How to Plan a Successful Business Sale

Selling a business today is not as easy as it once was. According to a 2014 study conducted by Guardian Life Insurance, 35% of business owners are planning to fund their retirement from the sale of their business. However, only 17% of those surveyed had identified a potential buyer. As the Baby Boomers retire, an increasing number of businesses go up for sale each year. And in many industries, there are a limited number of qualified buyers. Business Sale

If you are planning to sell your business in the near future, it is likely you will face a buyer’s market. But this does not mean you cannot make a successful sale. They key to selling any product or service, even in a crowded market, is to stand out from the competition. This principle applies equally to selling a business.

Here are four essential steps to take to ensure that your business stands out and you are able to make a successful sale:

Plan Ahead: The time to put your business up for sale is not a month or two before retiring or moving on to another endeavor. Ideally, it is best to give yourself 1-2 years lead time. This allows you plenty of time to get all your ducks in a row. In addition, you are able to negotiate from a position or strength rather than weakness as you will not be in a desperate scramble to sell your business “by next week.”

Clean up your Books: Bookkeeping is a major issue with many small business owners. It is understandable that in order to reduce tax liability, particularly self-employment tax, it is tempting to run many of your expenses that may cross a grey area between business and personal through your company. These may include travel, meals, entertainment, etc. There is a downside, however, to reducing business income; it makes your company far less attractive for potential buyers. This is one of the reasons a 1-2 year lead time is so important. It gives you the opportunity to get your bookkeeping in order.

Build your Brand: Many things make a business valuable. Showing a strong bottom line profit, growth trajectory and competent management are among the basics. But to really make your business stand out, it is important to invest in your brand. This involves going above and beyond the traditional advertising methods.

One of the best and most cost effective ways to establish your name is through social media. At the very least, set up a Facebook fan page and actively engage with it. Listen to customer/client feedback and take steps to ensure that your market is more than satisfied with your offerings. This will make them not only repeat customers, but advocates for your brand. And once you have achieved this level of brand loyalty, it will be far easier to attract buyer interest.

Work with a Reputable Business Broker: Selling a business is tricky, and in many industries, confidentiality is of the utmost importance. But how do you get the word out to potential buyers while keeping it quiet? The wise move is to list your business through a broker that has a proven track record of success. A good business intermediary will understand how to target a pool of prospective buyers confidentially and without upsetting your customers or employees.

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