Knowing When It Is Time to Sell a Business and How to Do It Smoothly

There can be many reasons why you may decide to sell your business, but if you do, then you need to make sure that you do the process properly. There are a lot of moving parts involved, and you do not want to make a mess out of the situation. Today, we’ll share some tips and resources to help you decide when it is time to sell — as well as the steps that you will want to take along the way.

Deciding on When It Is Time to Sell

Sometimes, a business owner decides to sell their company because they are older, want to retire, or want to transition to a new profession, and so they sell their business so they can move on. However, there are other reasons and situations that may come up that may inspire you to sell. For instance, you may be young, but the stress of running your company is just too much to take, and you are losing the balance that is so important for a healthy life.

There could also be the case that the company has outgrown your skill set. It was easy when you were getting started, but it has become complicated, and you don’t believe you have the knowledge to keep the ship on the right path. Sometimes, your company could grow so much that it is worth a lot of money, and it is the right time to sell. It is ultimately up to you and your current life situation.

Compose a Detailed Contract

When it comes to selling your business, understanding how to write a contract is crucial. This document must meticulously detail the sale price, the deadline for the final payment, everything included in the sale, and all other sale conditions to prevent future disputes. Only with the signatures of both parties does this agreement become formally acknowledged and legally enforceable.

Given the complexity and the legal implications of such a transaction, it's wise to collaborate with an attorney while drafting or finalizing your business sale contract. This ensures that your interests are well-protected and that the contract complies with all relevant laws and regulations.

Determining Your Business’s Value

Next, you will need to do some deep digging to find out exactly how much your business is worth so that you can get a fair price. When looking at your market value, you will want to list all of your assets, including the building, your inventory, and the equipment you have. You will also want to look at how much money your company makes on an annual basis. Finally, consider how much the company may be worth over the next few years. You can get that information by contacting a business broker.

You can also have a business valuation completed that will calculate your annual earnings before interest, your anticipated earnings, your level of business risk, and the number of years that earnings are expected to continue, so you can get a proper number. There are many valuation calculators available online that can give you a good start. Getting an accurate business value is important for you, and when you have the numbers to back it up, then the buyer will also know that they are getting a good deal. 

Finding a Buyer

Once you have all of your paperwork in order, you can try to find a buyer by visiting local trade shows where you can speak to potential brokers. You can also speak to family and friends and find out if anyone is interested.

As you can see, there are many considerations to bear in mind when selling your business. Just make sure that you are really ready to sell, that you have your documents and annual statement in order, and that you get a fair value.