20 Dec Around the Web: A Week in Summary
A recent article posted on BizJournals.com entitled “How to know when the ride is over and it’s time to get off” gives an overview of how to know when to exit your business and how to be prepared when the time is right. Here are 4 signs that it might be time to sell your business:
- Your health is declining or your business is negatively affecting your health
- You’ve lost your passion for the business
- Your priorities have changed and the business is no longer your top priority
- You are hesitant or unable to invest money in the growth of your business
Business owners should periodically review these factors and ask themselves if they are still the right person for the job. It’s also good to consult with a trusted advisor to start planning an exit strategy now so you’re prepared when the time comes to sell all or part of your business.
A recent article posted on The CBB Blog entitled “Selling a Business: Suiting Up for the Spotlight” compares selling a business to rehearsing for a stage performance, explaining how important it is to be prepared when selling your business. The business owner’s role is to be a source of information for accurately assessing the business’ value. This information will tell the story of your business to the audience.
Here is a list of key information that a buyer will look at when considering purchasing your business:
- Financial statements
- Trends in accounts receivable and payables
- Ensure any patents, trademarks & other property rights are properly registered
- Well-organized and updated materials such as employee handbooks, manuals, online presence, brochures and advertisements
- List of equipment, furniture, fixtures and service records
- Be prepared for questions from prospective buyers
It is also important to have a good team in place to help facilitate the sale, such as your accountant, attorney and business broker. Making sure you and your team are fully prepared will help make the sale process go as smoothly as possible.
A recent article from Divestopedia entitled “What to Keep in Mind to Maximize Valuation” explains how to increase your business valuation and develop an exit strategy far in advance to selling your business. The first step is to define your priorities for the sale, such as asking yourself how much you need to sell for to be financially secure, or what kind of legacy you want to leave behind with the company. This will give you direction in where to focus on for maximizing your company’s value.
You’ll also want to decide what type of buyer to sell to. If you sell to someone within the company, you may have to accept a lower price but you will be more likely to preserve your company’s legacy and culture. If you’re focused on selling for a higher price, you will look for a strategic or financial buyer.
The timing of the sale is also important and it’s better to wait for a strong economy if you can. Regardless, if your company’s financial performance is doing well and there is growth in your industry, these will be positive factors in your valuation at any time. The valuation process will also give you a chance to see your company from a buyer’s perspective and to improve in certain areas before you’re ready to sell.