6 Steps to Sell Your Business for Maximum Value
Selling your business is a big decision, but one you’ll never be alone in making. Once you’re settled on taking that step, there’s a complicated, often overwhelming process ahead.
How do you know exactly what steps to take, and when?
This is where a checklist comes in handy. Using a checklist will help you stay on track with all the essentials, ensure you don’t miss anything important, and put you on a path towards a satisfactory, lucrative sale of the business you’ve worked so hard to build.
Don’t forget to work with an experienced business broker. They can be your number-one advisor and walk you through all the essential action steps involved in selling your business profitably.
Your Business-Selling Checklist: 6 Important Actions to Take as a Seller
Selling a business involves many steps, but the following list puts the process in context for a busy owner. Check off all the items below, and you’ll find yourself in a much better position leading up to the sale.
1. Get a Professional Valuation
Gathering some key pieces of information will help a broker accurately calculate the fair market value of your business.
Review your gross revenues, cash flow, and general sales performance trends year-over-year, quarter-over-quarter, and month-over-month over the past 3-5 years
List all items your business has in inventory, if applicable
List of all physical business assets, such as equipment, furniture, and computer hardware
List all “soft” assets, such as long-standing customer and vendor relationships
List all ongoing costs and expenditures
2. Find a Third-Party Business Broker
Working with a broker is the best way to get a professional valuation, market your business to potential buyers, and ensure all legal and financial matters are taken care of as you move towards negotiating and closing the deal.
Start a conversation with a professional broker
Share all the details of your business, including revenue numbers and essential sales performance trends
Share your reasons for selling your business, and how soon you hope to make an exit
Ask what formulas and methods the broker uses in valuing businesses
Communicate the final valuation of your business to important stakeholders, including partners or other key personnel
3. Organize Your Financials
Getting your financial documents together is an important part of doing your due diligence as a seller.
Gather your balance sheets
Gather cash flow statements
Gather profit and loss (P&L) statements
Gather tax documents
Gather all pro forma statements and other revenue projections
Verify all information is complete and accurate.
4. Increase Your Sales
Improving your revenue numbers well ahead of the sale will help attract more buyers and increase your chances of closing a lucrative deal.
Implement digital marketing efforts, like SEO, social media, and pay-per-click (PPC) advertising to build your business
Use email marketing campaigns to promote products and support customer retention
Publish online content to attract organic traffic to your website
Build your brand locally through traditional advertising in newsletters, magazines, mailers, billboards, radio, and TV if applicable
Solidify long-term customer relationships
Build recurring revenue strategies into your business by promoting subscriptions to products or services
5. Time Your Exit
It’s good to give yourself a year or more to get your business in order, and improve it in all the important metrics that lead to a better sale. Careful planning will help you time your exit.
Determine whether you want to sell your business to a family member or a specific employee, as part of succession planning
Determine if your successor will need training, if applicable
Forecast how long it will take you to shore up sales performance
Schedule time to complete your legal, financial, and operational due diligence
Schedule time to negotiate with your landlord on favorable terms with a new owner, if applicable
Based on the above, determine roughly when you expect to exit or hope to close a sale of the business
6. Qualify Potential Buyers
Make sure to choose buyers who are in good financial shape, committed to maintaining confidentiality, and ready to pay you what your business is truly worth.
Tap into your personal and professional network to find serious potential buyers in your industry
Become a member of trade associations for your industry
Have your broker reach out to their network of qualified candidates
Ensure your potential buyer has the capital to purchase a business, or can secure it within a reasonable timeframe
Inquire about a potential buyer’s history of entrepreneurship or buying businesses
Note whether the buyer asks detailed questions about your business
Ensure you receive a formal letter of intent (LOI) from a buyer, with reasonable and negotiable terms
Ensure that the buyer signs a non-disclosure agreement
Work with your broker to make a final decision on which potential buyer to engage with further
By going through all these steps, you’ll be in a good place to complete the sale process with few headaches and obstacles, and increase your chances of a satisfactory profit when all is said and done.
Why It’s Important to Follow the Checklist When Selling Your Business
The items above should be completed in order. Doing so will afford you several key benefits as you look to sell your business.
First, it will give you peace of mind about the process. As quoted in Forbes.com, about half of all business sales fall apart during the due diligence stage. This need not happen to you, however. As you run your business, and ideally work with a professional broker to help you keep things on track, using the checklist will help you focus on what’s most important in leading you to your planned exit.
Second, following the steps can help you ensure you’re not scammed. Many business buyers you might find, particularly online, are unscrupulous. They may try to pay you far less than what your business is worth — or worse, propose a scammy “stock sale” transaction that leaves you and your company with no cash at all after closing.
By following the steps above, you’ll know to avoid buyers who want to move too quickly, don’t demonstrate serious interest in your business, or show other red flags as they interact with you.
Finally, going through this checklist is nearly foolproof when you work with the right professional. An experienced broker will help you implement every step, answer any questions you may have, and work their contacts in the industry to find the right buyer for you.
See the infographic below to learn even more about the six major stages of selling your business. If you’re ready to kickstart the process for selling your business at the highest possible price, contact Raincatcher today.
![A Complete Selling a Business Checklist [Infographic]](https://raincatcher.com/images/raincatcher_images/2019/04/6-Steps-To-Sell-Your-Business-0404.jpg)
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