Take the Steps to Plan Ahead
If you own a business, it is likely that at some point in the future you will want to sell your business. Perhaps you would like to retire, go after other interests or a take a step back from being a business owner. Whatever your reason, it is best to start preparing for the sale of your business years in advance. Having a plan will help you get the best value for your business when it comes time to sell.
7 to 10 years before selling
At this point, you should be educating yourself on the process that goes into selling your business. You should educate yourself on the basics of selling a business, how similarly sized companies are valued, what are the attractive and non-attractive qualities of a business to buyers and any other topics that are relevant. Talk to previous business owners that have sold their business about their experience and familiarize yourself with what to expect. Have an understanding of what is required as you approach the sale of your business such as the financial documents that will be necessary.
3 to 6 years before selling
At this time, you should start reaching out to advisors, such as accountants, attorneys, wealth managers, insurance agents, business brokers and exit planners, to prepare a more detailed exit plan. The professionals on your team should be knowledgeable about tax planning, wealth maximization and generally, business transactions. As you work with your advisors to fine-tune your exit plan, you may need to alter how you keep your financial records, the legal structure of your business, how your business operates and other things so that the value of your company will be maximized.
2 years before selling
As you approach closer to your exit, you should monitor your exit plan carefully and make changes as necessary. Make sure that you are on par with the goals you set out and if not, modify your plans accordingly to compensate for any deficiencies. It is advisable to know the value of your business so that you can tweak your business as needed.
Your business should be in full swing and all agreements and relationships pertaining to the business should be firmly in place and secure. In addition, prepare an operations manual that sets out the daily processes and procedures that keep your business running. Having an operations manual will later assist you in marketing your business for sale and speaking with buyers.
1 year before selling
At the one-year mark, you should have everything in place to start marketing your business. You should know the value of your business and should work with your business broker to develop a marketing strategy and marketing materials. The marketing plan should attract a variety of buyers and create a competitive marketplace so that your business fetches the best value possible. When you meet with buyers, be ready to discuss your business and answer their questions.
When your business goes on the market, you should continue running the business just the same as or better than before and let your business broker handle the ins and outs of the marketing and sale process. Through all of this, remember to preserve confidentiality. Letting employees, vendors, clients or anyone else know that you are selling the business will only unravel the hard work you have put in to prepare your business for sale and hurt the value of your business.
Preparation is the key to success when it comes to selling your business. Selling with a plan instead of letting circumstances dictate when and how you sell your business will maximize the value you receive and make the sale a whole lot less stressful. If you are thinking of selling your business, speak with an experienced advisor at Sun Acquisitions to learn more about the process.