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Thinking About Selling Your Small Business?

A small business owner typically has one primary focus: growth. All strategizing, all financial moves and all work is done with the goal of building out the business. But many owners eventually find themselves in the position of capping all that work and selling their small business.

Sometimes, it’s a choice made out of necessity – the business climate changes for the worse, or there’s not enough time to spend with the family. Sometimes, it’s a joyful exit where the owner walks away with a healthy premium and a smile. But in any instance, small business owners can benefit from putting thought and effort into their final stage with the company.

Selling your small business involves several steps, from determining how much your company is worth to finding a buyer to planning an exit strategy. Here are some tips on how you can prepare yourself and your small business for a successful sale.

5 Tips for Selling Your Small Business

1. Get a Head Start: This is a luxury that not every small business owner can afford – in some cases, selling the company isn’t a choice, but a condition thrust upon you. But in the event that you know that a sale could be on the horizon, don’t delay, whether it’s three months or three years. Time is an essential ingredient for several aspects of a sale, from setting up a smooth transition to increasing the value of your business before you exit.

2. Know Your Worth: One important step to get out of the way early is a business valuation. Knowing exactly what your company is worth can be useful for a number of situations – life insurance planning, gifting of stock and financial restructuring – but it’s an essential aspect of getting your company sold. Potential buyers typically aren’t going to accept a back-of-the-napkin valuation from a company’s own personnel – they’ll want an independent, professional business valuation. But you also can think of a valuation as a stepping stone. If you know this number a year or two before when you plan on putting your company on the market, you can start working on the next step: boosting your company’s value.

3. Improve What You Can: You might not necessarily be able to double your company’s revenues in anticipation of an eventual sale – after all, if you could do that, you might not be exiting in the first place. But there are several smaller steps you can take to make your business more attractive to an outside buyer. A few examples include getting current on all owed taxes, being up-to-date on all necessary licenses, producing professional financial statements, training up staff and ensuring your systems are easily transferrable. A professional consultation can help you clean up these and several other aspects of your business, making it appear more “move-in ready” to prospective buyers.

4. Prepare Your Business: More often than not, when a small business owner sells out, that marks the end of their involvement with the company … but the company has to keep humming along. In fact, many buyers could be dissuaded from purchasing your business if it looks like it’s too dependent on you to operate. Thus, in the time leading up to the sale, you should set up a succession plan. That includes choosing and training a successor, letting key personnel know about the exit (and any established timelines), and even preparing yourself for life after small business ownership.

5. Don’t Go It Alone: Most small business owners don’t have much (if any) experience selling their small business, which is problematic given all the potential land mines scattered along the path. Every misstep can lead to a lower buying price – and that’s exactly what some would-be acquirers are banking on. Set yourself up for success by bringing in the mergers and acquisitions experts at McManamon & Co., which can help you out from start to finish of a potential sale, from positioning your business to finding a buyer to negotiating favorable deal terms.

Don’t stumble at the finish line. Call us at 440.892.9088 or contact us online today to make the most of your exit from small business ownership.


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