Most business owners decide to sell too late – leading them to fail at the final step of the race. Looking for 3 easy steps to sell your business for top dollar?
They spent their years growing and nurturing a business without planning their exit because let’s face it, unless you have a ton of experience in mergers and acquisitions, it’s easy to get overwhelmed.
However, the most successful business owners consider their end game as soon as they have a vision for their product, brand, or service.
Now, if you’re past that point, that’s okay! It’s not too late but it IS important to act fast.
This article will help you understand the three basic steps to selling your business in the easiest way possible and for the most profit possible.
1. Prepare Your Business
First, to prepare your business for a profitable exit you must decide WHEN and WHY you want to sell.
Deciding WHEN you want to sell and creating a plan around that date helps hold you accountable and breathe life into your decision – making it real and more likely to happen.
Whether economic or personal, deciding WHY you want to sell and keeping those reasons at the forefront of everything you do will help you guide all future decisions.
Secondly, to prepare your business for a profitable exit you must ensure your finances are in order.
Some entrepreneurs think of their company as little more than a paycheck instead of an “income-generating asset.”
This is not only unhealthy for the day-to-day operations of the business, but it’s detrimental to your endgame.
Instead consider working through the following following three steps to financially preparing for your profitable exit:
- Create a 3-year monthly budget and stick to it using a balance sheet and P&L statement.
- Pay yourself a salary that’s neither too low nor too high. Future buyers will want to see if the business is able to sustain their salary if they choose to move forward with the purchase.
- Prepare a growth plan to help you stay focused and give you a roadmap for what, when, and how to accomplish each step.
2. Get the Support You Need
One of the biggest challenges business owners face is the need to ‘do it all on their own’. This is especially true when deciding to sell, however it’s also one of the most important times to accept support.
Now, this doesn’t always mean hiring outside help from agencies or brokerage firms. Often the best thing you can do is start with building up your management team.
If you don’t already have this in place, keep in mind, training a strong management team to run your business takes time and effort.
Begin by choosing individuals who are passionate about the industry and understand the vision of the company. By choosing and training a strong management team, your business should run smoothly whether you decide to sell in one year or ten.
Shifting from the biggest challenge, to the biggest expense of selling your business, let’s look at what to expect if you get support by hiring a business broker. Keep in mind, if you go this route, it will likely be your biggest expense but may also be your greatest support.
For example, commissions vary by location but typically range between 10-12% of the sale. However, most brokers also ask you to pay a retainer (monthly fee) for the first 3 to 6 months to kickstart the process and ensure you’re fully engaged in the project.
In the end, the most important thing is you get the support YOU need both inside and outside of the business.
3. Find Your Ideal Prospects
Finding the right buyer by deciding WHO you want to sell to is key to strategically planning your exit.
To do that, I recommend you carefully consider each of the following –
- Family members – you may consider a business succession where you finance a large portion of the deal to a child or other family member interested and capable of taking over and growing the business.
- Key employees – a management buy-out is one of the more popular forms of strategic selling. You may have already trained the ideal buyer, with the skills and desire to grow your business within the management team.
- Competitors – mergers have become more popular than ever because the best way to acquire something you don’t already have is to purchase it instead of building it. Your competitors may jump at an opportunity to purchase your business.
- Strategic buyers in your industry – a strategic buyer is a company that seeks to grow by purchasing another company, as opposed to someone acquiring a company simply to run it. In many cases, strategic buyers are a great fit for entrepreneurs looking to sell their businesses.
Now that you understand the basics of how to go from, thinking about selling, to enjoying a successful and profitable exit, you may be left wondering –
“What are the steps to selling my business? For that matter – what’s the first step?”
If that’s you, I invite you to join The ENDGAME Program. Selling your business is one of the most important transactions you’ll ever make.
This program empowers business owners in any stage of growth to make the process easy, fulfilling and successful.
If you own a business you hope to sell for a massive profit someday, then it’s time to shift your BIG dream of being a successful entrepreneur to enjoying a highly profitable exit (And you know what?… with The ENDGAME Program, you don’t have to waste thousands of dollars on brokerage commissions or stay stuck wondering the best way to move forward).