When Should I Sell My Business?

Did you wake up thinking, “Maybe I should sell my business?” If so, you’re not alone. Many entrepreneurs will have the itch to sell a business that they own at one time or another. Whether that thought of selling your business is a fleeting one or one that continues to pop into your head, is the real question. The second question is when should I sell my business?

There are many reasons business owners want to sell a business. Some want to retire, others are burned out, and some may need to sell for other personal reasons such as a life change or illness. Selling your business is in deed a personal choice. A business broker can assist in performing a business valuation so that you can get a clear picture of what a sale would look like financially to you and what the transition to the new owner would entail. They can also determine if it’s a good time to sell your business in terms of what the market will bear.

If you’re decided to sell your business, a business broker will help you with a business valuation which really, is the first step to getting your business on the market. Once he determines what the business is worth, the business broker will work to find a buyer. Utilizing complete confidentiality, a business broker will be able to attract qualified buyers without you having to announce to the world, “Hey, I’m selling my business!” A business broker understands the need to keep the details of a sale, or the potential of a sale confidential. In some instances staff, vendors, and even customers may be turned away if they know the business may be for sale. This, in turn, could affect your position in selling your business.

To sell your business, you’ll need to gather all financial statements and tax returns dating back three or four years. Have your accountant review these documents to ensure everything is in order. Additionally, you’ll need a list of all of the equipment that will be included when you sell your business along with a list of contracts related to sales transactions and supplies. Plus, if you lease the building your business is located in, you’ll also need to provide a copy of your current lease.

After selling a business, many people are at a loss what to do. Not only do they have all the free time in the world, but they also have, in most instances, a large influx of cash. To protect the fruits of your labor, be sure to create a solid financial plan early in the sale. Having a plan for how you will invest the money you earn from selling a business as well as having learned about any tax consequences associated with selling your business will put you a step in the right direction for long-term financial well being.

We started off talking about whether you’re ready to sell your business. It’s definitely not a spur-of-the-moment decision. Timing is everything. While you may think you’re ready to sell your business, if your industry or the business itself is in a declining trend, it may not be the best time to sell. Having a business broker look into the market conditions for you, giving you insight specific to your industry will help you make the right decision on when the time is right in selling a business. Couple that with a business valuation and you can make the best, informed decision whether to sell now or if you need to get your books in the best shape and wait a little longer.