A topic I have not discussed is the transfer of business ownership. Simply put, buying or selling a business. Although the concept might appear simple, it is not just a case of saying here is a business, here is a price and boom, your business is sold. Anyone who has sold an automobile knows there is much more to it. Not putting in the required effort will mean you could struggle to sell your business or buy a business, struggle to get (it for) the price you want, or lose out on a single opportunity to reap the rewards of your efforts.

Whether buying or selling, the effort is equally high but applied differently. Lets begin discussing selling a business:

Selling a business is the ultimate test of your time and effort. When this effort you spent on building a business and making it a success will get evaluated by others. You may have owned the business for decades without anyone to be held accountable to. However, now your focus shifts toward highlighting the business’ success and potential to buyers. There are a number of things you need to do to ensure you get what the business is really worth! Here are my tips for getting the most for your business:

Tips for buying/selling your business

Financial Clarity

Prepare a clear financial analysis of the business. This can include financial statements, tax returns, revenue generation, expenses, and anything related to costs and income. With these documents, you can show clearly the ability of the business to generate income. Historical increases in revenue can indicate a big benefit in buying a mature business over starting a new one which could be the difference between buying yours or someone else's. At the end of the day, the ability of the business to generate profit is the main selling factor.

Give your business a health check.

Before going to the next step of having your business evaluated by potential buyers, you should ensure the health of your business is at its highest. By health, I am referring to multiple aspects including: operational efficiency, legality, stability and more. These variables cover employees, licensing, permits, suppliers, stock management, marketing etc. Obviously a healthy business is going to demand more value as the transition for a new owner can be smoother without any initial issues to deal with.

If any of these health aspects of your business are not as good as they could be, you should invest the time (and money) in optimizing it before you offer it for sale. Every dollar invested could mean two dollars back.

Choose the right potential buyers

Filter and research potential buyers because many of them may not share the same goals for your business as you do. Although this may not matter to some people who just want the value of their business, others want the business to continue to thrive and grow from its current status.

How to find buyers

Finding a buyer for your business can be done in multiple ways. Often you may be in the company of others who are in the same or similar business such as focus groups, study groups, associates affiliates etc. Any of these could potentially be buyers especially if you are direct competition.

Another option is a business broker. Business brokers facilitate the buying and selling of businesses to try and make the transition as smooth as possible. They also provide other services such as business valuation and consultation. Not only have they access to many investors, they can filter out those who are the best option for your business. Of course, this service comes at a cost so ensure you consider this cost before agreeing on your final sale price.

Investment bankers search for businesses to invest in that generate a profit. You can find them typically through their banks. Since they have access to many investors, they could be a great option to finding someone suitable for your business.

Industry contacts such as raw material suppliers are often looking to expand their companies and possibly move to the next stage of production. If your product/service is dependent on a supplier, they may be interested in using their own material to generate your product or service while also generating more profit due to using their own supplies. Even if they are not interested, they may know others who use their materials who may be interested.

Of course in the modern age, online is how you can advertise anything for sale. No matter what it is, there will be a website that can list it for sale. Some are free and some at a cost. There are specialist websites that only sell businesses such as https://www.bizbuysell.com/ or https://canada.businessesforsale.com/ . A simple google search will show you the sites you can try.

Other things to consider when selling a business

Before setting your price, consult the various professionals that you may have to pay to complete the sale. This will include (depending on where you live), accountants, lawyers, realtors, business brokers/investment bankers, evaluators etc. There can be closing costs, taxes, capital gains and more that you should fully understand before selling so you are not left with much less than you expected.

If you are in doubt about any aspect of selling your business, consult with business coach David D’Silva who can help you navigate through the often complicated process of business sales. Make sure you get what you want for your business.