Are you ready to sell your business? If you are, then you have a lot to do. Selling a business involves several steps. The transaction should go as smoothly as possible. Here are four tips for preparing your business for sale.
1. Value your business. This is possibly the most important step when selling a business. Solid figures allow you to set a fair asking price. You might undervalue your business if you don’t know it’s worth.
A business broker / lawyer, accountant or business appraiser can help determine the value your business. Of course, success in this area depends on the dependability and skill of the person you hire. In any case, a valuation from a professional is better than a guess.
2. Gather business finances. Potential buyers want to make money. They want to know your business is worth the time and investment.
Have at least three years of tax returns and financial statements ready. This allows potential buyers to form an accurate picture of the state of your business.
A business burdened with financial problems scares most people away. You might find buyers, but fewer than you would otherwise. If your business has tax problems, then handle them before contacting buyers. Take care of problems with creditors or debtors as well.
Do what it takes to make your business irresistible.
3. Hire a tax advisor. You already have a tax advisor, right? Any business owner needs a good tax advisor. If you don’t have one, then get one. No matter where you live, the government will demand their cut of the sale.
Your business and personal tax situation affects the selling of your business. How much money will you owe in taxes? How much will remain once taxes are paid? Questions such as these, and other tax-related questions, are important to answer before setting an asking price.
If you have a child, then you might want to explore estate planning. A good tax advisor can help you plan for your child’s future. You might have the option to move equity into a trust for your child. Do this before selling the business so the trust benefits from the sale.
You might think it’s easier to sell the company, and then give the after-tax proceeds to your child. That’s not necessarily the most cost-effective move.
Speak with a good tax advisor. That’s the best way to make a good deal while avoiding tax trouble.
4. Whip your business into shape. Is your place of business in good shape? Is the lawn neat? Is the building clean? Do the fixtures look good as new? Making a good impression is important.
Potential buyers make judgments based on what they see.
Potential buyers aren’t interested in spending too much extra money. Most people will accept doing a few small repairs. That’s not so uncommon when buying a business. However, most people will balk at doing a significant amount of large, time-consuming and expensive repairs.
Make your business look as good as possible. Show potential buyers they’re getting a good deal. Otherwise, prepare to possibly sell for less than you’re asking.
Memorize the Tips
The information above is just the beginning of a long process. There’s much more to selling a business, but follow these tips and you’ll be on your way.
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