Tips for Selling your Small Business
The natural evolution for many small business owners is to eventually sell the business and move on to a new project. Many companies specialize in buying growing businesses, and other online resources allow owners to list their business for sale in a fully accessible directory like Business Mart.
There is a difference between starting new projects and selling them appropriately, and sticking to something all the way to its initial public offering, like in the case of Mark Zuckerberg’s Facebook. Once you determine that selling may be your best option, you must avoid traditional pitfalls that others run into. Listed below are some major tips on avoiding issues and selling your business for the right price:
The Art of Writing Off
US Money News reports that a major issue small businesses face is with tax write-offs. As a business is growing, owners will write off anything even remotely related to the business in an effort to minimize yearly and monthly tax payouts. This does not fare well for a potential buyer. It is recommended you have a year of less writing off, giving a potential buyer insight into exactly how much it costs to run that firm, without exaggerated the price.
Formal Evaluation
Many investors will value a formal price evaluation of a particular small business, as US Money News reports. The pro is that a potential buyer has a more concrete value of a business’ worth. The con is that it does box a business value in to an extent. A buyer will hardly pitch a price of $250,000 if the formal evaluation indicates that a business is worth half that. Depending on the size, you can obtain a rough do-it-yourself estimate at a resource such as BizTrader. On the other hand, larger businesses deserve an evaluation by a company which can cost upwards of $10,000.
Privacy Measures In Place Through the Whole Process
Business selling and buying is a vulnerable time for many. Sellers employ due diligence and open up their books to potential buyers. But the owner and the business must still be protected in case of fraudulent activity. Resources such as Lifelock.com employ accessible privacy matters that can be applied in a small business selling situation. These include credit alerts and software protection before, during, and after a transaction, according to Inc.
Do Not Close the Doors to Third Party Members
Many business owners have a certain pride about the business, and will close off to accountants, brokers, and attorneys. During a transaction, a business must still be maintained and ran properly, as Inc.com reports. The only way to juggle the sale and the ongoing business relations is to embrace the resources of these third-party companies and confirm the validity and seamlessness of the sale. This is one of the many reasons to hire a business broker.
Find a Bottom Line Worth for the Business
A formal evaluation will give you an excellent idea of a business’ worth, but it is up to you to determine the final value. In an ongoing transaction, one party will attempt to get the best deal they can against your highest value. Microsoft Business determines that the best way to find a value is to look at the profit line and maximize it logically. Base the value on general cash flow, assets, annual growth, and overall gross revenues. We specialize in business valuation here at Rogerson Business Services.
