Small businesses don’t last long. It’s estimated that most small businesses don’t last after the five-year mark. That’s why many owners aim to sell them.
However, selling a business isn’t as straightforward as you think. It takes a lot of preparation, the right timing, and an understanding of the process. Here are five things you need to know if you’re selling your company:
Valuing Your Business
The first thing you need to do is to value your business. This will give you an idea of your business worth and help you set a realistic selling price. There are a few ways to value a business, but the most common method is to use multiple earnings before interest, taxes, depreciation, and amortization (EBITDA).
You can also use a discount cash flow (DCF) analysis, which considers the present value of future cash flows. Another option is to look at comparable sales, which looks at similar businesses that have been sold recently.
Once you’ve decided on a valuation method, you need to calculate the value of your business using that method. You can do this yourself or have software doing it for you. An excellent business valuation service can also help you with this. This software can handle all the maths for your evaluation without inputting numbers. Remember that you and the buyer can negotiate this, so don’t think the valuation is at the end.
Necessary Financials
When you start looking for buyers, they want to see your financials. This includes your profit and loss statements, balance sheets, and cash flow statements. You should also have your tax returns ready.
If you don’t have all these documents, now is the time to get them in order. If you’re not sure how to do this, hire an accountant or bookkeeper to help you out.
You should also put together a projections report. This will give buyers an idea of where your business is headed and if it’s worth investing in.
Creating A Marketing Plan
The next thing you need to do is create a marketing plan. This will help you market your business to potential buyers and make it more attractive to those who want to buy it. The best marketing plan you can do is B2B marketing.
B2B marketing is a type of marketing that targets other businesses instead of consumers. It’s an effective way to reach out to potential buyers and get them interested in your industry.
To do B2B marketing, you must create content that speaks to other businesses. You can do this through blog posts, infographics, eBooks, Whitepapers, or even case studies.
You should also create social media accounts and start sharing your content there. LinkedIn is an excellent platform since it’s designed for businesses and professionals.
Once you have a robust marketing plan, your buyers can look for you. It’ll drastically reduce the time you need to wait for the right buyer.
Determining The Right Time To Sell
One of the most important things you need to know when selling your business is when to sell it. You don’t want to sell too early or too late.
The best time to sell is when your business is doing well and has a lot of growth potential. This will give you more negotiating power and help you get a better price for your business.
You should also consider selling when you’re ready to retire or take a break from running the business. If you’re not interested in running the company anymore, it might be time to sell.
Finding The Right Buyer
Once you’ve decided to sell your business, the next step is finding the right buyer. There are a few things to consider when looking for buyers. First, you need to find someone interested in your industry. Second, they should have the financial resources to buy your business. Lastly, they should be a good fit for your business.
One of the best places to find buyers is online. A few websites help businesses sell their companies, such as BizBuySell and BusinessesForSale. You can also use social media to reach out to potential buyers. LinkedIn is an excellent platform for this.
Once you’ve found a few interested buyers, you must start negotiating the sale. This includes discussing the price, terms of the deal, and other essential details. Remember that you’re in control of the sale, so don’t be afraid to negotiate for what you want.
Selling your business is a big decision, but it can be lucrative if done right. Follow these tips, and you’ll be on your way to successfully sell your company.
