Seven Steps for Selling a Small Business [The Complete Steps]

Selling your company can become a very difficult task. It requires proper planning and application of strategies before selling your company. Your main objective is to gain the maximum profit by selling the company. Profit increased depends on several factors such as the reason for the sale of your company, the structure of the business, the timing of the sale of the business, etc.

steps for selling small business

Here are the seven steps one should follow before selling their business to gain the maximum profit. They are:

1. Reasons for selling your business.

You should not take any rush decision of selling your company. Before selling a business, one should clearly know the advantages and disadvantages of selling the company. You should have a proper reason for selling your business. Some of the common reasons for selling a company are retirement, partnership disputes, illness or death of the partners, change in the business value, movement into a new industry, etc. Selling a business because it is not profitable is not a proper reason, as this will make it difficult to attract buyers.

2. Right time of selling the company.

To sell your business, you need to start preparing and planning as early as possible. It is advised that you should start making at least a year or two before selling your business. This will help you to develop your business structure, improve your financial records and increase your client base, which will result in the attraction of buyers. You have to wait for the right time to sell your business as the market fluctuates continuously.

3. Valuation of your company.

Before selling your business, you need to know the value or worth of your business so that you can get the maximum profit. Calculating the valuation of a company is a complicated task, so you need to hire a business appraiser. Besides physical assets, the cost depends on several factors. The document of valuation will impress the buyers and will add credibility to your asking price.

4. Choosing the broker.

Finding the right buyer can be tedious as well as a time-consuming task to do. Hiring a broker will improve your chances of getting a reasonable price. However, he will charge a high commission for the sale of your company. On the other hand, if you sell your business on your own, it will save you money. For small businesses with lesser assets, it is always preferable to sell your business without the help of a broker because in that case, you will gain more.

5. Prepare the documents.

Before selling your company, you need to prepare the documents that are required to market your company. You need financial statements and the tax returns for the last three years. You should hire an accountant to make sure that all your documents are in the correct order.

6. You need to find a buyer.

Once your company is ready for sale, and all your documents are in order, the next step to find a buyer. This is a time-consuming process, and you need to be patient. You should advertise your company efficiently so that it attracts potential buyers. Keep in touch with potential buyers continuously. Along with that, you must run your company efficiently so that it attracts more and more buyers.

7. Managing the profits.

You should start planning what to do with the profit that you will earn. You should also have knowledge about the tax obligations associated with your earnings. It is better to hire a financial advisor who will assist you to invest your earnings wisely.