Starting a business is a very complex project in today’s competitive market. However, it is more difficult to sell a running business during a pandemic. Further, as more and more economies are affected by the recession, many people are selling their businesses.
Reason Behind the Sale
The first and foremost step in this process would be to determine the reasons or causes behind the sale. These reasons can be retirement, death or illness, and partnership disputes. Some other reasons include boredom with the business or getting overworked in pursuit of profits.
Timing the Sale
When selling the business, you need to make a decision as early as possible to get the best price. You should take the decision and start preparing a year or two before the sale. While preparing for the sale, you can streamline the business, improve the customer base, business structure, and financial records.
Where Can I Sell My Business?
Now that you have decided to sell your business, it is the right time to think about where you can find potential buyers. Some of the key things to consider where trying to sell your business via an online platform are listed below
1. The platform needs to be trusted and legal business.
2. The platform needs to validate both buyer and seller.
3. It needs to support a system for Escrow of transactions.
4. It needs to support a strong dispute and conflict resolution policy.
5. It should provide all tools to communicate with potential buyers.
Recommended Platform for selling your business: Flippa
Flippa.com is a business leader that has sold thousands of businesses online. This has made things a lot easier for businesses.
There are many other websites that may offer to sell your business however it is too risky to trust them without a proven business record. Flippa in my opinion has served for long enough to build a reputation. This makes me feel a lot more confident about my business selling on the platform. The site has a huge customer base of both buyers and sellers that makes it ideal for flipping businesses. You can sell a business and buy another on this platform making more money.
After creating a timeline for selling your business, the next step would be the business valuation. This step remains the core element as you need to price your business and ensure that it is not too low or too high. This step involves an outside appraiser who will create a document to explain its net worth and it would offer a comprehensive explanation related to the worth of the business and the asking price. Completing this step would increase your credibility during sale negotiations. It is because this document validates your claims related to listing and the asking price. Further, it would offer the required information to the buyer at the same time.
How Flippa Does Business Valuations?
Flippa has a thorough business evaluation process to do valuation of business. This is a free service and very useful for serious sellers and buyers.
Flippa evaluation is based on past records of thousands of businesses that have been sold on the platform. The valuation process is self-correcting and already takes care of market corrections and trends.
Preparation of the Documents
After completing a comprehensive business valuation, the next step would be to prepare the documentation or information kit for sales. Some documents required for this process include tax returns and financial statements for the last three to four years, an equipment list, a list of contacts required for the process, and any other relevant document. You can also create a business manual about the business operation. When you are looking for a potential buyer, you can offer this information kit to them. At the same time, you need to ensure that your business is presentable when any buyer comes to visit the place. You can do that by refurbishing the premises or replacing and repairing broken equipment.
Finding The Buyer
After these preparations, the next step would be to find a buyer. During this process, you need to ensure that you have two to three potential buyers. Moreover, you need to keep in contact with them. Before shortlisting the buyer, you need to check their financial status. You also need to consult your accountant or lawyer before starting the sale process. While quoting the price, keep some margin for negotiations. While deciding the price, consider the future worth of the company. During negotiations, put everything in writing. Before disclosing your company information, ask the buyer to sign a non-disclosure agreement.
Handling The Profits
The last and final step after selling the business is to determine how you can handle the profit. For that purpose, you need to discuss the matter with your accountant or lawyer. It is because you need to determine how much tax you need to pay on your profits after the sale of your business and how to invest the money. Discussing with a financial professional will enable you to understand how to invest the profits gained after selling the business and gain long-term benefits. By investing your profits, you can maintain your lifestyle and save for your retirement as well.
Change remains the only constant and this tenet holds in business. There’s always a possibility that you may have to sell the business you have founded and have come to love. The reasons may vary according to circumstances, whether it is the death of the founder of disputes between different partners. However, you need to get the maximum profit by selling your business. Hence, it’s imperative that you don’t miss any of the aforementioned steps described above. By following these processes, selling your business will be hassle-free and you will monetarily benefit from the selling process too.