Here are the 4 most important things to consider when selling your small business: 1.
To hire or not to hire business broker.
A business broker is basically an agent helping entrepreneurs in selling their business.
They typically charge 10% of the selling price which is payable at closing.
Although it is highly recommend to hire a business broker if you are selling a huge business, you have the option not to hire one if there is little money involved in selling your small business.
2.
Financial statements.
Potential buyers require financial information showing profits and balance sheets for the last 3-5 years of operation.
Ideally, you should hire an outside firm to prepare and review these statements for the sale so they will be objective.
Aside from financial statement, tax income returns are also other documents that will be required during the selling process.
3.
Management agreements.
Potential buyers' expressing their interest in having the current owner to continue to run the business is something that isn't unheard of.
You will need to reach an agreement with the new owner outlining your roles and responsibilities.
Get everything into writing as working relationships between ex-owners and new owners are often subjected to friction.
4.
Review valuation guidelines before placing your business in the market.
You shouldn't get into the selling process if your chances of selling it are relatively slim.
Generally, small businesses that are relatively new or those that have declining sales are way difficult to sell.
I recommend that you wait for the right timing so you can land a better deal.