Stay in Business While Preparing to Sell
According to Rose Stabler, managing partner at Certified Business Brokers in Houston, it takes most U.S. businesses four to 12 months to sell. Without knowing how long your business will be on the market, there's no reason to shut it down before you've secured an offer and financing. Selling your business may be an incentive to push harder in the final months, which could increase sales, profits and the selling price.
Add Value to the Business
This is a similar strategy to home sellers who upgrade fixtures before the property goes on the market. If you have rusty equipment, replace it. If possible, sell off assets that aren't generating revenue. Do what you need to increase the financial attractiveness of your assets, especially if you can wait a year or two before selling your business.
Consider Hiring a Business Broker
Broker's fees are usually 10 percent, which will take a bite out of the revenue generated by your sale. Chamberlain says most small businesses are sold directly because brokers generally cater to firms valued above $500,000. However, some brokers have buyer contacts that could speed up the sale of your business. Brokers are generally paid after the sale is concluded. Many only sell businesses, and some even serve certain industries or small businesses.
You can get references from fellow businesspeople that have sold their operations or research a local broker through the International Business Brokers Association, which has a network of 1,950 brokers and intermediaries worldwide. You'll probably also want to work with a tax professional, an attorney and other experts to make sure that all aspects of a sale are handled properly.
Know the Market
Even if you have a broker, it's important to know the recent sale prices of comparable businesses. It's also important to monitor whether your industry or the economy is about to slow down or grow. Growth potential is key for potential buyers, who are often looking to invest in an emergent market or business. This takes some market research that can be done online or through industry publications. Projections will significantly affect the amount of time it can take for your business to sell and the selling price.
Know Your Buyers
Competitors and other businesses with similar services are probably better buyers than those simply interested in your business for financial reasons, Chamberlain says. It's also important to know what kind of return on investment potential buyers expect -- and what your business can deliver.
