If you want to sell your business, you cannot just set a price, hand it over, and call it a day. Selling any business, large or small, is a complicated process that can easily take multiple weeks, months, or even a year or two.
All that depends on how it was managed and how you sell your business to the buyer. But that doesn’t mean you can’t make it as easy as possible for yourself. With a checklist, you can make sure that your business is not just ready to be sold but also managed well, which is a prerequisite to it being sold as well.
A Checklist to Sell Your Business
Any business, large or small, is going to have assets, expenses, employee payroll, tax obligations, and many more aspects to look into. To make sure you sell your business the right way, you need proper direction.
1 – Don’t Sell a Business on Your Own. Seek Advice.
Even if you are selling a small business, unless you can easily collate all your expenses and tax obligations, there is always some help you need from a professional. A business isn’t run by a single person, nor should it be sold by one.
There are three professionals you need if you are looking to sell your business. The first one is an accountant, one with particular expertise in financial details and taxes for businesses. The second is an attorney to ensure there are no legal problems and a business broker whose job description is to buy and sell businesses.
2 – Confidentiality is Key
Selling your business should not be a very public affair. While the news of the sale can go public, the sale could be compromised in many ways, even from someone with the best of intentions. One of the key reasons is that if a business is being sold, employees will be concerned, and if it is a public company, it can see its stock tank with any amount of misinformation floating about.
Keep your sale private and sign confidentiality agreements as a standard practice. Confidentiality should last from the start of the process to the very end.
3 – Keep Your Financial Records Organized
Do you know of every single expense you do personally, with receipts and records of some kind to ensure that not even a single cent is missing? Probably not, right? That’s not going to fly for a business. Keep every single record and receipt, and keep it organized. Keep your chartered accountant for the long term and have them organize it if you can’t do it yourself. You need to track your finances through the following:
- Tax Returns
- Balance Sheet and Profit/Loss Statements
- Information on Leases
- Any Real Estate appraisals you’ve had
- Tax Bills
- List of Equipment and Assets
- Average Inventory Value
These are not all your financials, which also vary by company, but these can give you enough of an idea.
4 – Perform Maintenance Checks and Upkeep
There is a term called ‘curb appeal,’ which refers to how good a place looks from the outside. While this is usually used for homes, it can be used for businesses too. A buyer will look into your business before making the purchase, and if it looks attractive from the outside, it should look great inside too. So, make sure your real estate and the equipment you have are in good condition and have their checks completed as well.
5 – Perform a Business Appraisal
A seller just made an offer, but is your business worth that amount? Have their made an offer that’s too low or too high? Worth is decided based on what someone is willing to pay for it, not its actual value, though those numbers are usually pretty close together. Hire a professional to conduct a business valuation and get the right number to determine if you’re getting a good deal.
6 – You Need to ‘Sell’ Your Business
Perhaps it would be better to say you need to ‘market’ your business to potential buyers. Not every business will receive an offer to buy the business if you aren’t actively looking to sell it. Look to your business broker for advice on how to make this happen.
7 – Research Your Buyers
Typically, if you have a business broker, they will do this for you, but it is a necessary part of the process nonetheless. The buyer should also show that they are financially capable of buying the business; otherwise, there might be problems.
8 – Set up a Meeting
If one of you has a prospective buyer lined up (or a few), it is best to set up a meeting to discuss things. The discussion could be regarding anything, from what they plan to do with the business to even just having a regular meeting to get to know the buyer and form a business relationship.
9 – As the Owner, Due Diligence is Expected from You
You might assume that as you have hired an accountant, have had appraisals conducted, and performed other checks through hiring people, you aren’t responsible, but that isn’t the case. Even if your accountant makes a mistake or the appraisal gets it wrong, you are responsible for the due diligence. Of course, minor discrepancies, such as the value of your business changing a few hundred dollars, is nothing to be concerned about. However, having unknowns is always a bad sign, so it is always useful to conduct your due diligence throughout the sale process.
10 – Document Everything, and Keep it Organized
Keep copies of your tax documents and financial reports, and make the data as easy to read as possible for the buyer. You also need to prepare documents for closing the sale and be sure to keep all of those documents organized as well.
Conclusion
If you are looking to sell your business, there are a number of obligations to meet. We have collated them into a checklist, so you have to know the things you need to do to make sure your sale happens without any hassle.
