You may be an experienced business owner, but getting a business all the way from listing to closing is much more difficult than you think, especially if your timetable to sell is less than favorable. Great business owners and successful business sellers need a completely different mindset, so knowing what’s ahead and then staying ahead of the game will be critical to the success of your sale.
Unfortunately many sellers end up putting their business on the market for unforeseen personal reasons and as such the impending sale is happening on a sped-up time table that no one is ready for. Most in our industry would suggest making pre-sale preparations several years before your planned exit from the business, but for many small business owners this time table isn’t realistic. If having the adequate time to prep is not in the cards for you, you can always stay ahead of the game by staying prepared should the unforeseen happen.
Handshakes and Horizontal Filing
One of the major preparation issues with businesses is on the paperwork side. Most small business owners are not organization gurus, and as such their business documentation is typically scattered between their home and office, jammed into unlabeled boxes or in the case of “handshake agreements” never existed at all. When the time comes to sell, this paperwork issue can quickly turn into a nightmare. Staying ahead of the game by keeping your business documentation in order is incredibly important if you want buyers to be able to see your business as it truly is. Justification of your asking price will be far easier if your paperwork ducks are in a row.
Listing Prices and Reality
While we’re discussing asking prices, let’s talk reality. Your business might be solid, but in the business market it’s only worth what someone is willing to pay for it. Since in many cases you end up selling in a time frame that isn’t ideal, you need to understand that the current market will have something to do with what your listing price should be. You can absolutely go out and find a business broker who will tell you what you want to hear and let you list your business for whatever you want – but a successful sale is far more likely if you price your business correctly right out of the gate. It can be tough to put a number on all of the years of time, money and energy you’ve invested, so seek (and listen to) the advice of a knowledgeable broker before you decide on an initial listing price. Your listing price should be based on the numbers your business actually produces and should be in line with what comparable businesses actually sold for. If you have a good business and a good listing price, you will likely end up within about 10% of that number. If your listing price is ridiculous and not well supported, you probably won’t be able to sell at all.
Whether you weren’t planning on selling and now find yourself in the listing process, or if you think you have no plans on selling in the near future – it will be important to the successful (and unplanned) sale of your business if you stay ahead of the game.
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