There are many reasons why small business owners decide to sell their business. Whatever your reason, if you’re thinking about selling, ensure you do it the right way. Do not rush into the process, even if you truly want or need to get out quickly – rushing can lead to expensive mistakes in the long run. Instead, answer these three questions thoughtfully and follow the next action tips to start the process on the right foot.
1) Why do you want to sell?
What’s your motivation for making this move? Even if you’ve already given it thought, dig deeper – do you want out because managing operations is overwhelming or the financial strain is becoming too stressful? Sometimes these can be good reason to leave a business in someone else’s hands. However, ask yourself this – are you still passionate about your business? If the operations and financial stresses could be reduced, would you still be all-in? If you can answer “Yes” to either one of those questions, you may want to reconsider selling. Operational and financial strains can often be solved with the right strategy.
Next action tip:
If you’re 100% sure you want to sell, move on to #2. If your motivations to sell are based on financial or operational stresses, look into potential solutions before making your decision. If you’re still passionate about the business, you could regret selling. If your struggles are financial, you may be able to find an investor or private equity firm to help ease the burden. If you’re struggling with operations, consider finding a partner who specializes in the field – someone who is willing to help build the business by reducing your operational burden. If you still want to sell after you explore all options in depth, move on to #2.
2) Who are your advisors? Do you have a mentor?
Selling a business involves complicated financial and legal agreements, and other topics about which you may not have all of the details you need. Finding a financial and legal advisor is crucial to selling your business the right way – they can make sure all of the details are taken care of and that you’re getting your fair share of the deal. A mentor who has experience selling a business can also be helpful in the sales process. Use them as a sounding board when making tough decisions to ensure you’re choosing the best path possible.
Next action tip:
Before moving forward in the sales process, find a mentor who has experience selling a business. Ask your mentor for recommendations on which financial and legal advisors have a good reputation in your area. You should also do your own research online to be sure you’re comfortable with the selections. It can be tempting to opt for advisors with the smallest price tag. If low-cost seems like your only option, be sure you get the best you can afford – it will pay off in the end.
3) What will selling mean for you?
Do not move forward in the sales process until you know what this change will mean for your lifestyle. Do you know what the valuation will be after taxes and fees? You need to make sure that selling the business at this point in time is a sustainable solution.
Next action tip:
Get a solid valuation of your business and figure out what you’ll walk away with in the end. Then, calculate your next moves, your living expenses, etc. to ensure that the sale will leave you enough to maintain a lifestyle you’re okay with. If you find that you’re not going to walk away with what you need, consider how you can improve your current situation and make the business work for you. Perhaps with a few adjustments, you can grow the business and ripen it until you’re able to make a lucrative sale.
The Bottom Line
Selling your business is a big deal – do it right and you’ll be one happy camper. However, there is a lot to consider and do before you can get to that point. ClearVision is now offering services to help you prepare as well as actually take your company to the market place. For more information, call or write us today!