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You might ask yourself, “What are some of the things I need to do in order to adequately prepare my business to sell?”
Owning a business is a personal attachment, an extension of “YOU.” After all, YOU’VE put everything you’ve had financially & emotionally into making it into what it is today. So, it’s no wonder that when it’s time to sell the business and move on with your life, you might experience many mixed feelings and high emotion – but, no worries – you’re not alone here.
Some steps you need to take when preparing your business to sell include:
1. Get your house in order. In addition to doing some tidying up around the premises, the most important thing to do is to make sure your business is performing as well as it can. Now is the time to assess your cash flow, your expenditures, your employees, your tax strategy and other elements of your operation to see whether they are optimal.
2. Get your books in order. Buyers evaluating your business generally require at least three years’ worth of financial information. The more formal and detailed your statements (accountant-reviewed or -prepared vs. internally generated statements), the better the impression you’ll make-and the easier the due diligence for a buyer.
3. Consider the timing. It’s always easier to sell a business when it’s on the upswing. For this reason, owners of seasonal businesses should look to sell either just before, or soon after, their busy season begins. Plan ahead and you won’t find yourself desperate to sell during a slump.
4. Consult with experts. There’s no shame in seeking expert assistance. If structuring the sale in a tax-friendly manner, setting a price or other parts of the process are too much for you, consult your accountant and consider getting a business broker to handle the sale. That way you can focus on doing what you do best: running your business.
5. Keep your eye on the ball. Don’t let your business performance decline because you’re too focused on the sale of your business. This could potentially hurt the value of the business because of declining sales and could give buyers additional negotiating power to lower their offers.