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Selling your business is a big deal. For some, it marks the end of an era—a money move toward retirement or a way to transfer to another line of work. For others, it’s a stepping stone to go even further in your entrepreneurial future.

Regardless of the reason that you are considering selling your business, you need to take some steps to prepare. Marketing your business in a way that will get you top dollar takes a lot of time and planning, and much of that preparation revolves around various financial aspects of both your company and your life. Below are just a few tips and tricks to get you started.

Get Your Company Ready to Hand Off to Someone Else

If someone else walked in the door today and offered to purchase your company, would it be ready to go? If you sell your business, could the new buyer step in and run the company effectively right off the bat? If the answer is no, then you have some work to do. Unless you know that your business will be sold to someone within the company, you need to make efforts to make the transition between a potential buyer and owner as easy as possible.

Investors are interested in purchasing companies that can function without you, and sometimes, without those buyers as well. Proper planning and strategy are key. Nat Burgess, president of a company that provides mergers and acquisition advice for software companies, notes: “Without a good business, quality team, and solid execution, there is no exit.”

You need to be sure that your company is strong enough to stand on its own (without you at the wheel) long before you consider selling. However, experts also agree that you should set your business up as if you are going to run it forever—developing it with only the prospect of a sale isn’t going to be the most attractive option to buyers. Buyers want to see that you have long-term plans and prospects so that they can step in and take advantage of those opportunities easily.

Clean Up Your Books and Records

As part of the due diligence process, any potential buyer is going to want to take an in-depth look at your books and records. You should expect that those numbers will be provided to serious potential buyers, so they know what your business financials look like. It’s a lot like looking under the hood before purchasing a car.

For some, getting records and financial statements ready to be reviewed by an outside party can be a daunting task that may take considerable time and effort. Starting early and keeping up with these necessarily financial tasks on a regular basis will make the process much less intimidating.

If you want to sell your business, you should be sure to have:

  • Tax returns for the past five years
  • Annual financial statements for at least the past three years
  • Current contracts for things like inventory, long-term clients, and any ongoing services
  • A list of substantially all of the business assets (including accounts receivable, updated regularly)
  • Information regarding long-term debt obligations, including why the debts were incurred

It’s a good idea to go through these documents with a professional, especially if you do not have a third-party regularly reviewing your financial statements. Having an accountant, financial advisor, or even a legal auditor review your financial records can help you spot problem areas before potential buyers do. That way, you can either fix the issue or have an explanation for any discrepancy or potential issue before the buyer requests additional information.

To potential buyers, making sure that there are no skeletons in your business’s financial closet is a must—and if you can show them a clear picture that indicates you aren’t hiding anything, that will go a long way. You also want to showcase that your company is a money-maker, and that future revenue is likely to continue. This type of information will help you do that effectively.

Get a Reputable Business Valuation

Once you have your books and records ready for review, it’s a good idea to get a business valuation before you start trying to market the company. A valuation will tell you what your company is worth based on the market, in addition to a combination of your company’s assets, debts, good will, and more.

Having a third-party do your valuation is a must. Although you may think you know your company and your market inside and out, this company is yours—and you are likely biased regarding how much it’s worth. It’s a good idea to have an impartial third-party tell you if your potential asking price is too high or too low for the market. Pricing it too high could lead to a delayed exit plan, but pricing too low may mean that you aren’t getting the full value of the company.

In addition, having a credible business appraiser backing your listing price can go a long way with prospective buyers, especially repeat players. The appraiser may be able to point out areas of value that your company can offer to interested parties that you may not have even realized existed.

Talk to a Financial Advisor

Selling your business will affect more than just your company. As a business owner, it will change your overall financial picture, your day-to-day life, your future investments, your family, and more. There may also be tax implications of the sale that could affect you long-term. In fact, it may shock you to learn just how far-reaching this decision really is.

A financial advisor will be able to help you address concerns with:

If you are working toward a sale of your business, take some time to speak with the financial advisors at Dechtman Wealth Management. We can not only walk you through what you need to get your business in order, but we can also look past the company to provide analysis regarding your personal finances after you sell your business as well. We can help you set yourself up for your best possible future, regardless if that future means selling your business to retire or to set you up to start a new venture. Schedule a complimentary consultation today.

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