Where do I Get Started? Sell a California Small Business
If you’re a business owner in California looking to exit your small business and reducing your financial risk by selling your company, there are some essential steps to take before you put your California small business for sale.
Before you sell, it’s important to understand the steps to sell a privately held small business, including calculating your company’s value, knowing the market, where to advertise, how to protect the confidentiality of selling your business, and so much more. At Rogerson Business Sevices, Andrew Rogerson, a Certified business broker can guide you through the process of selling your business and developing an exit plan for success.
Having a business exit strategy and making the appropriate exit planning is key to making the sale of a business profitable with the expertise of a California business borker. They have the knowledge and expertise to do things correctly and will bring the right set of tools you need to learn how to get started on listing successfully a California small business for sale.
First, Evaluating Your Business
If you are considering of exiting your small business, the first step is evaluating your company and determining its worth or value. This is best done through a business valuation service as they have access to critical data such as what other businesses have sold for in your industry and how to analyze your financial statements to make sure they present well to potential buyers.
See also equipment valuations.
This helps increase your chances of selling the small business, but most buyers will need to get finance to close the sale. An accurate business valuation will help see the value of the business through the eyes of potential lenders.
If you’ve been closely monitoring your business’ assets, revenue, and overall potential from the start of your company, you’ll already have a good idea. A potential buyer will request financials to validate any claims you make about your company’s worth, which is essential to gauge their interest and support selling your California company.
A financial assessment of your company with a business broker will determine how much your business is worth and guide you through the small business for sale process.
How do I sell my business and make enough money for future ventures and investments? This process gives you the advantage of negotiating with potential buyers for a fair price, so you can close the deal with confidence while maximizing the return on your sale.
Developing a business owner exit plan is an essential step to beginning the sale of a small business. Selling your small business requires understanding what potential buyers are looking for and their future plans. Discussing tax-related details with an accountant is also key to a smooth acquisition process as you determine how to sell a small California company.
Make Summary of Your California Small Business for Sale
One of the things to be most careful about is disclosing too much about how you operate your business, including your key objectives. These are details that may be important for a buyer to know but what’s more important is you asking the buyer what is of interest to them because if you sold the small business, what you are doing will change as the buyer will take the business in the direction they wish to go.
Some California small businesses specialize in certain products and services, which are critical to their continued success. If you disclose too much information and the sale doesn’t close, it may damage your business and all the work you have invested your time and money in.
A carefully written business summary and plan are essential tools for a buyer to assess whether they are ready to take on the role of a new owner. This is one of the many areas where the help of an experienced business broker can make a difference. That is, an experienced business broker can provide the expertise you need to develop an executive summary of your company, making it attractive to buyers.
Organize Your Legal Documents
Does your small business require unique licensing or permits to operate? Most small businesses in California have this or a similar requirement. Disclosing any pertinent information that a potential buyer needs to have before they can legally operate a business is not only essential, it’s a requirement for success.
Documents needed to sell your small business essentially include financial reports, future planning, and details that may include expected growth through acquisition. How much can I sell my business for? This is a question most small business owners ask, though there is much they can ascertain from a due diligence checklist for selling a business and other tools that give them details on how to calculate the value of a business for sale.
Advertise and List Your California Small Business for Sale
The next step of selling your samll business is advertising or listing your California company for sale to attract potential buyers. An effective strategy used by a certified business broker in California is to introduce your company with a summary sheet and highlight notable benefits of the acquisition, but please be careful.
If you highlight some benefits that make it easy to know it is your small business, an employee or competitor may find out your small business is for sale, which may negatively impact your business. Be careful not to include media recognition, awards for exceptional products and service levels, and especially links to your company’s website.
A good business intermediary will identify which demographic to focus on to find the right buyer, as certain small businesses are more progressive than others. A bit of research goes a long way in determining who will take an active interest in your California company.
The critical step is to attract potential buyers so they sign a Non-Disclosure Agreement or NDA so you can then provide commercially sensitive information if the buyer is qualified to make the acquisition. Once you list your small business for sale, you’ll need to field through many inquiries before finding severe buyers. Once again, this is the advantage of using the services of a broker as they will do all this work for you.
Buyers Need a Chance to Assess Their Options
Selling your small business can attract a lot of interest, and fielding through buyer inquiries is critical to determine which individuals or investors are seriously in the market for buying your business.
As part of the process and after an offer has been presented, negotiated, and accepted, it is also important to allow potential buyers the opportunity to perform due diligence so they can verify the representations you have been making and therefore make a firm decision. Many buyers will need to obtain some sort of third-party finance, so this adds an additional layer of complexity to get the California small business sold.
How Long Does it Take to Sell a Small Business in California?
California samll businesses typically take approximately eight months to sell, on average but please be aware, only 25% of small businesses actually sell. The reason for such a high rate of businesses, not selling includes inaccurate financial statements, selling a small business when its performance is deteriorating, an industry is being disrupted by a new competitor or new technology, or perhaps a political event such as a new tariff or law.
For this reason, it’s essential to prepare all your reports and summaries (see a sample business summary) well in advance to show your company is performing strongly and it’s attractive for a buyer to buy. Taking all the steps in selling a small business may take longer than expected. However, it’s vital to increase your chances of success and achieve your ultimate goal of selling your small business while moving to a new phase of your life.
It’s worth considering that many factors determine how quickly your company will sell, such as local and current market trends. If your company is well known for its solid reputation, potential buyers will have more confidence in approaching you with a serious offer.
A lesser-known California small business may take longer to sell, as more research and due diligence are needed, and the buyer will be weighing their chances of success not only by looking at the price they have to pay but also their time and the investment of the necessary expertise.
There are many reasons why California business owners decide to sell their small company, whether it’s due to an unexpected disruption in sales or services or a change in professional or business goals. Selling your small business successfully increases if you keep all your legal documents and financial reports accurate and accessible.
Making a good impression from the start will ensure a better chance of selling your California company sooner and with good financial results.
With the help of Andrew Rogerson, California Certified Business Broker, you can have the confidence that your business is falling into good hands and focus on preparing for your next chapter in life.
Are you ready to sell your small business in California? Here is a 7 steps tutorial guide to help you get started. Link: https://www.rogersonbusinessservices.com/sellingyourbusiness/