"7 Things to Ask Yourself Before Selling Your Small Business"
Selling your own business is as crucial a business decision as starting, operating, or expanding one.
Aside from investing your resources, time, and effort, it has become a big part of your life and leaving it may have some emotional repercussions if you don't carefully plan for such an eventuality.
On a happier note, if you do make a conscious effort to map out a desirable plan, you are sure to end up satisfied and fulfilled as you go through the next phase of your life, be it retirement or an entirely new business venture.
The process of selling your own business can be tedious and complex. There are questions you should ask yourself for which you should find answers.
It is critical that at this point you should give yourself sufficient time to ponder specific questions if you are to achieve your desired outcome.
Here are 7 questions to get you started…
#1 - Why Am I Selling My Business?
The reasons for selling are varied, such as:
- New business undertaking
- Change of career
- Emigration
- Retirement
- Health concerns
- Family issues
- Business failure
- Economic down trend and alike
#2 - How Prepared Am I To Sell My Small Business?
The preparation phase entails various processes.
After making a final decision to sell, the key areas and the entire work force of your business should be informed in a discreet and professional manner to avoid speculation and panic amongst the ranks.
Accurate and updated financial records of the business should thereafter be made ready – make an appointment with a Business Accountant.
A complete inventory of all the business' assets, especially the tangible ones, should be undertaken and a thorough review of existing systems and procedures completed.
Other documents that can be prepared at a later time are:
- Information Memorandum containing complete information about your business
- Confidentiality Agreement to prevent information leakage, and
- Letter of Intent embodying the buyers willingness to buy after agreeing with the terms of the sale
#3 – How Much Is My Business Worth?
While a business can be valued in different ways…
…YOU, as the owner, are in the best position to give an honest and true valuation of your business.
After examining your books of accounts, reviewing the systems and procedures in place, consider your intangible assets, and assess the overall economic environment to include industry performance and competition.
You are now ready to give yourself a tag price that will suit your purpose.
#4 – When Is The Right Time To Sell My Business?
Proper timing is paramount when selling your own business, but there is no hard-and-fast rule as to when timing is right.
Depending on your motives for selling, anytime may be the right time…
…For instance, if maximization of price is your aim, a period of economic recession or depression is definitely not the right time.
If you are seriously thinking of retirement due to age or health, now is probably the right time - And so on.
#5 – Who Can I Sell To?
As you may or may not have noticed, demand for Small Businesses has increased considerably due to recent economic times, so most well prepared business owners can afford to be picky when it comes to who they sell their business to.
Your own family members, friends, customers, suppliers, and employees can be your first prospective buyers. Even your colleagues and competitors in the industry may be interested given the right perspective.
The public at large is of course your biggest market, but you will need extra efforts and time to reach to them.
#6 – How Do I Sell My Business?
The process of selling has greatly evolved with the advent of the computer. Reaching out to people far beyond your local area has been made easy with the click of a button or mouse…
…Selling your business through the web is the first option - It allows you to be seen by millions of readers and can be FREE!
Print advertising in newspapers, magazines, bill boards, or posters are good to do in conjuction with the web for maximum exposure.
#7 – Will I Be Happy When I Sell My Business?
Given the right price at the right time at the right place to the right buyer…do you think you will be happy in the end?
...I certainly hope so :-)