Once you have made the difficult decision to sell your small business, you still have a lot of work ahead of you. You have to find the right buyer. This involves more than just comparing offers and picking the highest one. However, there are steps you can take to make the process as smooth as possible.
It is a good idea to break selling your business down into steps. First, you need to determine the value of your business. You can use a range of values, but the key is to make sure it is realistic and based on objective measures such as sales, earnings, and cash flow. This means taking out any emotional value you have in your business. Look for certified business appraisers who can help you determine the right value. You don’t want to assign a value that is too high since your business won’t sell. If you undervalue your business, you leave money on the table.
Next, make sure your financial statements are organized and up to date. If there are any outstanding issues, such as money owed to a vendor or a tax claim with the government, try your best to settle it. The less roadblocks to a sale, the better. Once you have everything in order, you can hire a professional to bring you qualified buyers. They can do the leg work involved, including making sure the buyer has the financing to complete the deal. Accountants and lawyers are other professionals who can help you.
Hopefully, you have a lot of offers to choose from, and now it’s time to narrow them down. There is a lot more to consider than the price. Maybe one buyer wants to borrow a lot to pay you, which means he has to depend on a lender and getting a low enough interest rate. A buyer could also offer you something besides cash, or he may want you to stay on and pay you an earn-out based on future results.
Choosing the right buyer is not easy. On top of everything else, you want to make sure the buyer has a good reputation and won’t destroy everything you have built.