Whether you want to sell your small business or are just starting to examine your choices, there is no right or wrong way to go. While every small business is unique, understanding your sales process may help you make better decisions, reduce risk, and protect your interests. Consider the following factors when selling your small business:
Get the appropriate representation
Starting and operating a business is not the same as selling a business. While you may know your company and industry well and out, navigating the selling process is a very different story. Bad advice can cost you money, so always do your homework and pick the correct individual to represent your transaction. Having the appropriate person on your side, whether it’s a broker, adviser, accountant, lawyer, or a combination of advisors, may make or break the deal. There is an emotional component to selling your physical business, and letting go may be a tough process. A neutral third party can assist limit this risk and guarantee that the process starts on time and continues on track.
We recommend BizBrokers. They have a great track record and are perfectly suited for helping you if you’re looking at selling a small business. And better yet, they’re located on the Sunshine Coast, so if you’re looking for a Sunshine Coast Business Broker then check out BizBrokers.
Prepare ahead of time
Selling a business of any size takes careful strategy and effort. However, it is not as simple as switching from running a business to selling one. It is critical to plan ahead of time in order to prepare yourself and your business. Begin by organising your books and ensuring a sustainable cash flow. If you identify any areas of your firm that require improvement, you must address them immediately since they may be deal breakers for potential purchasers. Because the selling process is time-consuming and can be a distraction from the day-to-day operations of the business, having protocols in place can assist keep the wheels turning.
Finances in order
Your books are the lifeblood of your company, and any small business owner will tell you that books do not balance themselves. A potential buyer will almost certainly look at your financials first to gauge their risk. Books that have not been well handled might be a red signal for potential purchasers, so invest in accounting before placing the firm on the market. A potential buyer may request financial data such as: as part of the due diligence process.
- Profit and loss statements covering the previous 24 to 36 months
- Balance sheet as of today
- Any financial projections or business plans
- Any bank loans or credit line loans
- Financial systems and operations in your company
- A full breakdown of the expenses
If you want to sell, consult with an expert accountant to organise your records.
Don’t cheap out on legal counsel.
Selling a business is a rather difficult procedure. With so many moving components and decisions to make, it’s easy to feel overwhelmed. Aside from financial concerns, there are several legal consequences to consider when selling a firm, both from a compliance and financial one. When it comes to legal counsel, the greatest advice is never to cut shortcuts. Seek competent, credible assistance from a commercial lawyer who is well-versed in the intricacies of selling your firm. Not only can getting the greatest counsel to help you obtain the best price, but it may also keep you from making a costly mistake once the sale is completed.
Don’t hurry through due diligence.
Due diligence, as difficult as it may be, is a vital and necessary procedure for all sides. The potential buyer has the opportunity to learn more about your company and the opportunity. Simultaneously, as the seller, you may get to know the possible buyer and determine whether this is the perfect opportunity before entering into a contract. Your lawyer and accountant can both assist you with this procedure.
Don’t sell to the incorrect person.
You’ve put your blood, sweat, and tears into your company, so it’s easy to get carried away with the prospect of profiting from your work. Not all agreements, regardless of price, will work in your favour, so choose the proper buyer carefully. Your initial offer may not be your best offer, so before you jump at the chance, make sure you grasp the risks and advantages. In rare situations, business sales might go sour when the new owner takes over, leaving you out of pocket. Always have a lawyer and accountant examine the offer so you know where you are legally, financially, and tax-wise.