Selling a business should not be that hard both for the seller and the prospective buyer. However, many business owners are struggling to sell their business fast and easy. One of the common questions sellers have in mind is, “how do I get my business ready to sell?” For the business selling process, a desirable experience to both parties, the following has to be prioritized:
- Get your house in order – Before you even decide to sell your business, you have to make sure you prepare everything, and it starts with getting everything in order. Your prospective buyer would turn down your offer if they see that your business is in chaos. Gather your tax records for the past two or three years and financials. Put them together and present them to your prospective buyers. If this work is too much for you to handle, then you can ask your accountant to prepare everything for you.
- Put an operations manual – If you haven’t put up your operations manual yet, then it is high time to do so. As a seller, you know your business more than anyone else, but is your prospective buyer realize it too? If the buyer thinks that your business is challenging to operate, then he would surely turn away. As a seller, your goal is to make things easy for the new owner. Draft the operations manual, specifically the job descriptions, and present it to your prospective buyer.
- Put your team together – By putting your team together means finding a broker and an appraiser. These are the people who can give you an estimated figure in your business’ market value. Not only will they give you insights on your business worth, but they will also help craft strategies on how to take your business to the market. Other factors have to be considered too, such as knowing the current tax environment, knowing how to re-cash your financials and ask your accountant to translate them into discretionary cash flow.The goal is to let the buyers see that the money your business creates will return after you do your tax. Many business owners want to avoid paying tax, but we are all aware that tax evasion is illegal. Fortunately, smart business owners have a way of avoiding paying too much tax without breaking the law. You can pay little taxes by factoring in non-cash expenses, depreciation, and discretionary stuff.
The goal when selling a business to a potential buyer is to let the buyer know all the value your company creates. It is all about knowing your financials, put your operations manual, put a team together, and most importantly, get your house in order. If you have been trying hard to sell your business, but nothing seems to work, then contact Freedom Factory. It is a company owned by Robert Hirsch and Tyler Tysdal, serial entrepreneurs based in Colorado. Freedom Factory is a business brokerage firm that helps to free entrepreneurs by assisting them to sell their business for maximum value.
Check out the podcast How to Prepare My Business to Sell