Every business owner knows how much time, effort, sacrifice, and investment of the heart and mind it takes to start and operate a business. But there may come a time when selling your business becomes appealing. Know that you are not alone in facing this difficult decision. In fact, in 2021, 8,647 business sales transactions were closed according to bizbuysell.com.
Why Selling Your Business May be Right for You
At some point, a business owner may need to consider selling his/her business for some of the following reasons:
First, the risks of operating a business may become too daunting to deal with. Second, after many years of working hard to run a company, retirement may become attractive, and selling your business could finance your retirement plans. Third, every person changes over time. Maybe a business that was once highly energizing just isn’t as interesting or motivating anymore. Perhaps a geographic move makes it difficult to keep the business running. Or perhaps one’s health conditions have changed. Fourth, advances in technology and a constantly changing marketplace that becomes more competitive each year may make it difficult for the business to achieve the desired success level. Fifth, perhaps a partnership or shareholder disputes seem to make selling an imperative decision. And sixth, selling your business could provide funds that could be used elsewhere.
Selling Your Business—The How-to Tips
Selling your business can be a time-consuming and emotional proposition. The process calls for using experts, especially your CPA, to help you achieve an outcome that is satisfying and problem-free. Consider these tips:
- Decide exactly why you want to sell your business because potential buyers will want to know that as will your employees and vendors.
- Determine the characteristics of an ideal buyer. Don’t sell to the wrong kind of buyer.
- Pay attention to the timing of the intended sale. Will the economy support selling the business at an attractive price? Don’t sell (unless you absolutely have to) when the market is in a downturn.
- Determine the value of your business using an appraiser or valuation firm. Be able to defend the proposed selling price.
- Get your finances in order. Make sure that the business is in good shape to be sold. With advance planning and good effort, you can strengthen your customer base, increase sales, and improve your financial records so that the business is more attractive to potential buyers.
- Assemble your financial statements and tax returns and review them with your CPA for completeness and accuracy.
- Determine, based on the size and complexity of the company, if you will handle the sale of the business by yourself or if you need to secure the services of a business broker.
- Prepare an executive summary of the business. That will include things like the current objectives and mission of the business, a summary of its operating components, its products and services, employees, current marketing and sales strategies, and a competitive analysis.
- Put the business on the market.
- Choose your buyer but pre-qualify the buyer before signing a sales agreement.
- Allow adequate time for thorough due diligence. That may take 60 to 120 days.
- Close the deal.
- Plan and prepare for a smooth transition.
Get Expert Accounting and Financial Assistance
Contact Doerhoff & Associates, CPA, based in Jefferson City, MO for professional accounting and financial assistance that you can count on. Doerhoff & Associates has one goal in mind, to provide comprehensive business accounting services designed specifically for your success.
