When To Sell Your Business

There are a number of reasons why a business owner would want to sell the business. Some may be facing lawsuits, a looming divorce, an expiring lease contract and other obstacles that may impede business development. A business broker can lay out the groundwork for any business owner that may be faced with a dilemma on selling the business or not.

A lot of considerations before selling the business are at stake that must be put in a proper exit plan. It is good to project the right time to sell but it is better to know when the “good time” or “bad time” is with the following guidelines:

It is a good time to sell when:

  • The exit plan is well-thought of
  • Everybody is buying
  • You cease to enjoy doing business
  • Looking forward to a well-funded retirement plan
  • Receiving an unexpected offer
  • Foreseeing a more productive lifestyle after selling the business
  • Your business is in the upward scale
  • Your successors are able and ready to take over the business when you retire

It is a bad time to sell when:

  • There is an economic plunge
  • You are threatened by an upcoming competitor
  • Faced with serious health conditions
  • Facing serious disputes or lawsuits
  • Your products or services are in a downward trend
  • Your managing partners are not performing well
  • A business problem impedes a sale
  • Lease contracts are expiring

Careful preparation and meticulous planning should be your foremost concern before selling out. It is necessary to consult an experienced business broker to help get your business in tip-top shape as far as operations and physical attributes are concerned. The selling process begins with preparation starting with proper documentation of financial statements and other important data. The following are a few pointers to start with:

Review your expiring lease contracts particularly the stipulations in the terms, options, rentals and assignments. Correct any errors or add any provision that may have been missed.

  • Check your inventory: Are your products obsolete or overstocked?
  • Get a breakdown of your receivables
  • Check status of payables.
  • Are deliveries of goods updated?
  • Do you maintain good customers that are happy over goodwill prices?
  • Check for marketplace trends.
  • Are your business permits and licenses updated?
  • Prepare the tax returns from the last three year of business operations.
  • Make certain that all insurance policies are active.
  • Prepare audited financial data from the first day of operations to the current year.

If you do not have time to clean up all facets of the business, then it is recommended to hire professional help. An experienced business broker to perform these necessary tasks for you. Professional help is more appreciated when your see that your business worth is established based on industry and appraisal standards, buyers are pre-qualified to full quality potential and assurance that you can get your desired price for the sale. You should also consider getting advice from certified financial accountants to help analyze your business worth through the process of business valuation based on your business’ earning power, intrinsic value, market comparisons and goodwill.