Last Updated on Aug 26, 2021 by James W
Selling a business is not that easy. The nature of the whole process depends on several controllable factors. Most sellers usually prefer to do the transaction as fast as possible. To sell a business fast, one has to develop a marketing plan and devise a method of allowing potential customers to know that the business is on the market. Moreover, one has to work together with his or her insurance representative, accountant, lender, supplier and even competitors to help market the business and facilitate the sale.
The sale of a business should be planned early in advance, preferably a year earlier. All the financial records should be carefully monitored and kept in shape. This increases the credibility of the business, which in turn attracts more buyers. One should also schedule meetings with the buyers and maintain constant communication with them. This way, demand is created and the price of the company goes up.
Determining Price of the Business
In order to properly price the business, one should find out the selling prices of similar businesses in the locality. This will enable him or her to come up with a practical asking price for his or her business. The other option would be to hire a professional business appraiser. This method has more credibility and many customers are likely to accept the formal appraisal to selling your business.
There are several other ways through which one can determine the value of his or her business. They include:
• Asset-based valuation
• Market-based valuation
• Return on investment (ROI)
• Price building
• Earnings-based valuation
Preparing Business for Sale
The best results come from a well-planned process. The business owner should plan the sale a year in advance. This gives him or her the time to review the financial statements and have a clear understanding of the company’s potential. Moreover, the owner is able to mobilize his or her resources to enable the sale of the business.
In this stage the owner prepares the company records and contracts. This is done so as to give the customers a clear view of the company’s financial status. Manuals, policies, procedures and employee manifests should also be created to show how the business is run. Evaluation of the assets should also be done, so as to update the inventory, equipment and other properties that the business owns.
The owner should make a complete disclosure to the buyer about all aspects of the business. He or she should allow the business to be inspected and provide all the information that is required. It is advisable to consult a lawyer so as to ensure that all the laws have been complied with.
When all requirements have been met, the owner can define his or her priorities. He or she should state their expectations from the sale. The expectations can include the minimum price and type of deal that is ideal. Selling a company is not an easy endeavor. Therefore, one should hire professional help so as to facilitate the deal.
This article was written by Riley Thommes.