Easily Sell Your Company
Are you trying to sell your company in Sarasota, Florida? Do you know what your business is worth? It’s easy to think that your company is worth what you think it is, but the only way to know for sure is by following these steps.
First, make sure everything in the company has value on paper. Next, find out if there are any legal problems with your business. Finally, decide on an asking price and figure out how long it will take to sell the business. Use this time wisely; put together an ad campaign and start looking for buyers!
Value Everything
If you’re trying to sell your company, make sure you value everything in the company. If you haven’t done this before, it may be hard to understand what things are truly worth. Don’t worry, though! Here is a list of items that have been known to add significant value:
Inventory/Products
Inventory can include anything from machinery and manufacturing equipment to office supplies and spare parts. In general, these things will add value if they are still being made or used by companies for their original purpose. For instance, a discontinued product may only have resale value if there is a market for it already out there looking for it.
Accounts Receivable
Remember: accounts receivable are the accounts that owe you money. If they’re paid off, it makes your company look more valuable to buyers and might even inspire them to pay a higher price!
Current Assets
Any current assets–assets that you can turn into cash quickly–are generally worth as much as they cost. For instance, accounts receivable will add value because you can receive money from those customers immediately after selling the business.
Clean Up Legal Problems
If you’re in the business of selling your company, make sure there are no legal problems hidden in your past. Here are some common legal issues that can be easily overlooked when preparing a business for sale:
Contracts
A lot of businesses have contracts with other companies or individuals. Contracts take time to negotiate and sign, so it can be bad news for everyone involved if they are broken prematurely. For this reason alone, contracts should generally not be broken–especially if you’re trying to sell your business!
Of course, sometimes, you may need to get out of a contract by choice before actually selling the business. If you break an employment contract or vendor agreement without good reason, you may be liable to pay damages.
Employee Disputes
This one is pretty simple; make sure your employees are happy, and there aren’t any lawsuits, grievances, or arbitration hearings that need to be taken care of before selling the business. These things can take a lot of time and attention (and money) away from selling the company–which means less time marketing to buyers!
Talk with an attorney if you think you might have legal problems but don’t know what they are or want more information. They can help clean up any legal issues so that your company looks its best when it’s time to sell.
Lawsuits
If buyers think they’ll have to deal with lawsuits after purchasing the company, they’re less likely to make an offer. This is because lawyers are expensive and time-consuming–and if a business ends up being sued by someone else, all of that money goes straight out of the owners’ pockets!
To avoid lawsuits altogether, only do business with reputable people or companies. If you already have agreements in place but are worried about them being broken later on down the road, involve attorneys in the negotiations so everything can be made clear from the start.
Decide Your Selling Price
There are a lot of factors that determine how much a business will sell for, but some common ones include:
Revenue
When negotiating with buyers, you might ask for more than what your company is currently making if you think it can make even more in the future. Be careful not to overprice the company–buyers usually aren’t willing to pay more than about 2-3 times monthly net profit.
Appreciation
If your business has recently seen an increase in revenue or value (for example, by acquiring new customers or upgrading technology), that may bring up the overall price. Just remember that these things can also decrease the value of your company if they disappear!
Net Income
Don’t forget about net income! Just because something increases total revenues doesn’t mean your bottom line will be affected. If there are ways to increase overall revenue without increasing expenses (like lowering prices or getting better deals on supplies), that could bump up your asking price considerably.
Cash Flow
So we know that net income is essential, but don’t let cash flow slip through the cracks when negotiating a selling price. After all, if you make more money, but the business doesn’t have enough cash flow to operate, you won’t be able to keep it running for long.
Even though many factors go into figuring out how much a business is worth, the above can help you figure out your asking price.
Work With A Business Broker
Of course, it’s not always easy to step back and look at how much your business is worth. If you need help deciding, consider working with a broker who can provide professional guidance on the best way to ensure you get top dollar for your company.
After all, if there are problems with your company that potential buyers might find out about later down the road, they may think twice about buying!
Make sure all information you give a broker is accurate–if things turn out differently from what you said during due diligence (when the buyer thoroughly examines everything), it will be bad news for everyone involved.
Business brokers have seen just about every kind of problem that a company can have–so they’ll know exactly how to explain what needs to be fixed before selling and how much it will cost.
Sunbelt of Sarasota, FL, can help you prepare and sell your business. We have decades of experience buying and selling small businesses and can help you figure out your asking price. To find out more about how we can help you prepare for a successful sale, be sure to reach out today!