If you’ve come to the point where you want to sell your business, it can be quite terrifying to surrender control to someone else. If you’ve spent years and countless hours building your business, it can feel like you’re letting go of a piece of yourself. You don’t want to sell to just anybody; you’ll want to make sure that the organization you’re working with has the best intentions in mind and that you’re getting the best deal for all the hard work you’ve put into the business. Here are five tips for owners selling their business.
1. Know When It’s Time to Sell
Knowing when to sell is just as important as knowing who to sell to. There are many reasons why someone might want to sell their business, from personal reasons to smart business reasons or to get out from under the company. Whatever your motivation is, it will undoubtedly have an effect on the negotiation and selling process. Ask yourself, “is selling my business what I really want right now?”
Someone who’s just looking to get out from under the business might be more eager to accept a lower offer just to be free of it; whereas someone who’s put years into their business might be stubborn and unwilling to settle for just any offer. Figure out why you want to sell before you do anything. Are you tired of running a business? Not cut out for it? Have sudden life changes made it impossible to run your business effectively?
2. Don’t Settle for Less Than Your Business is Worth
If you’re looking to sell your business, you’ll probably come across more than your share of low-ball offers. You understand better than anyone the value of your business, but it’s also important to understand the true value of the organization and what it’s worth in terms of your industry. The simple way to calculate your business value is to subtract your liabilities and expenses from your assets. Whatever the difference is can be a rough estimate of what your business is worth.
Once you’ve calculated your business’s worth, you’ll have a general idea of where the offers should fall. Don’t let your business that you’ve worked so hard for fall into the wrong hands. Someone who’s willing to pay close to what your business is worth is likely more invested in the business’s future than someone offering a low-ball price.
3. Keep Employees Informed
Your employees will be most impacted by your changes, so it’s important to keep them informed every step of the way simply out of respect for them as people and members of the business. Big changes can often be stressful, and employees may not feel confident about where they’ll fall into the new hierarchy. Putting their minds at ease can make the sale process easier for everyone, and let your employees know that you care about their thoughts and feelings on the matter.
Don’t let the news circulate via gossip; host a meeting for the company to discuss the coming changes so that everyone is equally informed. You might find that some employees don’t approve of the new direction, and may actually jump ship before the sale is complete, and that’s ok. Remember that you can’t possibly make everyone happy!
4. Negotiate
Once you’re at the table with potential buyers, it’s important to use negotiation to work out the best deal for everyone involved. While you should definitely keep your own interests in mind, putting yourself in the shoes of the buyer can go a long way during the negotiating process. Don’t settle for much less than the business is worth, but also keep the buyer’s needs in mind.
A good negotiator understands both sides of the negotiation and knows when to bend a little and when to stand firm. Your business is the culmination of your efforts over the last few years, and shouldn’t be given up lightly, but at the same time, you don’t want to be overly difficult either. This can scare off potential buyers and make the process even more difficult than it should be.
5. Understand Your New Place at the Business
Once you’ve made the decision to sell your business, you’ll need to decide and understand your new place within the organization, should you decide to stay. With a new owner, you may have almost no say in the direction of the business, and you need to be certain that you’re ready to accept the new changes that will be made in the coming months. Can you accept that you’re no longer in control, or are you going to remain a driving force behind the policies and values of the business?
It can be quite intimidating to step down from ownership, but once you’ve understood your new place, it will become much more comfortable for you. Should you decide to part from the business, you won’t need to worry yourself with the day-to-day operations any longer.
