Starting a business is often intimidating, overwhelming, and frightening. Depending on the business there are myriads of people, tools, and considerations that you have to put together and fine tune to ensure your business will be profitable. Selling that business is no different, and in fact it may be everything that starting a business is with the added stress of knowing there are no do-overs.
If you make a mistake starting a business, while it may set you back, chances are you will get an opportunity to reverse the mistake. When you’re selling you get one chance to get the most out of everything you have worked so hard to build. With that in mind let’s take a look at some of the considerations that come with selling your business.
Why & When?
Why are you selling your business and when are you selling your business should be among the first questions you ask yourself before selling.
According to Susan Ward’s article on The Balance the most common reason for selling a business is that the business owner, either through illness or old age, simply is not capable of running it anymore. Susan states that this is both the wrong time and the wrong reason:
For one thing, it’s going to be extremely difficult for you to deal with the additional stress of selling a business in those circumstances; for another, the buyer will use your circumstances as leverage against you.
Selling when the business has hit a slump in performance or catastrophic event will inevitably result in fewer dollars in the seller’s pocket. Experts at Forbes, Inc., and The Balance all agree that the timing is extremely important and that the right time to sell your business is when it’s doing well.
Who are you going to need to help you sell your business? Unless your business is one that buys and sells businesses you are going to need outside professionals to ensure you are not leaving money on the table.
Primary in this is a professional business valuator to evaluate your business and provide an estimate to its worth. The Canadian Institute of Chartered Business Valuators is one place Canadians can locate a professional business valuator.
Renovations and maintenance are proven methods to increase a business’ worth when property is involved. A professional and knowledgeable contractor can add dollars to the final sale. Antham Construction Group Inc. can help make the right changes to boost the bottom line.
A commercial realtor or business broker may be extremely helpful in finding and dealing with prospective buyers for your business. Check local listings to find these in your area.
It’s a good idea to have a lawyer on hand to prepare and\or review documents such as business summaries, the purchase, and the sales agreements that will be necessary to sell your business.
How much of your business do you want to sell? To the brass tacks? The trademarks and client lists? Will you sell or lease the building? If your company is incorporated, as Susan explained in her article, then there are two ways to sell it. With a “business as an asset” sale you sell everything in the corporation but not the incorporated company itself. “Share sales” you sell everything including the incorporated company. Some of this your professional business valuator can help with, but ultimately, just like when you first hung your shingle it’s all up to you.
One of the best things to do before selling your business is to consider a renovation to make it more attractive to prospective buyers. If you’d like to discuss your exit plan further and how we can help, please contact us.