Whether you are considering, “What do I need to do to sell my business?” or “I’m ready to sell my business” there are three things to think through first.
Formal, audited business evaluations can be cost-prohibitive. Before you go on to search “Business Evaluators Near Me,” consider reaching out to IA Business Advisors. Not only can we objectively evaluate your business, we can provide the strategy and tactics to improve the value and find well-qualified investors.
One thought you may have had is, “How do I know how much my business is worth?” This is an excellent starting place as all businesses are not evaluated the same. In some industries there are standardized formulas to determine what your business is worth. One universal standard is consistent: contractually bound, monthly recurring revenue adds value while revenue supported solely by a loyalty based on owner or key employee relationships detracts value.
Think about “What will happen to my business when I leave?” Does everything revolve around what you are able to accomplish, who you know, and your specialty? A policy and procedure manual is another way to effectively increase quality, sustainability and value.
A second thought should be about how you want to be paid for your business. Perhaps you’re thinking “I want a lump sum and sail away into the sunset” or “I want to sell my business to my employees.” These are just two ways to structure the sale of your business.
Knowing how you want to get paid is almost as important as actually getting paid. Another option is seller financing, but can be risky even if your business has a very strong cash flow and balance sheet.
Selling a business is similar to sports’ free-agency situations where multiple interested parties create speculation value. This is a great benefit of working with a consulting team like IA Business Advisors who can line up investors to review your business. A “Who wants to buy my business” Facebook post might not attract the most interested or qualified buyers.
Having attractive financial statements is part of what seasoned business professionals may ask for. Do you also have a business plan, strategic plan, and/or market analysis to show the future potential of your business? These are some examples of tools which will boost your business’s value.
Value, payment and buyers are only three things to consider when thinking about selling your business. Don’t forget that among others, there are also legal and financial considerations that will need to be investigated prior to finalizing an agreement.