The key to selling your business is preparation!

The key to selling your business is preparation!

How many times have you heard the cliche “location, location, location” about selling your home? A company’s mantra is the same: preparation, repeated. Now, it’s not that a business’s location isn’t important; rather, planning and preparation are much more important to a business’s successful sale.

Not only is it ill-advised, but it could also be detrimental to your financial well-being if you wait until the very last minute to even begin planning for the sale of your business. Your business will become more appealing to a potential buyer the more effort you put into preparing it and its management for the sale.

At least two to three years prior to the event that marks the transition, begin considering the procedure. You can pace yourself, give yourself enough time to think about all the things that need to be done, and create a solid exit strategy that covers all possible scenarios with enough lead time. Selling your business, on the other hand, will have a profound impact not only on your own life but also on the lives of those around you.

For selling your business, you’ll need the right attitude and motivation, and remember that your business is a part of you and everything that implies. Selling a business is an emotional and frustrating experience unlike any other. It can also be nerve-wracking.

However, once the smoke clears and you have concluded the transaction, the amount you keep is more important than the price at which you sell your business. You should hopefully be able to finance your retirement for many years to come if you receive a fair and just sale price and are able to reduce your personal and capital gains taxes. However, if your company isn’t appealing, no one will buy it.

Your company’s profitability does not necessarily indicate that it is appealing to potential buyers. From a buyer’s point of view, there are a lot of things to think about, such as: What is your profit margin in comparison to that of the industry? Do you have a competitive advantage, trade secrets, or patents? How many of your clients stay with you? Do you have long-term contracts or repeat customers?

Do you have a staff that is committed and skilled? Do you have contracts with exclusive distributors? Do you have plans for expansion, and is your company scalable? These are only few notable credits that contribute towards aggregate engaging quality. You will be able to streamline the business and manage it with the endgame—the sale of your business and maximizing your equity—in mind if you implement a formalized exit (transition) plan.