Knocking Down Walls: Keys to Selling Your Home Remodeling Business
The construction business in California is extremely healthy, and when it comes to home remodeling businesses, companies are thriving. As the seasons change, people often want to make changes too, and that includes remodeling their home. However, you may be craving change as well and feel like selling your home remodeling business.
Whatever your reason, whether you are ready to retire or just prepared to move on to a new project, selling your home remodeling business in California does offer some challenges. But by following some simple steps and paying attention to certain keys, you can successfully sell your business.
Step One: Valuing Your Home Remodeling Business
The first key to selling your home remodeling business is that you need to know what it is worth. That means you need to start with a business valuation.
If you are early in the process, we offer you a tool here at Rogerson Business Services for free. It will guide you through the process of valuing your business, and at the same time, it will help you know what to expect when you are ready for an official business valuation. Many businesses go through this process annually to help determine their growth year over year.
Once you are ready to list your business, it is important that you contact a business broker for an official business valuation. It is extremely important that this valuation is accurate. It will not only determine what a potential buyer will pay for your business and speed up the due diligence process, but it will provide a basis for a lender to fund the sale if your buyer needs financing.
Without knowing what your business is worth, it’s hard to move forward in the process of selling it.
Step Two: Assembling Your Team
One of the keys to selling your business located in California is that you must keep it running and growing during the process of the sale. But selling your business can itself be a part-time job. That is why you need a team to help you. There are a few key elements to this team.
- A Certified California Based Business Broker: Your business broker is the member of your team that makes sure every part of the sale goes off without a hitch. At Rogerson Business Brokers, one of our specializations is selling businesses in the construction industry just like yours.
- Your Accountant: While your business broker can help you understand the tax implications and financial impact selling your business will have, your accountant can get specific about your situation. It’s best to introduce them to your business broker so the two of them can communicate and work together to protect your interests. For many people, selling a business will be one of the most impactful transactions of their lives, and it’s important that you understand it before you even get started.
- Your Attorney: Just like the financial aspect of selling your home remodeling business, the legal aspect is equally important. Having your own attorney to look over contracts and other documents will ensure that you are comfortable with the entire process.
Your team is the key to your ability to focus on your business while they focus on the sale for you when it comes to things like finding a buyer and vetting them. Which leads us to the next step.
Step Three: Finding a Qualified Buyer
In the state of California, there are often a lot of local and state certifications and requirements a buyer must meet to run a home remodeling business or any business in the construction industry. When looking for a qualified buyer, the ideal situation is that they already have those licenses they need or have a path to getting them quickly.
If your buyer does not have a California General Contractor’s License they will need to get one, and that process takes time even if they were certified in another state. If you are going to sell to this buyer, just understand the process may take longer.
Your buyer must also be financially qualified. Ideally, they will already have cash or other financing in place when they make an offer. But if not, this is where the importance of your business valuation comes in. If they plan to get an SBA loan or another small business loan from another lender, they will need to be able to prove the value of what they are purchasing.
Another consideration is whether or not you will carry some of the financing as the owner of the business. Owner financing is often an expected part of the deal and can be a great way for you to earn some residual income going forward. Be sure to talk with your business broker about the many ways this can be structured into the sale.
Step Four: Selling Your Home Remodeling Business
The final step is closing the sale, and this is one of the aspects that makes selling a business in California unique. The escrow process is a mandatory part of the final sale of your business, and that comes after some other important keys:
- Your Lease: Make sure your lease is negotiable if you are renting. It is even a good idea to negotiate your lease ahead of time.
- Real Estate: If you own the real estate associated with your business, you need to decide whether to sell it with the business, keep it and lease it to the new owner, or explore other options.
- Due Diligence: Your buyer will want to make sure that everything you’ve said about your business and the income is accurate. This is often the longest part of the process before the final sale, and this is also why it’s important to make sure your business books are in good shape before you sell. Your business broker can help with this vital step.
Once you have done these things, you can feel good about entering the escrow process and closing the sale of the business.
Want to learn more about Successfully Selling Your Business? Andrew Rogerson of Rogerson Business Services has written a great book about the process, and you can purchase it here.
Are you ready to start the process of selling your home remodeling business? Get in touch with us at Rogerson Business Services today. We’d love to be your California business broker and help you every step of the way, from business valuation to escrow and closing day.
