Making the decision to sell your small business is a big undertaking.
Whether you sell to an employee or an outsider, you’ll need to get your financial and tax records in order and start planning what to do with any profits.
Experts recommend that you have at least three years worth of financial and tax information ready for inspection by prospective buyers. They also suggest that you have that information reviewed by an accountant or attorney who can help advise you about the best way to get this organized.
That’s because prospective buyers are going to want to know why you’re selling and they’ll want to get a feel for the health of your business, including your specific trends and competition.
Hiring an appraiser might be beneficial when it comes to setting a fair price. While the value of each business will vary, you want to make sure you get a fair price. The value can be set based on things that range from sales, to intangibles such as intellectual property, to value of assets such as equipment or property.
You’ll have the choice of selling the business yourself or finding a broker to advertise it and look for qualified buyers. If you’re selling to an employee, you may be able to bypass a broker, but having one might be a wise choice if you’re looking for an outside buyer. You’ll be paying a commission but keep in mind that a broker will want to maximize that commission by getting the best price possible.
You should also strongly consider hiring an attorney, who can prepare and review the financial documents and any agreements necessary for the sale and the transition of ownership.
In the best of worlds, you’ll be walking away with profit from the sale, which means you will have to make some decisions on what to do with the money. A financial advisor can help with those decisions. These decisions include how to minimize taxes and how to best invest the money for your needs. Whether that’s how to meet your normal living expenses or how to invest it for the future.
So if you decide to sell your business, make sure you allow yourself the time to have it running at its best and to weigh your options for finding the right professionals to help you get the best price possible.