Selling your small business can be challenging, chaotic, and disastrous without the right guidance and help. Below, we recap some of the big dos and don’ts that every business owner must consider when selling their small business, from record-keeping to appraisal advice.
The Dos of Selling Your Business
First, there are a couple of things every entrepreneur should consider before putting their small business on the market.
Organize Records and Documents
The first step in putting your business on the market and courting buyers is ensuring you have all the necessary financials and paperwork organized and ready for review. Recordkeeping is crucial to the success of a business and its attractiveness to potential buyers. If your business documentation is haphazard, disorganized, and confusing, buyers won’t be interested or will want a significant discount.
One of the first steps in readying your business for sale is collecting and organizing all the records and documents to understand your business’s strengths and weaknesses better. No buyer will want to invest so much money into a business without doing their due diligence, and if they find shoddy and disordered recordkeeping, it’ll likely sour their interest.
Rush Into Hiring Representation
You should hire some representation as soon as you set out to sell your business. For example, business brokers are great for sellers as they have a wide network of businesspeople to consider and are experts in negotiating between buyers and sellers.
But when choosing the perfect business broker, you don’t want to rush into the first person you meet. They’ll be integral in selling your business, so you want to take your time to talk and review with them and consider all your options before making a final decision.
The Don’ts of Selling Your Business
We’ve covered the dos of selling your small business, but what about the don’ts? Sellers will want to avoid waiting too long to sell their business and thinking they can appraise it independently.
Wait Too Long To Sell
When selling your business and negotiating with buyers, you want leverage to get the best deal possible. However, if your business’s revenue is down, you’re inching toward retirement, or other factors are forcing you to sell quickly, your leverage goes out the window.
Too often, business owners only consider selling when they need to instead of when they’re most profitable. Plan and consider selling before you absolutely must to maintain negotiating leverage.
Appraise Its Value on Your Own
Another thing that many owners want to do on their own is set the selling price based on their appraisal. While no one knows the business better than them, they’re also so close to it that they can’t be impartial, and many list too high or too low.
Have a professional take care of the appraisal to put it at an initial fair market value. This will attract more buyers and give you more wiggle room in negotiations.
We hope our guide helps you make the best decisions for you and your business when selling. Remember to prioritize organization and quality representation before listing the business, and don’t wait until you have no choice but to put it on the market.
