If you are planning to retire in a few years, dealing with disagreements with your business partner, have health matters to prioritize, or feel like it’s the end of the road for you as far as running the business goes, chances are, you’ve considered selling it. It may sound like an easy path to take, but it’s a slippery slope to tread—and for all the right reasons.
Selling your business can be a great way to earn more out of your business or practice but it is more complicated than that. And as with any transaction, there are significant factors that a business sale cannot possibly be successful without. Here are five questions you should consider to help you outline your business sale process:
Preparing for the sale is incredibly crucial. At least a year or two of preparation should allow you to improve the business structure and consequently, enhance your financial records. You need to keep your business running as normal as possible during this period and stabilize your customer base. This is important in creating a smooth transition to new ownership when the time comes.
- Are you able to conduct a business valuation?
What’s your business worth? The answer is critical to ensuring that your price is neither too high nor too low. In most cases, particularly for big businesses, an appraiser or valuator should do the job.
- Are you selling the practice on your own or through a broker?
Similarly, you need to determine whether the sale of your business or practice requires professional assistance or you’re confident and equipped enough to sell the business yourself. As both have pros and cons, you need to pay attention to your present business situation. If you do need a broker, hire a reputable professional. For more details on this topic, continue to:
- Do you have a shortlist of potential buyers?
Depending on your practice and its status as a business, you can expect a number of parties expressing their interest in your business. You need to develop a shortlist of qualified prospects based on their general background and financial capability.
- Are your documents ready?
As early as you possibly can, revisit your financial statements, tax returns, contracts, transactions and other pertinent paperwork for the last three to four years. Have an accountant check them out. As may be required under the law or deemed necessary from a business standpoint, distribute these documents to your potential buyers.
A business sale doesn’t promise to be an easy one. Learn (and unlearn) what you must and make the necessary preparations to ease the process. Find a way to make it stress-free for you and as promising as possible for them. Here is a video of business expert Michael Roub explaining when the right time is to sell a practice