It happens in every business owner’s life. The owner spent a lifetime building a business and increasing its value to the community. Employees are providing quality service to the customers and selling goods and services that provide a healthy income for the firm. There is a time to make a decision to get out of the “rat race” and let someone take over. This the time when the desirable option has become … selling your business. MN business owners who make this decision should understand a few things before moving forward.
Business owners may have hoped their son or daughter would want to take over the business and pay their parents a monthly retirement check. This is a nice dream but it doesn’t always work out that way. Children may have other interests and pursue other careers. Without an “heir apparent,” it is time to consider the sale of the company to fund the necessary retirement income.
Comparison to Selling Real Estate
Once you decide on selling your business, you need to decide on how to put your business on the market. Like real estate, no one knows what you have to sell unless you get the word out to potential buyers. For example, if you have a house to sell, you contact a realtor, sign a contract and list the house on a real estate multiple listing service. The realtor advises you on what to do to make your house more appealing to the buyer and help you decide on what offer to take.
The Process is Similar but Requires Specialized Skills
Selling your business is similar. You need a broker from a firm that specializes in valuating and selling businesses. You need advice on the value of your firm and what you need to do to improve the balance sheet and the operation to appeal to a buyer.
Carefully Examine the Financials
You need an analysis of the cash flow and other financial factors that could be detrimental to a sale such as bad debts from customers or losses due to pilfering. The firm’s Dun and Bradstreet credit rating is indicative of the health of the enterprise. Sales figures and annual increases over a set period of time also enhance the value of the business.
Market share analysis is important since buyers want to consider the risk factors of the firm’s future success. A highly competitive environment may be too risky for a buyer and may decrease the value of the firm. But a firm that has a significant market share would be considered a “cash cow” with a relatively low risk factor and improve the purchase offer considerably.
Human Resources of Your Business is a Major Influence on the Sale
The management team and the employees working at the firm are the backbone of the organization. Will they stay if the firm is sold? Do you want to pay them a retirement bonus? Can you sell the quality of the team to a buyer? Selling a business is not as simple as putting your house on the market.
It’s Your Business. Seek Qualified Counsel
Business owners who are about to make the most important business decision of their life should consider consulting Sunbelt Business Advisors. They can value your firm, advise you on how to market the firm, and help you negotiate a successful closing price to your satisfaction. Visit www.sunbelt-busienss-advisors.com today for more information and begin the selling process now.