Creating Your Small Business Selling Plan
Most business owners plan to eventually walk away from their careers and enjoy the fruits of their labor in retirement by traveling, enjoying family, and other activities. It is also quite common for business owners to pour most of their effort into growing the business and not spend enough time preparing to take their business to market. This can make it difficult to attract buyers, lower the final market value, and make the entire process more difficult.
To get the most out of your life’s work building your own business, we offer the following tips for a more successful selling process:
The key piece of advice is to start planning several years prior to your desired selling period. This gives you time to not only plan the best exit strategy to achieve your financial goals, but ample time to put together a team of professionals with the expertise and knowledge to improve your results.
In the early planning stages, an expert financial consultant can assist you by getting your books in order, updating policies, and separating any personal assets from the business. This professional can also analyze compensation packages and make sure everything is in line with industry averages.
David Sweeten, a CPA at Business Brokers of Texas, explains that “by removing risks that records are haphazard, the seller gives the buyer peace of mind.” In other words, cleaning up your records and policies will give the buyer confidence as they go through their due diligence phase.
Another way to stand out from the competition when it’s time to take your business to market is to articulate your business’ competitive advantages. Sweeten adds, “this could be anything such as a superior location, a relative price advantage, the ability to consistently provide above-average service or something else that can be clearly explained to a buyer.”
Additional consulting could revolve around advice such as stabilizing your year-to-year sales and earnings so that your business is easier to value and making sure your workforce, capital and facilities are well-suited for the business’ future operations.
If your business’ tax preparer/CPA is experienced with business sales, they may also have specific expertise that can increase the business value. Be sure your tax preparer, financial planner, and business broker are all working as a team toward the same goal and sharing important information.
We see the financial planner/wealth manager as a final critical cog in your professional service team. We can help you determine an acceptable bottom-line number for your business after considering all the variables at play, helping you understand and improve on factors that advance your financial condition. Also, we can assist in the creation of a professional service team by connecting you with experienced third-party business brokers, CPAs, or contract attorneys.
Through thoughtful, proactive planning, a professional team of experts can help a business owner both increase the business’ market value and make the selling process run smoother and faster than it would be otherwise.