Would you like to sell your business one day?
Many business owners forget that their business is an investment. They sometimes get blinded by just making a living for that particular year. They don't think while in the early stages of their business life cycle that they could possibly sell their business one day. The truth is, in most cases for a business to be sold one day there has to be proper planning well in advance. The business has to be successful enough or have something attracting a potential buyer. Here are a few things to consider before actually selling your business.
- Retirement - One needs to consider when it is that they would like to retire in order to start planning for the sale of their business. It doesn't have to be an exact date or year, but you need to have some sort of ballpark. If you wait until you are 1 - 3 years from retirement you could lose out on some negotiating power. Also, some sales take place internally and those take several years to transition. So it is best to get your game plan started well in advance so that proper planning can be done and so that you get the maximum value out of your business whenever the sale takes place.
- Internal Or External - Now that you have got a basic idea of when you will want to retire, one needs to consider whether or not the sale will take place internally or externally. Either way proper planning will be needed for both. You have taken the time to hire the right employees so naturally that is an option given that your employees know your business very well. If a sale is to take place internally, you will need to first decide which employee(s) will step up to fill this position. As mentioned before, internal sales will take a few years to transition. If the business is to be sold externally, then a business owner needs to look at all the options of how to go about getting an external buyer. This could range from looking into competitors, knowing someone looking to get into the business, having people calling about purchasing the business, or going through a third party broker.
- Valuation - Now that you have your plan in place and are ready to actually sell the business, you will want to have a proper valuation done on your business. This will ensure that you are getting the right amount for your business. One could use a CPA or Tax Professional to do a pretty basic valuation or you can hire a professional valuation expert.
- Structure Of The Sale - The structure of the sale is very important and typically takes place closer to the date of the sale. One needs to get with a CPA or Tax Professional in order to make sure that the taxes can be minimized. I have seen business owners put their business up for sale without regards to the tax implications. This results in a much higher tax bill than they should have paid. Also, a good attorney is needed in order to help you draw up the paperwork.