If you own a business and have decided that it is time to sell your business and begin fresh, you might have several thoughts crossing your mind about how to accomplish this task. If it is so, you have reached the right place. It is because today, in this article, we shall be talking about how to sell a business in six simple steps. Here we go!
Step 1: Determine Your Business Value
The profits you make are not always equivalent of the value of your business. In fact, it can be multiple times the profit you make. The value of your business can be anywhere between two to ten times of the profit you make. So, based on the scope of the growth of your business, you might want to sell your business at the highest possible multiple of your profit.
Step 2: Review Your Financials
Every business is valued based on the profits or loss it makes. If you are looking to sell a business, it is advisable to prepare an adjusted profit and loss statement with the help of your accountant.
Naturally, if your business has a healthy book of financials, your business will be sold at higher rates. However, if your business is bleeding money, do not expect your business to yield a good amount for you.
Step 3: Prepare Your Value Proposition
To sell a business, it is important that you create a value proposition of your business before you pitch into potential buyers.
You must identify the positives of your business and make the buyers know what is the value that your business can bring to the buyer. This will help you get more money out of your business.
Step 4: Arrive at Realistic Valuation
By following the above steps, you should now arrive at a realistic valuation of your business. You should neither have sky-high expectations from your business nor should you undervalue your business. Perform a practical evaluation of your business and arrive at a valuation that you think will be fair enough.
Step 5: Market Your Business for Sale
Now that you know what your expectations from the business are, you should market your business that it is available for sale. Identify, if someone in the market is looking for an acquisition, or even if not, do not shy away from pitching to other businesses (including your competitors), whom your business might be a value proposition.
Step 6: Make the Sale and Complete Documentation
After marketing your business for sale, it is now time to evaluate the incoming offers and select the best offer. Before zeroing-in on any offer, make sure that it is as per your expectations or the market value of your business.
Apart from that, do not forget to read the contract documents carefully before signing them. It is because some contracts also have a ‘non-compete’ clause within them, as per which, you cannot start a similar business within a certain period of time. If you are in agreement with the contract, congratulations on the successful sale of your business!