How to Sell Your Business: A 10-Step Guide
- Posted By Jenny Chellew
Businesses are sold for many reasons and for most business owners, it is not a decision made lightly. Whether you’re selling a motel, a garden care company or a business that sells kitchenware, selling a business is a lengthy, time-consuming and sometimes stressful process.
If you’ve been thinking that now is the time to get real about selling your business, this is the right article to read.
Below, I’ve put together a list of 10 steps that you need to consider when thinking about how to sell your business.
1. Confirm selling is the right way to go
If you are experiencing financial difficulty with your business, selling might not necessarily be a quick fix solution and you could be left with debt. Before committing to selling, make sure you are doing so for the right reason and that the time is right to sell. Building a team to assist you in determining the right course of action can be a wise investment. Your team could consist of your accountant, solicitor and a business broker.
2. Decide what you want to sell & prepare the documentation
Once you’ve decided to sell, consider what exactly you want to sell, including the business name, intellectual property, assets and property. Organise your business paperwork. Documents will be needed for the appraisal and due diligence. Click here for your free documentation checklist
3. Value the business
It’s then time to consider the price you will put on the business. To do this, research similar sales, or calculate the cost of starting a similar business from scratch. Other valuation methods include using your net profit as a basis for appraisal, future profits or figuring out the difference between your assets and liabilities.
4. Prepare your marketing plan and find a buyer
Once you’ve come up with a value, it’s time to let potential buyers know that your business is for sale. Use your networks to spread the news as far as possible; employees and customers may be able to assist you. Use traditional and new media, including industry-specific publications and sites. You should also consider using a Confidentiality Agreement or NDA (Non-disclosure Agreement) to ensure any prospective purchaser does not use your business information for their gain.
5. Negotiate a deal
When negotiating the sale with potential buyers, you need to be truthful because there can be penalties for giving misleading information. You will need to discuss the price to be paid, the amount to be given as a deposit and the settlement period. It is also wise to talk about the handover process, staff and training being offered.
6. Draft up the contract
If you’re not familiar with drafting contracts, it’s wise to get your solicitor to prepare the Contract of Sale. Arrangements need to cover all sale details including:
- A list of business assets and liabilities
- Arrangements regarding existing employees
- Clauses relating to potential outcomes such as the buyer changing their mind
- Relevant state and territory laws, which might include some trading limitations on you
Make sure you read, understand and agree with all of the conditions before you sign the contract
7. Handle your employees
You have a responsibility to keep your employees informed about what is happening with the sale of the business and if they will continue to be employed once the sale is complete. Either way, you must notify them that they will no longer be your employees.
8. Tax & legal
It’s worth taking the time to fully understand and plan how the sale of your business could impact your tax status, including any tax debt. The sale may attract capital gains tax or goods and services tax, and you may need to repay GST credits. Engage your accountant to provide you with advice.
9. Transfer the business
For many business owners, the final step of the sale is bittersweet. Transferring leases, licenses and permits make the sale real. You also need to cancel your ABN and transfer or cancel the business name.
10. Ready to sell your business?
It can take up to two years to plan the sale of your business and the ideal time is when profits are strong. If you’re eager to learn more about how to set up to sell your business, get in touch with our expert business brokers. If you would like to learn more about what a Business Broker can do for you click here what is a business broker
Better Business Brokers is located in the beautiful township of Bright and are specialists in buying and selling accommodation, tourism and country-based businesses across North East Victoria. We’ve had years of experience helping both companies and individuals sell their businesses and we look forward to helping you to.
Click here to request a confidential chat
Jenny Chellew is an accredited Business Broker who loves helping business owners realise their dreams.