usiness and relax? Do you need capital and have decided that selling your business is a good way to finance another business venture, pay for college, or pay off a mortgage? The reasons for selling a business vary greatly, but many of the potential pitfalls and the techniques for making sure you get the price you want are the same.
If you are preparing to sell your business or you are considering putting your business up for sale, follow the advice below to enhance your likelihood of selling your business successfully.
Sell for the right reasons
A sale has to be done for the right reason in order to be successful. Brokers say good reasons to sell include a desire to move on to something else, divorce, retirement, or death of a spouse.
Finances, on the other hand, are not considered a positive motivation for selling your business. When people want to use the proceeds to pay off a mortgage, or when financial considerations are the driving force for some other reason, the sale often does not happen. If a sale motivated by money does go through, it often takes a long time to sell, and frequently sells for a price significantly lower than what the owner hoped.
"When people try to sell for financial reasons they are almost always unrealistic about the worth of their company," says Jim Salvarakis, a lecturer on the topic of selling a business, and president of the brokerage company Connecticut Business investments, Inc. in Southport, CT. "Their price is not related to the marketplace because they have doubled the worth or more and the marketplace will just not net them that."
Don't let your books work against you
It is not news that many small business owners keep poor books and records, and these record keeping habits can be problematic when a business is for sale. For example, in a cash-based business, owners pocketing money instead of recording it on the books may find themselves forced to sell a business based on what is recorded, not what is actually made. This means that your business could be worth much more than you will be able to get for it.
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