General
The 5 Rules To Follow When Selling Your Small Business in Fort Lauderdale
If you have decided to sell your business, it’s vital that you take the correct steps to ensure a successful sale. Even a small mistake or an unintentional omission on your part can prove to be costly – leading to delays, a reduced sales price or a dead deal.
How can you ensure that the sale goes through as planned? Is there any way to guarantee that you get the maximum possible value for your business?
Here are five rules that you should follow during the sale process. You can adapt or modify them to your situation, but don’t ignore them. Adhering to these rules could help you to avoid many of the problems that arise when a business is being sold.
Rule #1 – Get your house in order
You can be sure that the prospective buyer is going to ask detailed financial and operational questions about your business. You will be required to support your answers with proper documentation. It is essential that your financial and business records are up to date and reflect an accurate picture of your company’s operations. This includes three years of profit and loss statements, corporate tax returns (with documented adjustments from your CPA), asset list, inventory updates, employee information including a simple organizational chart, customer information, etc.
Spend some time cleaning up your records. Hire a bookkeeper or a CPA. It will be worth the effort and the expense.
Rule #2 – Sell at the right time
The best time to sell a business is when it is doing well. Your sales should be rising, your cash position should be good, and you should have healthy projections. Obviously, this could be the most difficult time to let go, but if you want the highest possible value for your business, you have to sell it when the future is bright. Although buyers pay for how the business has performed, they decide to buy based on how the business might perform in the future.
Rule #3 – Don’t hide any details from the buyer
It is critical that you remain transparent during the sale process. Convey all the essential information as early as possible.
Don’t let yourself get into a position where an adverse fact about your business is discovered during the due diligence process. This could put you at a disadvantage and make the buyer suspicious about the accuracy of the other information that you have provided. It’s best to get bad news out early – no sense waiting until the day before the closing to deal with a major hurdle.
Rule #4 – It’s a marathon, not a sprint
How long does it take to sell a business? The general rule is that it takes longer than the seller expects.
If your asking price is higher than the amount that buyers are willing to pay, the length of time will go up. The due diligence process alone could also eat up several weeks. Then there’s the landlord, the lender, the franchisor, the staff…it takes time.
As a seller, it’s best to pace yourself. Don’t expect the sale to be closed quickly but do expect the deal to stay on track. Maintain your enthusiasm and try and follow the maxim that says, “Make haste slowly.” A deliberate and measured approach will usually get the fastest results.
Rule #5 – Check the buyer’s fit
Buying and selling is a two-way street. The business has to be a fit to the buyer. Can the buyer really operate the business? Does he/she have the necessary capital to keep the business running properly? Is the culture you’ve built with employees, suppliers and customers likely to continue based on the way the new owner deals with people? Even on an all-cash sale, there’s still pride in ownership and most sellers truly want to see the business flourish after the deal is done. Take the time to get to know the buyer and convey your values so that you can determine the “fit”.
It’s important to be flexible
Don’t expect everything to proceed as planned. If you aren’t getting the offers that you hoped for, it may be necessary to reduce your expectations. It’s better to compromise a little on the sale price or carry financing for a qualified buyer rather than finding yourself in a position where the business hits a rough patch and value erodes.
Our best advice? Don’t waste another day and talk to a Sunbelt South Florida broker today!
Whether you are an established business owner nearing retirement and looking to sell, or an ambitious entrepreneur seeking your next investment opportunity, there is no reason to look beyond Sunbelt Business Brokers. Visit us at 800 Village Square Crossing
Suite 216 Palm Beach Gardens, FL 33410 or contact us at (561) 832-9222.
Ryan Cave is President of Sunbelt Business Brokers of South Florida, a business brokerage firm specializing in the purchase and sale of small to midsize businesses. Sunbelt Business Brokers of South Florida has been involved in the valuation and sale of hundreds of privately held businesses for nearly 20 years.
