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The decision to sell your business may be the most important financial decision you will ever make.
For some owners, the process of selling a business can take far too long, and delays require a bigger time investment on your part. A longer process also means that you must continue to operate your business for months, and you may feel increasing anxiety about finding a buyer.
To speed up the process, you need a plan, and the help of competent advisors. Use these tips to learn how to sell your business quickly at the highest price.
1. Review Accounting Records
Your accounting records document your firm’s track record of success, and reveal your company’s potential value to a buyer. To discover how to sell a business fast, create a set of accounting records that includes these components:
- Accurate, up-to-date records that comply with accounting standards: If your records are accurate and current, a buyer can review your financials in less time. It’s also important that your records comply with accounting standards, so that your financial statements are comparable with other companies.
- Annual business planning, budgeting, and forecasting: Effective managers create an annual business plan- and a formal budget- before the start of each year. Your budget should include a sales forecast, budgeted costs, and planned sales prices. Implementing these plans each year shows a potential buyer that your firm is well managed, which increases its value.
- Cash flow forecasting and management: For many companies, cash management is just as important as profitability, and your need a formal process for managing cash flow. As you create your annual budget for sales and costs, you can build in a cash flow forecast.
- Metrics and dashboards: Every business owner has specific metrics that are most important for effective business management. A retailer, for example, may closely monitor inventory turnover and the cost of ordering inventory. It’s important to identify the metrics that increase sales and profits, and to track those metrics on a company dashboard.
- Industry benchmarks and analysis: A buyer will compare many aspects of your firm’s performance to industry benchmarks, and you need to evaluate your company using the same benchmarks. If businesses in your industry typically generate a 30% gross profit, for example, you need to produce results that are at or above the 30% benchmark.
If you have accurate and current data for each of these topics, you’ll know how to sell a small business quickly.
2. Business Operations Documented
The biggest value in your business may be how well you operate your company on a daily basis.
If you make smart decisions about routine tasks, such as billing, fulfillment, and production, you can create a valuable business that outperforms your competitors. The documentation of your business operations is a valuable asset to a buyer.
Here are some key items that a buyer will want to review:
- Procedures manual: This manual documents each routine task you perform, who completes the task, and how often. Maintaining a procedures manual eliminates confusion about performing a particular task, and is a great training tool for your staff.
- Organization chart: The chart allows a buyer to understand how your business is managed.
- Current supplier and customer contracts, employment agreements: Contracts and agreements are important, because a buyer may need to negotiate and change these agreements to complete a purchase.
- Automated processes are documented: Automating your business helps you to leverage your time, and to operate more productively as you grow. If, for example, you purchase software to automate the invoicing process, you can process more invoices in less time, and support company growth.
Providing business operation documents helps the buyer plan for running the business after a purchase. A buyer will be more motivated to buy your business, if the acquiring firm has a clear picture of your operation. If you are wondering how to sell your business quickly, this step is important.
3. Have a Marketing Plan
If you’re growing sales and profits, you have an effective process for getting attention, generating interest, and a method that differentiates your product from the competition.
Your marketing plan is a valuable resource to a buyer, and your plan allows the purchaser to drive sales and profits moving forward.
A buyer will want to see your ongoing plans to increase brand awareness, and a strategy that differentiates your products and services in the minds of customers and prospects. Explain your system for generating leads and driving sales, and the future growth opportunities in demographic segments and geographically.
Buyers want to feel confident that your successful marketing plan can be continued after the purchase.
4. Hire a Business Broker
If you’re telling yourself: “I need to sell my business fast”, it’s critically important to find an experienced business broker who can guide you through the process. When you’re looking for a business broker, you need to consider these key points:
- Find qualified business broker: The price you ultimately receive for your business is affected by your specific industry and other factors, such as general economic conditions. You need an experienced broker who will take these factors into account and compute a reasonable price for your business.
- Get a current valuation: A broker can help you obtain a current valuation for your business, and he or she can explain the factors that are used to generate the valuation.
- Develop marketing plan: Business brokers add tremendous value by developing a marketing plan to sell your business. The broker can create written materials to promote your business, and identify prospects that will understand the value of your firm.
- Identify the seller’s reasons for exiting and life after the sale: Selling your business is both a financial and a personal decision, and a broker can help you navigate the personal side of a company sale. Potential buyers will want to know why you’re selling the business, and your broker can help you answer that question. A business broker can also help you consider how your life will change after the sale. What will you do, and how will you use the sales proceeds?
Selling a business is a big decision, and you need the help of an experienced advisor that you can trust. If you need to know how to sell your small business fast, find a business broker who can guide you through the entire process.
5. Plan to Target Buyer Prospects
A business buyer may be a retired executive who wants to purchase a company, a business that operates as a competitor, or a private equity firm.
Each of these buyers may have different reasons for buying your firm, and a business brokers understand these prospects and their motivations.
An experienced broker creates and implements a formal plan to find potential buyers. When a prospect shows an interest, the business broker can pre-screen buyers to determine if the have a reliable funding source, and if the buyer is a good fit for the transaction.
The process of matching business sellers with an interested buyer is a complex process, and a business broker can help you move through the process in less time.
6. Plan for Due Diligence
When you find a buyer who has a strong interest in buying your firm, you must provide documentation for the due diligence process
To sell your business quickly, have a complete and organized set of records ready for due diligence before you start looking for a buyer. Your records should showcase the business’s hidden value and overcome potential objections. This strategy can minimize seller fatigue during the due diligence and the sales process, and keep the purchase on track.
7. Collaborate for Successful Transition
Successful business sales produce a good result for both the buyer and the seller. You can be proactive and help create a smooth transition as a buyer takes over
Communicate with stakeholders (customers, employees, vendors) to create an effective transition after sale, and be available for questions and to address concerns.
Save Time Selling Your Business
Selling your business is a big financial and emotional decision, and the process can be time consuming. If you’re looking to sell your business quickly, invest the time to implement the seven steps explained above. Find a business broker who can lead you through this process, and you can have a successful business sale that closes in less time.
If you’re ready to sell your business, contact Raincatcher to see why they’re the perfect broker for your sale.