If you are something of an entrepreneur, you’ll probably have to make a number of difficult decisions in your professional life. This could be hiring and firing people you are close to or having to take a risk with an ambitious sales plan. But one other major issue that you may find yourself coming across in your business career is the prospect of selling your company. As a fledgling entrepreneur, this idea might seem ludicrous.
After all, when you first start bringing your business to life, you are incredibly passionate about it, and probably can’t see yourself doing anything else in life. But as the working world goes, business comes in ebbs and flows; and something you were passionate about when you were 25 might not hold the same pull for you at 35. Businesses aren’t always sold purely in times of trouble, either.
In fact, you would struggle to sell a company with falling profits – buyers are simply not going to be interested. You may want to sell your business because you are planning on retiring, or because you have a desire to enter another sector while you still can. Whatever your reasons are behind it, here are a few things you’ll need to consider before signing that all-important dotted line.
If you think you will be able to sell a business in a couple of weeks, you are (regrettably) sorely mistaken. In an ideal world, you should plan the sale at least a year, if not two, in advance. This gives you time to have a last-ditched push at expanding your client base and making sure all your financial affairs are in order. Plus, it’s a great time frame for you to get to know the new buyer in, and hopefully gradually integrate them into the company first hand.
Now, you may think that your business is priceless – or worth a cool six million, perhaps. But throwing random figures are people isn’t going to get you very far; you need a proper valuation performing to figure out just how much your company is worth. Find an appraiser who will be able to do this for you, then present the findings to your interested buyers. This will give credibility to your cause and also acts as a tool for negotiation.
The actual selling process can be a complex one, especially as there are so many legalities involved. It also takes up a lot of time – which is why many people choose to sell their business through a broker, rather than do it themselves. Of course, the downside of this is that you have to pay a broker’s commission; not ideal if finances are tight as it is. If you are going to sell the business yourself, you are better off selling it to someone you trust, such as a family member or a friend. However, do bear in mind that you’ll need to have someone available to keep the business running for you while you go through this process.