When the time comes to sell your business, you have to make sure that you are ready for the long process. Most sales take up to 1-2 years of preparation to ensure that your business is as functional and successful as possible so that you make the most profit from selling it. There are plenty of steps that go into selling a business, big or small, and if you’re serious about finding the right buyer, you’ll need to follow these 5 steps:
1. Preparing to Sell Your Business
As mentioned before, the early process of selling your business shouldn’t be an overnight decision. There are a lot of things you have to prepare in order to determine how, when, and for how much you should sell your business for. Some things you will need to have ready are yourfinancial documents and tax returns from the past 3-4 years. Also take the time to create a list of contacts that relate to sale transactions, supplies, and relevant paperwork like your current lease. You’ll go over all of these with an accountant to make sure that these documents representing your business are well structured for potential buyers.
2. Using A Broker
This is a huge decision for business owners because not only does it affect how much money you make but also how much money you can save. Selling your business on your own is a great option if you have experience and know what you’re doing. You won’t have to pay commission to a broker and you don’t have to worry about anyone making decisions you wouldn’t approve of. However, broker’s are much more knowledgeable in selling businesses and can maximize your profit as well as free up more time for you to continue running your business.
3. Documents You Need To Know
Whether you are using a broker or not, there are a few documents that make up the process of selling your business that are crucial to understand. The bill of sale transfers your business assets to the buyer, a security agreement allows you to retain a lien on your business, meaning that you will keep possession of the property until the other person pays you in full. And lastly, knowing how to write a proper lease will affect the entire requirements and agreements of the sale.
4. Finding the Right Buyer
When you’re on the search for the perfect buyer, keep these things in mind: always keep multiple buyers on the line that you keep in contact with in case your current sale doesn’t work out. Make sure each potential buyer qualifies for financing if you are planning to finance your sale. When working with buyers, put all agreements into writing and have each person sign a nondisclosure/ confidentiality agreement to protect your business’s information.
5. Reinvesting Your Profit
Once you’re finished with selling your business, you should take some time to plan out how you will spend the profit you’ve made. Meet with a financial advisor that can explain the tax consequences of gaining a lot of money suddenly and how to properly invest that into a new business, retirement account, or using it to pay off debt quickly so that you don’t lose the profit you’ve worked hard for.
Managing Your Accounting and Tax
When you sell your business, it is an adventure with twists and turns that ultimately and hopefully results in gaining money for your efforts. No matter how experienced you are, there will always be questions on what decisions you should make and what other professionals you should engage with to further your profit before selling. Working with PayTech is a guaranteed way to ensure your business is in the right hands and that no big moves will be made without communicating with you first. Let us deal with the complicated stuff while you focus on improving your business so that in the end, your earnings will feel more like winnings.