You’ve decided that you want to sell your business, but is now the right time to do it? Here are a few questions to ask yourself to make sure that you’re ready to sell.
Is your business growing?
If your business is struggling, selling it may seem like an easy way of getting it off your hands. However, not many buyers are going to be interested in a struggling business. A business that is showing growth is a much more attractive investment to buyers. For this reason, if you can, it’s worth putting energy into growing your business before you sell up. This could include doing some thorough marketing to attract more clients or finding a way to expand your services. Typically, most business owners don’t want to sell their business when it is growing, however this is the best time to put it up for sale.
Are there large debts left to pay/unresolved lawsuits?
Large debts and unresolved lawsuits aren’t going to make your business attractive to buyers. Try to pay off as many debts as you can – if you have lots of small debts, you could consider consolidating them first by paying them all off with a single loan. This could even be a personal loan that you pay off with the money you earn from selling your business. As for lawsuits, try to resolve these as quickly and painlessly as possible.
Do you have a strong team of staff?
You employees are your greatest asset. If you’ve recently been experiencing a rapid turnover of staff, it could be worth trying to build a few loyal staff members before selling up. Make sure that any new employees have been thoroughly trained up. This will help to show that you’ve got a strong team.
Have you valued your business?
In order to sell your business, you need to know exactly how much to sell it for. In most cases, a business goes on sale for two to three times its annual turnover. However, depending on the type of business, you may find that alternative ways of valuing your business work better. There are guides online on how to value a dental practice or how to value a restaurant. Be prepared to negotiate the price – most businesses sell for less than their initial asking price.
Do you have an exit plan?
Selling a business is a long process – you can’t just sign it over and walk away. A transition period is likely to be necessary for slowly handing over responsibility to the new owner. During this time, you can introduce them to your employees and familiarize them with all your clients and services. You don’t want news about the sale leaking out too early, so it’s worth creating a non-disclosure agreement. Many business owners hire the help of brokers, solicitors and financial advisors when handling the sale.