There could be several reasons why you might want to sell your business. It could be that you want to retire or that you just want to move on to something else. Whatever the reason, you want to be able to get the best possible price, and here are a few tips to help you do just that.
Have Everything in Order
One of the first things people considering buying your business will want to see is the account, who owes you money and who you owe money too. The value of a business usually takes these things into account, and the more up to date the information is, the fairer price you will get.
It is wise to start the preparations for the sale of 12 to 18 months before you intend putting it on the market. This will give you enough time to make sure everything is in order and to reduce costs and boost your profits if that is possible.
Different types of business are valued in various ways. Some businesses are valued on turnover and others on profits. There are times a business owner will get twice his profit, for instance, while in other cases a year’s turnover is the amount paid. When the economy was at its best in the 1990s and earlier this century, it was not uncommon to get three and a half times yearly profit, but those heady days have gone and now the prices paid are more realistic.
Because there are so many ways to value a business it is best to use professionals that understand how it works. For example, according to www.retiringifa.co.uk, the introduction of the Financial Services Act in 1986 has speeded up the consolidation rates across the retail financial world.
Ask for Offers to be Made in Writing
Don’t accept an offer verbally as this could always be denied afterward. If someone is serious about buying your business, ask them to put what they are prepared to pay in writing. Sometimes, part of the payment can be deferred for various reasons, and if this is the case, these figures should be included as part of the offer.
Be Prepared to Continue Working for a While
Many businesses, especially in the service sector such as accounts, solicitors and financial advisors, have been built on the fact that the clients have trust in the person they deal with. This is why often part of a deal when selling these types of business to include a clause that says the person will carry on working for a while even after the transfer has taken place.
This gives the clients the chance to get used to the new owners, and it means the new owners are more likely to retain more of the client base they have purchased.
Life Will Change
What many people fail to realize is how much their lives will change once they have sold their business. For some that started from scratch, it can be quite an emotional time to hand over their baby to someone else. Being prepared in all ways is the key from the start to the finish of the sale.