If you're thinking about selling your business, there are
several different pieces to consider. Are you ready to sell your business? Are
you prepared for this large transaction? Is selling the right choice for you?
If you are planning on selling your business, it is important to keep these do's and don'ts of selling your business in mind.
The Do's
- Plan Ahead
It is never too early to start preparing for the sale of your
business. If you're unsure about selling your business, planning ahead can
still give you a head start if you decide to follow through with a sale. A part
of the planning process is keeping account of all important documents,
documenting all changes in the business, and outlining any ground rules that
will be important in a sale of the business.
- Maximize The Value of Your
Business
Before you decide to sell your business, you need to take
certain steps to get the maximum value of your business. One of the best ways
to do this is by documenting the business's performance and profits in its years
in operation. Evidence of profitability can greatly improve the value of the
business. It is also important to document the processes that have contributed
to the profitability so the process can be replicated.
- Organize Your Records
Any buyer will want all important records and documents to be
reviewed before moving forward with the transaction. Having them readily
available will make this process easier when the time comes. These documents
include financial statements, client contracts, employment contracts, a list of
assets, and more. An easy way to compile this information is in a confidential
information memorandum. A CIM provides a summary of the business for interested
buyers.
The Don'ts
- Base A Sale On the Buyer, Not
the Selling Price
While you may be looking for the highest bidder, you should
look for the best buyer instead. The type of buyer you choose can impact the
outcome of the sale, such as the selling price, how much money you receive, and
how the business performs after the sale. You need to choose the best buyer for
you and for the business based on what is most important to you.
- Don't Rush The Process
If you rush the sale, the sale may not be properly executed
and you may not get the maximum value for your business. Providing grace and
time to your buyer, lenders, and investors can help the transaction go as
smoothly as possible.
- Don't Take This On Alone
These transactions can be extremely complex. If you are not
well-versed and experienced with this, it can be difficult to navigate on your
own. Having a knowledgeable professional on your side will make the transaction
go smoother. You'll want to consult with any financial partners, your lawyers,
and your accountants. Hiring a consultant in business successions could be
helpful.
The choice and process to decide if you're selling your small
business can be made easy with the right financial advisor. Our advisors here
at Genesis Financial Group can help you answer the hard questions. Call us
today to get started.
Sources:
https://www.bdc.ca/en/articles-tools/blog/5-do-and-dont-when-selling-a-business
https://www.bcbusiness.ca/The-Dos-and-Donts-of-Selling-Your-Business
https://www.leithwheeler.com/resources/insights/dos-and-donts-when-selling-your-business