Like buying or selling anything of great value, selling a business is a lengthy and complicated process, chock full of legal potholes and difficult questions. Don’t let this put you off, though, as the outcome could be incredible for you. People approach this from many angles, partly because people want to sell up for such a wide range of reasons. You might need to be willing to compromise on some areas, but be ready to stick to your guns too. Here are just a few things you need to know before you commence the process of selling your business.
- It’s all about the profit
Your potential buyers aren’t going to care about the revenue your company drew – the profit is all they are interested in. Yes, they will want to see your revenue figures to see what could be tightened up to draw more profit from the business, but if the overheads are colossal and the profit suffers as a result, they’re understandably going to be a little bit more concerned. So when you’re putting together your sales pack, be sure to make a bigger deal out of your profit, not your revenue.
- Potential doesn’t have a price
You may not share a vision of the future of your business with your potential buyer. You may see wonderful potential, but if that isn’t the direction that person wants to take the business in, it means next to nothing. What’s more, the truth of the matter is that potential has no price. If you’re making a profit of $1000 a month now, but you believe you could make a profit of $10,000 in a year’s time, they’re still only going to be able to make an offer based on the actual profit, not the projected profit. Yes, it might make them more keen, but don’t expect them to trip over themselves at the potential.
- Professional help never goes amiss
Whether you choose to do all of your negotiating through an agent, or you just keep an investment professional such as Chris Pivik on your side to answer all of your tricky questions, being able to call someone up when you’re stuck can really put your mind at ease. Especially if this is your first rodeo. So when you’re deciding on the asking price for your business, remember to factor this into your costings.
- You need to be able to verify all claims
Anything you claim about the value of your business, from advertising revenue to the cost of assets, your buyers are going to want to see solid, verifiable evidence to back up your claim. Receipts, invoices, and even bank statements can all be a part of this evidence, which your accountant, if you choose to use one, will be able to advise you on. If you don’t have this evidence available, don’t expect to be offered the money your company is technically deserving of.
- The key word? Honesty.
Finally, be sure to tell the truth throughout the whole process. Not only will it speed it up, but it covers your back one the process is complete. If you’re dishonest, there is always a risk of legal action against you.
Selling your company could be the best thing that ever happened to you, but it’s always best to be prepared.
