What You Should Know Before Selling Your Business

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There are many advantages to selling a business. It provides the freedom to live a lifestyle that is free of ownership responsibilities. Selling a business also has financial advantages, allowing the former owner to invest in other ventures. It may also help the seller to capitalize on a high selling price, when economic conditions are right. When selling a business becomes a priority, there are a number of things that should be considered which will help to make it a reality.

Defining an exit strategy is something that is best done at the very start of the business. In fact, Inc.com considers a lack of an exit strategy as being the biggest issue facing a seller. What should be done if an exit strategy is not clearly defined? Everything needs to be put in order so that the sale can go through successfully. It is much better to sell a business when it is at its prime than to wait until catastrophic issue occurs. When a business has all of their books in order and has an accurate financial evaluation, it will help to make it more attractive to potential buyers.

Businesses that only cater to a single customer or perhaps have a limited number of customers are going to be less attractive to buyers. In order to improve the odds of selling a business, it is important to diversify the customer base. It may become necessary to market the business aggressively to build a customer base before a sale is considered. This will also have the benefit of increasing the potential profit from the sale of the business. One of the more successful ways to build a customer base is by asking for referrals from existing customers. By leveraging the trust of existing customers, it is often possible for a business to build a customer base quickly and effectively.

It is important for the sale of a business to be kept as quiet as possible. Putting a business on the auction block openly can be detrimental to the sale. While building up a customer base before the sale takes place, any word of the sale will make it less likely for customers to come on board. Even letting employees know that the sale is about to occur can impact the services that are being provided to the customer. When selling a business, keep everything under lock and key. All of the financial records and any sales information should be kept on a password-protected website. A nondisclosure form should always be signed before access is granted to a potential buyer.

One other missing piece of the puzzle for many business owners is to be prepared mentally for the sale. Many business owners, particularly small business owners tend to get very involved in the everyday activities of the business. It can be difficult for them to let go, which could cause a variety of problems. By being mentally prepared for the sale of the business, it allows everything to go smoothly from all sides.