Selling Your Small Business
Being on the sell side of a business transaction can be more work than you might think. This month’s “Financial Fitness,” as featured in Small Business Monthly, features Karen Stern, Partner in Charge of the Brown Smith Wallace Entrepreneurial Services Group, discussing some important steps that should be taken when selling a small business.
There are as many reasons to sell your business as there were to start it. Whether you’re retiring, pursuing new opportunities, looking to make a profit, or any one of countless other motives, making the decision to sell your small business is just the first step. The process for selling a business can be overwhelming, not to mention time consuming.
Here are some tips for implementing a successful exit strategy and selling your small business:
- Give yourself plenty of time. You should start preparing your business to be sold about 3-4 years in advance. This gives potential buyers the opportunity to check out trends in your business’s financial history.
- Perform a professional business valuation. This will help you find out how much your business is actually worth. A good business analyst can also help you discover specific value drivers or eroders that your business is sensitive to.
- Ensure quality information. While high quality financial and operational information about your business might not directly influence your purchase price, low quality information certainly won’t help.
- Plan ahead for taxes. Tax liabilities can be significant and can take away from sales proceeds. Be sure to plan from both a business and personal /estate standpoint.
- Increase profitability. Make sure your operations are as lean as possible. The quality of the underlying earnings will increase the value of your business.
The best way to ensure your sales transaction succeeds is to be proactive. If you have any questions about selling your small business, be sure to contact your business advisor.