I Want to Sell My Business: What Do I Need to Know?
Ok, so you’ve decided, “I want to sell my business”, but how do you do it?
Are classified ads enough? How do I assess the value of my business? How do I make sure I don’t get scammed? How do I know the buyer is reliable?
These are just some of the questions you’ll need an answer to before actually putting up your listings and start openly accepting offers from buyers. Still, most of these factors can be divided into two categories: the preparation period and the listing period.
I Want to Sell My Business: Getting Started
While, by and large, we tend to see selling a business as a negative thing, it doesn’t necessarily need to be so. Sure, some companies end up on the market because the current owner can’t keep them afloat, but many are sold for reasons unrelated to their financial performance.
Gathering cash for future investments, personal reasons, and retirement are just some of the common reasons why people opt to sell their business.
Now, it may seem that selling a business is easier than buying one, but that is a common misconception. Approaching the sale of your business without a proper understanding of how to do it can lead to undervalued sales, meaning that you get less than the fair value for your business. Lack of knowledge can also lead to selling a business taking too long or even being unable to sell it all. Let’s look at some of the most prominent things sellers need to understand before putting up a business for sale.
- Profit vs. Revenue – The value of a business is determined through profit, not revenue. You can have a big cash flow, but if your profit is low, it will lower the overall value of your business.
- Potential doesn’t equal value – Most people interested in buying a business don’t want a work in progress. They want something that works. Many sellers will overprice their business based on potential, but if a buyer wanted to grow a business from scratch, they would start their own, not buy one.
- Expect questions and thorough inspection – Businesses are rarely sold for cheap, and that makes them a big investment, which naturally leads to increased diligence when inquiring about details related to a potential purchase.
You’ll have to have prepared all relevant financial documentation, a full and comprehensive explanation of how your operations work, an overview of the costs, the whole shebang.
You’ll also have to answer questions that the buyer may have. Prepare yourself in advance as not being familiar with the nuances of the day-to-day operations of your business may portray it in a bad light.
- Focus on the last 12 months –A lot of business owners tend to consider the past success of a business to be relevant for selling the business today. On the other hand, most buyers will strictly put their focus on the last 12 months of its lifecycle to make a decision.
That makes sense as this period is the most relevant to the business they’re thinking about buying. You should prepare most information about business operations in that period.
Where to List My Business?
There are many places you can list a business that’s going up for sale, but your primary concern should be safety. Let’s be frank here. If someone is to decide whether to buy a business, they need access to that business’s sensitive information, which opens all kinds of avenues for abuse.
“I want to sell a business” usually means “I need a safe place to list my business info so I can reach buyers.” That’s where marketplaces like FindBusinesses4Sale step in. We provide that intermediary link that ensures that all businesses listed are legit and that all buyers are required to sign an NDA (Non-Disclosure Agreement) to protect sensitive information owners share when listing a business for sale.
FindBusinesses4Sale also provides sellers with a comprehensive guide to help them find their way around the platform and create listings that attract buyers’ attention.
Marketplaces like this one also allow sellers to seek out buyers actively, not just passively wait for leads to approach them. Buyers have an option to create wanted listings, so if you are in a hurry, you can put in the time and find a match yourself.
Of course, one crucial tool to help you assess your business’s worth is a Business Valuation Calculator. Most markets have one, and they give you a ballpark estimate of your business’s value. You shouldn’t rely on it 100%, but it is a good starting point for assessing its value.
I Want to Sell My Business: Frequently Asked Questions
1. How long does selling a business take?
The average time to sell a business is around 12 months. Still, this is just the average and the time needed to find a buyer depends on many factors like location, price, niche, time of year you list it out, and so on. All in all, don’t expect to be able to sell it quickly unless you are really lucky.
2. What do I need to include in a business listing?
Well, that’s up to you, and it is a big choice. The more detailed a job listing is, the better the chances of someone developing an interest in it, but the more you put yourself out there. Find a good balance between the two.
3. How do I find reliable buyers?
Most marketplaces perform buyer screening to ensure that they are legit investors, not scammers. If you really want your business to go to someone with a particular background or approach to entrepreneurship, nothing is stopping you from inquiring about them throughout the negotiation process. It’s a two-way street.
4. Can I change my listings?
Yes, at any time. Sellers get their own dashboard, which allows them to change the details of the listing and track the traffic and interest their listings accumulate. Mistakes and omissions are common for listings, so having an option to edit the info is a must.
I Want to Sell Business: Should I Start Now?
Well, this will depend on a lot of factors. If you are in full “I want to sell my business” mode, and this is not something you will change your mind about, you can start now. Even if you fail to get the offers you are hoping for, the decision to sell is entirely up to you, so you can easily postpone pulling the trigger until you get the right one.
Ultimately, it takes some time to sell a business so getting an early start is a good idea, even if you are not aiming to sell in the immediate future.
