There are several reasons why a business owner decides to sell his business. Selling a business is not the easiest decision to make for a business proprietor who had built his business out of blood, sweat and tears, so to speak. Needless to say, It is not easy to just turnover the intricate process of selling the business to a business broker (though this is the most recommended move) if the seller has no idea at all of how to go about the process.
Avoid the unexpected. When deciding when to sell, do your homework and carefully plan your selling strategy. Anything may go wrong or completely head towards the opposite direction of your end goal in selling the business. Even if you have decided to sell with the help of a professional business broker, preparation is the key to a successful business sale. Treat the process of selling, as would a good business broker do, with utmost care like what you did in building and developing your business. After all, who, in his right mind, would buy a business that is haphazardly offered with only the urgency of the business seller to dispose of the business at stake?
Remember to put into consideration both internal and external factors in the crucial moment of decision making. Before deciding to sell, part of the internal preparation is to dig into your books and do the balance sheets for at least the last few years of operations. Allot some time in updating your financial records. Relatively, put some weight in the external factor, i.e. prevailing economic condition that affects stability of continuing operations. Not all considerations on circumstances may align perfectly but still you are now prepared to hurdle any obstacle.
When fully decided and cleared of any backroom hinges, think of the people who may be or may have been a part of your team, i.e. silent partners, friends or family who, at one time or another, may be stakeholders in the business you are selling. Even how small their shares are, they are still legally entitled to have a piece of the cake, (do not laugh, but prepare to let go of the icing tooJ)
Determine your business value or worth as this will also be the basis for setting your asking price. Know the market and sell at the right time. Until such time, that you have a well prepared plan, never discuss your selling-out moves to employees and other beneficiaries of the business. You will never know their reactionary moves (just assume the “negative worse”) that may thwart or block your goals.
After business valuation and determining the selling price, researching for similar businesses that are up for sale in the market would be an inspiring move regardless of size or price. Now, that you are done with due diligence, it is now time to find buyers for your business. Initially, you may want to sell the business to your employees because among all other prospects, your employees know your business well and are more than capable of running it. In a gist, employees are extremely motivated and would be top candidates to ensure the business will move forward when incentivized with power to own the business.
Have your legal adviser set up a payment scheme wherein the employee buyers could purchase and pay in easy installment plan with support of your financing or outside resources. In 1978, the Employee Stock Ownership Plans or ESOPs was established and required by law as part of the benefit plan for employee retirement. The ESOP is equivalent to the “profit-sharing plan” where companies benefit for the purpose of continuing business, incentivizing and enhancing motivation among its employees.
Your next best prospect is your business competitor. You would not expect this recommendation but it is a win-win scenario – you are getting your business worth and peace of mind knowing your business is in good hands, while competitor-buyer is more than happy to have one less competition in the block.
Contact: Westwood-Benson at 800-761-8460, www.westwoodbenson.com