A Basic Guide to Selling a Business

Did you know the average value of a business has risen by 30% in the last year? If you are thinking of selling your company, then there has never been a better time. But how do you go about the process?

While it is a complex procedure, there are ways to do it quickly and efficiently. Read on as we give our must-know guide on selling a business.

If you connect with the right investors on these sites, you will be in luck because they are looking for the next best business to invest in. Make sure you use a popular crowdfunding platform because your business will be noticed by people who are actually looking to invest. Are you feeling a little skeptical about using crowdfunding marketing campaign? You should know that a lot of big businesses started out here.

Know Its Worth

The value of your business is based on its profit. This is often multiplied by a given amount, which is often dictated by the industry you are in.

Generally, smaller businesses can expect the business to be valued at three to six times the current cash flow. Larger businesses may be as much as ten times the profit. For the most accurate assessment, bring in a third-party valuation expert.

Organize Your Finances

When you sell a business, you will have numerous people scrutinizing your finances. Valuers, brokers, lawyers, and accountants are just a few of them. Because of this, it helps to get your finances in order before you begin.

You will need to have three years’ worth of tax returns and all of your financial statements. In many cases, you may even need the year-to-date statements.

Find a Broker

Next, you need to put your business for sale. The best way to do that is by hiring the right business broker.

A broker will have a number of insights, contacts, and experience about selling a business. They will take factors such as the size and revenue, and juggle it against the industry and current interest. This will result in the best possible profit for yourself.

Develop an Executive Summary

You probably already have an executive summary in place. However, when selling, you should really tighten it up and make it count. It should include the company mission, products, services, and financial data, essentially advertising your business.

Don’t Wind Down

The best businesses don’t begin to wind down once the company has gone on the market. Though your eye may be on that lucrative payout, to make sure you get the best deal you now need to work harder than ever. A focus on increasing sales can make your business look like it has plenty of potential for the future.

Due Diligence

Due diligence is the period that buyers have to vet your business and check everything is in order. The time period depends on the types of businesses involved but is around 60 to 120 days on average.

You should already have your financials in order, but in this period be prepared to answer a number of questions about various facets of the business. You need to tread a fine line between being open and honest, but not giving away too many company secrets that may go to competitors.

Taking Care

Follow this guide on selling a business, and always follow your instinct. While emotion should be kept out of the sales process, if something does not seem right, then do not move forward. This is particularly true of people selling small businesses.

If you enjoyed our article, visit the rest of our blog. With everything from finance to marketing, we can help your business thrive in the coming year.

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