How to Sell Your Business Fast
How to Sell Your Business Fast
There are many reasons why you may want to sell your business, but most business owners want to do this quickly. Some have found themselves knee-high in debt, others simply have found a new passion project or business idea they want to pursue. Either way, it’s critical to sell your business – and do it fast!
When selling your business, with a focus on doing so quickly, it’s important that in the process you also don’t undervalue it. Similar to when you’re selling a house, you will have to make compromises, but at the same time, you don’t want to sell it for much less than its worth. It’s important to determine what kind of concessions you are willing to make in this process, and what are your nonnegotiables.
In the following paragraphs, we’ll break down everything you must do to prepare for a fast sell, as well as things to take into consideration.
Finding the Right Buyer
Assuming you’ve built your business from scratch, you want to make sure that no matter what the time pressure or financial situation you find the right buyer. You have invested incredible amounts of time and money, emotional ups and downs, and relationships for this business throughout the years. Considering the sacrifice, it’s important that the next buyer doesn’t run your business into the ground.
It’s also important to consider that no matter who is buying this business, it’ll always be tied to you. Whatever decisions this new buyer will make in regards to the business will also reflect back on you. It’s crucial you find someone who mirrors similar values to you, wants to take it somewhere you originally wanted to, and that they don’t suddenly turn your business into something you feel ashamed about.
Clarify the Reason Why You’re Selling
Whether a buyer is interested or not in purchasing your business completely depends on how you communicate why you’re deciding to sell your business. Buyers want to know what kind of challenges they can expect going into this deal. Are they going to face massive amounts of debt? Are they going to face a company that is barely running?
If your reasons for selling have nothing to do with finances or lack of success, such as a new business interest, deteriorating health, or wanting to simply spend more time with family – it’s important to mention that. While financial or health of the business won’t necessarily turn away all buyers, transparency is key for the next buyer to make something of your business that you yourself couldn’t.
What Exactly Are You Selling?
Are you looking to sell shares or stakes in your business? Or are you looking to transfer complete ownership of your business to someone else? Are you looking to bring on a partner to split financial burden and responsibility with? Or are you looking to drop this business altogether as fast as you can?
What you want your involvement in the business to be post-sale is important not only for you to know but for your potential buyer to know.
Strengths and Weaknesses
When looking at your business, it helps to have an inventory of its strengths and weaknesses. Buyers want to know if there’s potential for them to grow this business, and depending on their own experience or strengths they may or may not feel that yours is a good fit for them. Highlighting what is already going well in your business, and what isn’t will make that decision easier for them.
Additionally, if there are any challenges or weaknesses you can possibly improve prior to the business sale it can be of huge benefit to address them now rather than later.
Have documents and reports at the ready showcasing how your business is doing financially. The average timeframe buyers are interested in is 3 years’ worth of reports. This will give them a better long-term picture of your business and how it’s performing.
Additional documents to keep on hand include insurance policies, licenses, employee records, any contracts, supplier/buyer arrangements, etc.
Buyers want to know what your business is worth – not sentimental value, but the true value of what you have built. Having a third party give you a business valuation is going to address any concerns your buyer may have about the value of your business.
Who Sells Your Business
There are many options on who can sell your business for you. Business brokers will help make the process more stress-free by taking care of marketing for you in exchange for a percentage of the selling price. You will want to choose someone who has experience selling your kind of business before. Find out exactly what their rates are to make the right decision for you. Alternatively, you can sell your business yourself.
Selling your own business can be stressful and certainly time-consuming, especially if you’re on a time crunch. At FD Capital, we offer interim Finance Directors to help you with your financial data and needs. Using this service can be incredibly helpful in reducing your stress and worries during the selling process. Most of our FDs and CFOs are ICAEW qualified accountants. We believe in helping you with all aspects of your business’s financial health, including being part of the last hurrah.
No matter how hard it is to sell your business either due to emotional attachment or it’s not going as fast as you want, have patience. Rome wasn’t built in a day, and neither was your business – so know that your business WILL sell but it may take a little longer than originally anticipated.