Entrepreneurs who have spent all the time developing a company would probably have mixed feelings about selling it, even to a trusted employee.
If you add the many aspects of how to sell your small business to that, then the mere thought can be overwhelming.
Selling your business, though, can be a workable task for entrepreneurs.
For entrepreneurs looking to sell their small businesses there is a comprehensive process in place.
How to market your small business can be a fairly easy sequence of events, with some preparation and planning.
In this article, the entrepreneurs will learn what steps to take to be well prepared for sale in advance.
1. Have an business exit strategy
Developing an exit or succession plan, when you write your initial business plan, seems counterintuitive. But, how to sell your small business is a recommended step.
For example, if you want to raise funds, investors will most assuredly ask you about your business’ long-term plans.
Entrepreneurs with an established strategy will have more success in securing funds than those with a blank sheet of paper.
Even if you are not planning to seek funding, it is best to start thinking of your business exit strategy months or years before the sale.
The truth is that a established exit strategy is key to the way your small business is sold
2. Be aware of the terms of the valuation
Many entrepreneurs have no grip on what their business is worth. Many factors affect the valuation of the company, which is why this can cause confusion.
A valuation is extremely important, since it is the basis for the selling price of the small business.
Projections for cash flow, revenue and industry are just a few of the criteria that impact the valuation.
Entrepreneurs may take advantage of online resources or employ an expert to provide independent valuation.
You should bear in mind that, during the negotiation process, the third party analysis tends to hold on better.
Entrepreneurs who realize the importance of their company are ahead of the curve as they decide how to market your small business.
3. Make ready your sales memorandum
If you want to hire a broker to sell your small company, he / she will write a memorandum of sales for you.
However, for this information the broker will rely on entrepreneurs, and with good reason.
You are a small business specialist, and the perfect person to “sell” it.
Generally speaking, a sales memorandum contains details about the finances of your company , marketing initiatives, projected growth, competition and sales price.
Entrepreneurs should distribute this document only to prospective buyers which have signed a non-disclosure agreement. This is a significant step in the way you sell your small business.
4. Take account of your curb appeal
Your company has a presence, whether you’re a small business owner with a brick and mortar store or an eCommerce store.
Only you can monitor how this looks to potential buyers.
It is a delicate combination between functionality and aesthetics but must be tackled before listing for sale your small company.
To raise the valuation, you can sell your company “as it is” or make improvements.
Your physical location might need some upgrades to the paint or equipment. Or perhaps your online store needs to refresh its website.
In spite of that, entrepreneurs need to make improvements before thinking about selling your small business to get the top dollar from potential buyers.
5. Searh for the deserved buyer
It takes finding the right buyer to sell your small business. If you’re an entrepreneur who’s been working tirelessly to build the business, you ‘re likely looking for someone to carry the torch.
That means that may not be a good option for the first offer or the highest bidder. Set requirements for your prospective customers, and measure each accordingly.
Choose the new owner carefully, particularly if you have long-term customers and employees.
Even after you have completed the paperwork, your reputation is still on the line.
Entrepreneurs must start thinking about a business exit strategy well in advance of actual sale.
The steps for selling your small business are well-defined and simple.
Part of the process is to plan an assessment, make changes and find the right buyer.
Education and preparation are crucial if entrepreneurs are to be able to continue doing business throughout this time.
Entrepreneurs who follow these steps are ahead of the curve for how to sell your small business and on their way to a successful sale.