There comes a time when you decide to retire or at least stop managing your business on a day-to-day basis. Do you have a trusted relative or employee willing to take over, safeguard what you have built and buy your equity over time? If not, selling your business may be your best option, but it can be one of the most difficult exit strategies. Careful consideration should be given to the following areas in order to successfully value and market your business.

Where do you start?

The sale price depends on the assets included, accurate multi-year financials, people on staff expected to stay after the sale and years of sweat equity. Pricing it correctly usually involves working with a professional in your specific business that understands multiples, the value of the products, technology and equipment you are selling along with the accounts receivable, liabilities, revenue and the goodwill attached to your business.

As you can imagine this is actually a pretty complex group of calculations and of course it still needs to stand the test of market demand. There are always many businesses for sale but they are not in demand because they are in a dying industry, or require long hours to be open or have low barriers to entry or have other problems making them unattractive to prospective buyers.

Are you part of the “deal”?

Once these mostly quantitative variables are considered the next step is a personal one. Questions like: do you as the owner want to be part of the sale? Are you willing to offer training on the business operations and for how long and at what price?

What is the real worth of your business? 

Many businesses have been successful because you might have a loyal customer base or are very knowledgeable about the product(s) and services you sell. If you don’t come with the sale, the revenue and profitability must be discounted as sales probably will be impacted.

What are the true profits?

Though many of us value branding and goodwill, potential buyers will want to stick to profitability, adding back the replacement cost of the owners skill set as part of the cost of the business. If you engage in barter or not properly account for profit it will impact the sales price for your business.

Live in the present.

Even though businesses go through peak and valley cycles buyers will not pay for past performance or one-time experiences that may or may not arise again in the future. If business has been dragged down by on-line competitors or new innovations buyers will assume this will continue and will offer you a price based on this assumption

Honesty is still the best policy.

Buyers will want to see verifiable receipts for purchases, will comb through sales records and want to speak to past and current customers. They will want to know a great deal about how you do things, what you spend money on, how you market and the specific reasons why you are selling. Be prepared to answer many questions.

Be prepared

Once you are emotionally and mentally prepared to do the research necessary to properly price your business for sale and are prepared to address the points listed above, you must find the right broker/professional that you feel has the knowledge and understanding of the business you are selling.  There are on-line brokers available on sites like Bizquest and Bizbuysell or the traditional route of agents and businesses that for a fee and/or commission will solicit your business to potential buyers. All come with advantages and drawbacks but all should be entertained to see what is the best for you.

Patience…Patience….Patience.

It didn’t take a couple of months to get your business up to a point where it has a value in the marketplace and finding the right buyer can take some time. Sometimes it is someone you know and who trusts you. The process of selling your business is often one that is stressful as there are financial considerations as well as your emotional attachments to a business you built.

And finally

Selling your business is emotional with financial impact. Conducting the research and connecting with professionals can improve the sale probability while minimizing the stress level.