Selling Your Business in a Step by Step Process

A recent survey found that of all first-time business owners, 80% simply allowed their businesses to go broke, eventually closing their doors and selling their equipment. Does that sound familiar? “Going out of business sale”, says the sign. You may even have some equipment which you picked up at bargain prices from business owners who were selling their businesses this way. The thing that nobody seems to ask is - why don’t we think of selling businesses first, before they go under?

It makes reasonable sense, after all, that if a business is petering out, maybe a different owner could bring a fresh vision to it and nurture it into a thriving industry. For instance, say you have a passion for growing flowers, so you open a florist. Then you discover that while you may love indulging your green-thumb hobby, the business side doesn’t appeal to you at all. But now you have everything set up just right - you have orders coming in and an inventory system in place, and employees that know what to do.

Now, selling this business might give someone else the opportunity to take on a ready-made business, even if they don’t know that much about growing flowers. A sales-oriented person could come in and use some clever marketing or maybe some innovative customer service gimmicks to turn the business around. Meanwhile, you sold out when the time was right and got a nice chunk of change out of the deal, and the hassles and headaches of running a business are somebody else’s problem. Maybe you could start over growing flowers at home, and sell them to the new business owner as a wholesaler.

In deciding to sell your business, first you should figure out how to set a price. Consider the factors that make your business worth buying. Take into account your profit history, current sales trends, location, and the condition of your premises and equipment. Consider things like brand recognition; have you had some repeat customers, advertised locally, or gotten a story about your business in the paper? Does your business have a website with an established amount of traffic through incoming links? The longer a business has been in operation, the more name recognition it gets.

You can also offer perks to the potential buyer, such as offering to stick around for a while and consult or as a temporary employee.

Cash flow is always an important element in selling a business and here’s six important tips to improve your cash flow.

The next thing to do is to choose the best time to sell your business. This will be affected by business cycles, real estate rates, and the economy. If you’re in the middle of a recession, you’ll want to wait. Interest rates, and industry trends will also affect your business’s value.

Finally, advertise it for sale! Take out ads in every local paper you can think of. Entrepreneurs are everywhere, always ferreting out potential money-making leads, so spread a wide net. Offer to provide potential buyers with a business profile provided by a third-party audit, certifying that your business is what you say it is. Don’t forget that you competitor might want to buy you out and turn the business into one of their branches.

When a business changes hands from someone who didn’t want it to someone who will love it, everyone wins! It helps the economy, too, to keep an existing business on the market rather than liquidate it. After all, nobody likes to drive down the street and see boarded up storefronts.