How to Sell Your Business: A Short Guide on Business Preparation

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Are you looking to sell your business?

If yes, you’ve undoubtedly thought long and hard and decided that selling is the best thing to do. Perhaps you want to venture into another industry, or you’re no longer interested in entrepreneurship. Or you always had plans to exist once the business reached a certain level.

Regardless of your motivation, selling a business isn’t as easy as selling a household item. You need to make adequate preparations and follow a number of steps before closing the deal.

Continue reading for a quick guide on how to sell your business safely and smartly.


Establish the Right Time to Sell

When selling your business, you want to earn as much as possible from the transaction.

There are several factors that will affect how the sale goes, so you need to ensure you’re selling the business at the best time possible. One important aspect to look at is the state of the economy.

In 2020, for instance, the COVID-19 pandemic has wreaked havoc on the economy, which means it’s not a good time to sell – unless it’s something you really must do. With millions of small businesses across the country being disrupted, it’s hard to find a person who might be willing to buy an existing business, let alone meet your valuation.

In general, you want to sell a business when the economy is in an uptrend.  


What’s Your Company’s Value?

Speaking of valuation, what’s your company worth?

You probably have an estimate of what your business is worth. That’s fine, but you aren’t going to rely on your personal estimates. You ought to hire a professional valuation company to help you determine your business’s worth. In most cases, this will be the company’s price tag to all prospective buyers.

There’s a lot that goes into determining the value of a company. The valuers will assess annual revues since the company’s inception, it’s market position, current economic condition, and brand power among other things.


Prepare Ownership Documents

Of course, you need to provide proof of ownership. Find your registration documents and ensure they’re up to date. If the business is an LLC or a corporation, you need to have the certificate of incorporation, as well as other documents to show that any other owners or partners have consented to the sale.

There are also other documents you might need to provide, depending on the nature of your business. If you’re selling your HVAC business, for example, any prospective buyer will need to see the relevant permits and/or licenses you have been using.


Let Your Lawyer Handle the Negotiations

It’s not likely that interested buyers will meet your valuation when they make their initial offers. You need to be prepared for intensive negotiations.

Do you have good negotiation skills?

Even if you do, it’s advisable to hire a business lawyer to represent you in the negotiations and see to it that the transaction meets all the relevant business acquisition regulations.


How to Sell Your Business the Right Way

Whether you’re selling your business voluntarily or because of circumstances beyond your control, it’s essential to do it the right way. With this guide on how to sell your business, you now know the steps you need to follow for a safe, smooth sale.

All the best and keep reading our blog for more entrepreneurship tips and insights. Visit the Business and Sales sections of the Frugal Finance Blog to learn more about how to sell your business successfully.