Along with experiencing success, operating a business involves dealing with stress and uncertainty on a regular basis. During your entrepreneurial journey, you may reach a crossroads where you face the prospect of selling your business. While you may feel hesitant to let go of a business project you work so hard to build, sometimes it is the better option for your health and future.
For those on the ropes about making this decision, this article by the French American Chamber of Commerce of West Florida – FRAMCO will provide your clarity for the right time to sell your business and how to go about it.
You’re Experiencing Burnout ?
Facing consistent business challenges can be motivating at first, but day after day, leading to burnout. Additionally, as your business expands further, the challenges will increase. If you feel like you’ve lost the motivation to push through, it’s a clear sign that you should sell your business. Experiencing long-term burnout will not only negatively affect your ability to manage business responsibilities, but also lead to deteriorating health – as reported by Mayo Clinic.
Business Risk Is Increasing
According to research cited by Lightspeed, 20% of small businesses close within a year and 50% close within the first five years. If your business survived these odds, you’re already more successful than most of your peers. But, with time, the risks are only going to increase and, as your business expands, you’ll compete with bigger players in the market. Besides, technological changes can disrupt your industry and pose new challenges.
If your business predictions show such risks looming soon, it’s a technical choice to sell while you’re still profitable. Not only will you receive more offers but also hold leverage during negotiations.
Retirement Is an Option
Not everyone envisions being a lifelong entrepreneur. If running a successful business for a prolonged period has helped you achieve financial stability, selling can be the last step towards being secured for the foreseeable future. “Post-sale you” could still work as a consultant for the business but focus most of your time on achieving other life goals like traveling, starting a family, relocating to your dream location, and more.
Steps to Sell Your Business
Selling a business can take between six months to a year. It involves various moving pieces and interactions with numerous stakeholders. Below we explore the major steps you will be expected to take from start to finish:
Gather Important Documents
The key to having a smooth selling process is to always have important documents handy, like:
● Tax returns and financial statements such as balance sheets, cash flow statements, profit, and loss statements of the last 3-4 years.
● Business annual reports of the same period. If you’ve recently changed your business name, official address, or issued new shares, remember to update these in the latest annual report.
● Registration documents such as certificate of incorporation, and EIN.
Additionally, prioritize collecting payment from all debtors before listing the business. You can use this best invoice template for free to speed up the process and send reminders for payments.
Complete a Business Valuation
Hire a business appraiser who will provide you with an accurate valuation of your business which you can then use as a quote for interested buyers.
Hire a Broker
A broker experienced in making business sales will help take a lot of burden and stress off your shoulders. They will undertake the responsibility of finding buyers, handling negotiations, and allowing you to continue keeping your business in good health until the sale is made.
Even with an agent involved be stern on the following requirements:
● Wanting multiple offers for your business to compare and negotiate.
● Making buyers sign NDAs to protect confidential information regarding the sale and the business.
● Having the purchased amount be held in escrow until all formalities are completed.
When it comes to selling a business, making an early decision will allow you the time to plan a smooth transition. Taking the final decision will be difficult, but in the long term, it will prove to be the right one.
The French American Chamber of Commerce of West Florida – FRAMCO facilitates connections and cooperation between expatriate-owned and other businesses in the Tampa Bay area, connecting these businesses with international organizations and authorities connected to their industry.
Connect with us today to find out more! (813) 618-7267