Selling a business is not complicated, but it has several steps and working parts. There are definite things that need your attention, including the most important things that you need to avoid. The things that usually keep people from succeeding with their business sale include:
- Timing
- Representation
- Marketing
- Planning
- Pricing
- Timing
Timing is something that always plagues the real estate and business markets. When you want to sell a business, it will be important for you to choose a time that’s right to go to market. Your broker can help with this but make sure that it’s something high on the priority list so that you can list your business for a quick sale and the most money. This could be related to seasons or the business climate, but either way, it needs to be a factor. Look at historical statistics and find out when other businesses like yours have had the most successful sales. Then use that timing to your advantage.
Representation
Who’s helping you? Too often, people try to sell a business on their own without taking the time to utilize the resources that they are given. Make sure that you hire anyone you need and enlist the right resources in your sale. You likely can’t get the best deal on your own, and you shouldn’t try. Brokers and financial planners, accountants, and others can ensure that you go through the process and get the best outcome.
Marketing
Where are you marketing your business? Again, this is an area where many companies drop the ball. If you realize that your listing isn’t getting noticed or that you are struggling to get the best buyers, you might want to reconsider where and how you are marketing your brand. Create a robust marketing strategy that includes tools like social media and other avenues you may not have considered before. Choose people in the right regions, circles, and locations to ensure that you are getting the attention of the right people.
Planning
The absolute best thing that you can do when you are selling your business is to have a solid plan in place. You’re already on a good path by taking the time to read this guide. Set up the people you need and come up with a strategy to market your sale and close the deal in the most efficient and profitable way possible. When you plan and make plans for all kinds of contingencies, you can sail through the hiccups with ease.
You should get all of your financial paperwork in order, create the necessary documents, and then check all of your reports and analytics. You should also create the executive summary and other pages that clients will use to determine whether they want to put in an offer. The more you plan in the beginning, the quicker and easier the transaction will be later.
Pricing
By and large, one of the biggest missteps in selling a business is setting the price. People try to figure out how to price the business, but it can be tricky. For starters, it’s more than just the profits or the value of the company assets. There are several factors involved. That’s another area where having the assistance of someone else can be beneficial to get another perspective. Brokers will know exactly where to price your business in the market to get the best profit and a quick sale.
Finding the value of your business requires you to be humble and honest with yourself so that you aren’t overshooting the goal. Typically, your assets and profits will determine your value. For smaller companies, it will be 2-3 times the amount. For larger companies, the price is usually 5-7 times higher than the profitability and assets. Another consideration is when and where you’re selling because that can affect how you can price your business and whether you need to roll things back a little.
Choosing a Buyer
It’s important to get a few buyers or potential deals lined up just in case the first one falls through. Stay in contact with all of them and find out if they can finance the sale on their own. Make sure that you leave a little room for negotiation but don’t let them walk all over you. Agreements always need to be in writing, too, for everyone’s safety and peace of mind. Choose the deal that you like best or the one that offers you the most money for your business. Don’t just pick one person and get rid of the rest of the leads because it’s rare if a first buyer actually comes through. Make sure that you think about these things when figuring out who’s going to buy your business.
One more factor people don’t consider when choosing a buyer is whether they’re a good fit for the business. You aren’t just going to sell to the highest bidder, or at least not if you want to get the right buyer. You may need to ask some questions yourself, but don’t feel bad if you don’t accept an offer from someone you worry will ruin all of your hard work.
Now that you know the pitfalls to avoid, here are some frequently asked questions to provide even more insight on selling a business in Mississippi.
