Business owners may choose to sell their company for a variety of reasons. The reasons could include retirement or the desire to start a new venture that is separate from the existing company. The business owner will need to create a sales contract with their broker that shows what they keep from the business and what is transferred to the new owner.
Brokers help business owners manage the sale of their companies and eliminate common mistakes that could prove costly. With the right help, the business owner generates a higher profit from the sale and provides enough proceeds for retirement or a new business venture.
Get an Accurate Valuation for the Business
When selling a company, the business owner must get an official appraisal for their business according to the current status of the business. The selling price is determined according to the total value of the business and its assets.
This includes the net worth of the business brand, the market price of all assets, and future earnings. The business owner must get a licensed appraiser to complete the assessment and give them an accurate price for the business based on all these factors. It is the first step they should take when considering selling your company.
Set Up a Long-Term Plan
The process of selling a business is not simple, and the business owner will need help completing all their checklist items. They must start with a plan at least one or two years ahead of schedule to make sure the business remains profitable. A business is more attractive to investors if it continues to generate profits. A broker can help the owner create a comprehensive plan to sell their business and increase their profitability.
Hire a Broker to Help You
A broker understands the ins and outs of selling a business. They know exactly what documents the business owner needs when presenting their company to potential buyers. For example, they will need financial records that show all their incoming proceeds and what to expect when in the future.
The records must show steady growth and new ways to make the company profitable and control overhead costs. The business should also have e-commerce revenue and an active website for the business. Brokers can help the business owner get their business affairs in order when selling the business and its assets.
Manage Your Company’s Reputation
How the public perceives the business could affect its value, and with social media becoming a defining factor with businesses, the business owner must manage their reputation on social media and online. Too many negative listings about the company could decrease their profits and make buyers shy away from the business sale.
Many business owners these days use reputation management software to track all mentions of their business or their products online. By managing these mentions properly, the business owner can make sure that all trending topics related to their business are positive. This could make them and their brand more attractive to buyers and investors.
Be Realistic with Your Profits
Buyers will want to review the financial records for the last three years at least. The business owner should never alter their financial statements to make their company appear more profitable than it is. This is a fraud, and it will not end well for the business.
It is recommended that the business owner hires a licensed accountant to evaluate their financial records and ensure they are accurate and up to date. The records must project realistic profits and what the buyer can expect if they purchase the company and its assets.
Decide If Your Business Will Continue Operating
A business that will be shut down could present the owner a chance to just sell their product designs, their business assets, and collect profits for existing products that are in marketing pipelines. The process could give them an immediate profit for all their assets. With these sales, the business owner doesn’t have to sell the business as a whole, and they can sell assets individually if it will generate more profits. However, investors and buyers who want to purchase the business and equipment may choose to purchase the business and all its assets at once.
Evaluate All Buyers
A broker can help business owners weed out fraudulent buyers and scammers. As offers are submitted, the broker can assess them and determine what buyers are qualified for the purchase. The broker will review all financial information presented by buyers and determine if the buyers are legitimate.
They will verify all mortgage details presented by the buyer or investor to ensure the buyer has access to funding if they must finance the venture. Any instances of fraud are reported, and the broker protects the business owner’s interests.
Fulfill All Contractual Obligations
Existing contracts must be fulfilled by the company, and if a buyer takes on these contracts, they must complete all obligations as the new business owner. If the contracts guarantee certain profits, this could give the buyer a chance to keep the doors open and continue to operate the business after the sale is final. However, the seller must list clauses in the contract that provide ownership of the contracts to the new owner. This shifts the liability to the new owner instead of the seller. They must work out the fine details about all contracts with the buyer and list these terms in the sales contract.
Business owners invest their hearts and souls in their companies and follow the necessary steps to keep them profitable. However, in life, sometimes it is time to say goodbye to these businesses and start a new chapter in their lives. When business owners make the decision to sell their company, they must get their affairs in order ahead of time.
Brokers can help business owners with a business sale, and they understand the best ways to promote the sale and attract a more potential investor. They will also show the business owner how to get all documentation ready for the buyers. A broker could give the business owner the assistance they need to sell their business and avoid serious financial mistakes.8
