Selling a business is often the pinnacle of your hard work developing a business venture. You can think of selling it for multiple reasons, like wanting to retire or starting something you like. Whatever the reason, your primary target must be to take out much value from your company.
The entire process can be hectic if business owners don’t understand what they should consider while selling a business. This post will smoothen up the whole process and help you get the maximum value from the company.
Step-by-step process of selling business
The hardest decision as an entrepreneur is deciding the perfect time to sell my business. There can be different reasons for selling your business, but ideal timing influences the price.
1. Set your goals
It is essential to understand why you want to sell your business. Make your goals set and what you are expecting from the deal. It is a lengthy process and can take at least 6 to 9 months, so be prepared early to reach your goals.
2. Prepare your business for sale
Preparing your business for sale before putting it on the market is essential. It includes building a solid team and corporate structure, replacing broken equipment, settling disputes, reducing personal expenses, etc. It is best to seek advice on the possible deal structure.
3. Research on the taxes
Regardless of an online selling business or an offline store, paying taxes before selling is essential. In Particular, you must pay capital gains tax on your profits above your tax-free allowance.
You can also apply for specific tax relief that lower your total expense, including business asset disposal relief, business asset rollover relief, incorporation relief, and gift holdover relief.
If you are registered for that, before transferring the registration number to the new owner, make sure you pay what you owe.
Inform the HMRC as soon as you stop trading and complete a self-assessment tax return, including that date.
4. Select the right time to sell
You must carefully decide on the timing of the sales to facilitate the smoothest transaction and attract higher profits. Keeping your sale deadline in mind, give yourself time to plan for yourself and prepare your business in advance.
5. Value your business
Whether you want to buy or sell business, business valuation is vital. You can evaluate your business based on the physical assets, projected profits, brand reputation and the sector.
6. Create sale brochure
Write a one-page summary of your business features, a unique headline, location, USPs, reason for sale, growth potential, turnover and other information to grab attention.
7. Prepare for due diligence
Any buyer interested in your business will undoubtedly perform due diligence to find a great deal. Look into your liabilities, financial documents, statutory registers, properties message, shareholders’ information, intellectual property details, contracts and insurance papers to stay safe while buyers come.
8. Be ready to negotiate
Buyers will try to negotiate price or deal terms to suit their goals. Therefore, you must be ready to deal with them and make the most money possible from selling the business.
9. Sell your business
Look into the agreements, including patches and sale agreements, lender documents, lease agreements, bill of sale, and non-compete agreements and discuss an agreed sale date.
10. Inform staff
As you have legal responsibilities to staff, you must tell them when and why you are selling the business and any other details they need to know.
How to shape your business before selling?
Business owners need to prepare their business correctly before going to the market. Whatever your situation, don’t act too fast or hang on too long; that can harm your sale price.
1. Make yourself dispensable
When you put a business for sale, you may feel the company would be nothing in your absence, but don’t make the buyer think the same. Therefore before going on the market, you should document everything that will help the new owner. It includes having a solid team, a clear business strategy, good lines of communication, a great business model, and a successful marketing plan.
2. Organise your books
Get your book organised before the buyer asks for them. Your books clearly indicate overdue contracts, employee disputes, new lease agreements, etc. Before putting a small business for sale, streamline your financials, keep records up to date, arrange documents showing how you protect valuable assets and do other accounting tasks.
3. Have a unique concept
Why would someone buy a business when there is nothing unique in it? Finding out the uniqueness of your business can create a valuable piece of intellectual property and ensure a reasonable price for your business.
4. Understand the deal structure
At first, you must be clear about what you are selling, your business or assets. A buyer purchasing your business gets complete control over your assets and liabilities.
For sellers, it is good to pay less tax on profits from the sale of a business rather than selling an asset. You also need to consider staffing issues, funding options, handover period and other issues that can affect the deal process.
5. Get third-party authorisation
Don’t wait to get third-party consent if your deal depends on the landlord or a supplier. Get these done before going on the market, or you may waste valuable time working on them at the last minute.
Can I sell my online business?
Yes, you can. But, before you put an online business for sale, consider the following.
- Buyers coming from other countries or overseas can purchase your business online.
- Ensure your business information is readily available and easily accessible
- Provide valuable insights on your business performance and other data
- Try to get good reviews about customer and employee satisfaction, business functioning, and products or services
- Advertise your business on online marketplaces, websites, and social media
Ask for professional advice while selling your business, even if selling online. Organising all information from accounting and operations to product details, property details, and employee details is essential. A lawyer and an accountant can help you complete the entire selling process smoothly and generate good value for your business.