, selling is a one-time action for a business (so it’s critical to do it properly!) An important consideration is how you will remain compliant with taxes and government regulations while simultaneously filing the proper documentation. Beyond the legal steps you will need to take, it’s imperative to be as transparent with your plans as you can with your businesses stakeholders, including any employees, partners and investors. At the end of the day, remember what contributions they have made to your success and treat them as the value-add they are.
We recommend that you elicit the help of the professionals to guide you through the process, ensuring that all necessary steps are taken to selling your business successfully!
Alert Your Accountant
Just like the assistance they provide for the overall management of your business, your accountant can help you make smart financial decisions when selling your business assets. You should discuss your plans with your accountant in advance and get his or her advice on the best methods of arranging the deal. Your accountant can also find ways to maximize the owner draw from the business to ensure that it is an attractive purchase for a potential buyer. Your accountant may also be called upon to provide financial information during the deal and will play an important role in the final phases of the sale.
Appraise Your Business
An appraisal is used to determine your business’ worth on the market. A business’ value is typically determined by a formula that may vary slightly based on the type of business being appraised. The appraiser will be able to give you the best estimate on the price you can reasonably ask for your business. If real estate will be included in the sale, the appraiser may advise minor repairs to make the sale more attractive to potential buyers.
Contact A Business Broker
Once you have a clear idea of the value of your business, you can contact a business broker. Business brokers help facilitate the sale throughout the process. They generally pre-screen buyers to ensure that time is not wasted on either side of the transaction. A business broker can also advise you on the types of information you should provide to convince the buyer of the viability of the business under new ownership.
Find An Experienced Attorney
You will need an attorney with experience in business sales to help protect your interests throughout the entire sales process. Generally, business brokers can refer you to an attorney or you can contact your local bar association for a list of names. Having a partner who knows the ins and outs of the legal system is crucial to a successful sale. He/she will help you avoid unnecessary legal battles or costly litigation associated with some negotiations.
Be Forthcoming With Information
Be prepared to act as the “salesman” for your business, providing as much information about the day-to-day operations as you reasonably can. Don’t be afraid to offer the “tips and tricks” you have learned over the years that can be critical to the success of a new owner. Reaffirming the success of your business can help to reassure the potential buyer about the likelihood for his or her own success.
Selling a business may be just as difficult as starting a business – the considerations have to be taken just as seriously and the risk is equal. We hope that our guidelines can help give you a little relief when venturing into a business sale.