Susan Stilwell has more than 30 years of comprehensive sales, marketing and management experience in the coaching, consulting and human capital industries. As an accomplished business development professional Susan has specialized in successfully launching start up businesses including her own staffing company in 1998. Susan is currently responsible for Brand Development for AdviCoach, a national business coaching company with more than 75 offices throughout the U.S. that advises small-medium sized businesses.
Selling a business is not unlike selling a house. In fact, both require big emotional decisions and meticulous planning. However, the process of selling something that has encompassed years of hard work and dedication takes more than putting up a “For Sale” sign.
According to a recent BizBuySell study, there were nearly 50 percent more businesses sold in 2013, than there were in 2012. To break it down, there were approximately 7,000 small businesses sold in 2013, compared with 4,730 sold the previous year. During that same time period, the housing market looked brighter than it has in years.
People are becoming more confident with the state of the economy and are willing to make bigger decisions that will have a lasting impact on their lives. If you are looking to transition out of your business, the tips below could make the processes a bit easier.
Make sure your business is running like a well-oiled machine far before you think to sell it. The foundation of the business needs to be strong, the finances need to be in order and the day-to-day operations should be so systematized that anyone could come in and fill any role with simple instructions. In other words the business should be process and system dependent, not people dependent.
Providing financial statements (well documented and audited) as well as recent tax returns for at least three years before selling the business will help instill confidence for the buyer and make them feel more knowledgeable about the history of the business.
Businesses with successful systems in place and their finances in order ease the transition of ownership and will also add value to the business as a whole. Another added perk, if the company is strong before the sale, the likelihood of it continuing to be successful is greater.
When to sell
Most people want to sell a business when it is doing poorly or suffering. Contrary to popular belief, that is the absolute worst time to try and make money on your business. That is why it is extremely important to start building equity in a business long before selling is a necessity.
Think about the poor souls who purchased a new house a bit out of their price range, banking on the extra bucks from the sale of their old house to swoop in and save the day. As we all know, those are the houses that sit on the lot with no offers made, as the asking price slowly falls day by day.
In order to avoid this common misfortune, keep in mind that you eventually want to sell the business and then wait comfortably until the most opportune time. Most business owners need 2-3 years to get everything in order, so use that time to monitor the selling environment.
As much as it is important for your business to hold strong for a sale to finalize, it is equally important for the economy to also be doing well. Even if a business is experiencing positive sales, and amazing profit, if no one in the marketplace has the money to buy it, the business will not sell.
When deciding to sell, aim to have either the economy or the profitability of your business on your side. Because the economy is starting to improve, now would be an ideal time to sell a business, even if profits aren’t as high as they could be.
What you want
Why sell a business if it is doing well and the economy is thriving? There are many different factors that go into whether or not you want to keep a business. One that is succeeding can still take a lot of time and energy to maintain, which may be a lifestyle you no longer desire.
At some point a business owner needs to decide if they still want the responsibility, or if they would rather get rid of it in order to make room for a new passion, or even retirement. It is important to outline those desires before selling a business in order to ensure that you are getting the best deal to achieve your new goals.
Having those expectations will allow you to find the right person to take over, and also assess how involved you want to be in in the business going forward.
Ask for help
You may be wondering, how much is my business worth? How can I find the right person to buy it? Are the legal items all in place for the sale of the business? There are multiple factors, all of which are extremely important to ensure that the business you have painstakingly cultivated falls into the right hands.
Questioning the sale of one of the biggest investments of your life should not be dealt with lightly. A professional can help guide you and provide much needed insight on how to get the most out of your sale. It is also necessary to speak with a Certified Public Accountant who can work on making sure that the audit is completed and comprehensive prior to the sale of your business.
Although a business owner may have to pay for a professional out of pocket, the investment will pay off in the end when the business is sold for higher than expected. Developing a systematic approach to letting go of your business can help ease the financial and emotional difficulties with starting your new chapter.