Selling a business privately is an exciting idea to anyone who wishes to save some bucks in the sale process. However, this isn’t as easy as many think. There are various things that you should know before listing your business for sale. And you can only do this successfully when you understand how to do things right.
Here are ideas to guide you:
- Valuation- Estimate the worth of your business
To sell your enterprise, you must determine its value. Not knowing how much your business is worth makes it difficult to determine the price. Fortunately, there are various ways of valuing a business. These are;
- Asset-based valuations
- Book value valuations
- Discounted cash flow
- Return on investment method
- EBIT( Earnings Before Interest and Tax) method
- Price-earnings method
- Sales multiple valuation methods
Most potential buyers use the recent year’s profit to estimate the business’s value on sale. There are also many other considerations that matter.
- Determine the sale price
Although you want to sell your business privately, it’s only logical to discuss your business’s worth with an accountant or a business appraiser. This way, you can be sure of the figures before marketing your business to potential buyers.
For instance, Nash Advisory business sales are done by professionals and always fetch the maximum price. Seeking information from such specialists makes it easier for you to value your business without making costly blunders.
- Prepare for a sale- Put your documents in order.
Potential buyers will want to check your financial documents, and you ease the process with proper documentation. Have a record of the;
- Inventory list
- Financial rations& trends
- Balance sheets
- Tax returns
- Supplier& Distributor contracts
- Business formation documents
- Office lease
- Insurance policies
- Loan agreements
- Understand the legal documents
When selling your business, two key documents should concern you. These are;
- Contract of sale
- Vendor statement
The contract of sale contains all the information about the seller, the agreed sale price, and the date of sale. Moreover, it includes any agreements between the seller and the buyer and any fittings included in the agreement. On the other hand, the vendor statement contains information pertinent to the business on sale. It involves information similar to the contract of sale but is more detailed.
- List the business for sale
List your business for sale and start marketing it. You can do this online or use posters and signboards. Take advantage of the many social media platforms available to reach a wide scope of clients. Also, post on your website, and put across the best features to entice more buyers.
- Negotiations & Accepting an offer
Regardless of the listed sale price, you’ll still get offers to negotiate the price. Most buyers will always strive to get a discount on the sale price, and you require the right skills to negotiate appropriately. Have a minimum asking price in mind, and resist the urge to accept a lower amount. Instead, allow buyers time to weigh their options. Once you get the best offer, sign the necessary legal documents and seal the deal.
Before listing your business for sale, have the right documents and know how to go about the process. Also, value the business appropriately, and seek ideas from professional appraisers. By so doing, you avoid blunders and sell your business faster.