For many small business owners, selling the business is the goal when it comes time to retire or move on. If you are in this situation, experts recommend having a business succession plan and familiarizing yourself with the buying and selling process, so you will be able to recognize and act upon a good offer when one comes along. Recently, Entrepreneur Magazine also offered the following tips for business owners that are considering selling their business.
Keep your customers informed
When you sell your business, many buyout agreements link your compensation with your business's ability to retain customers after you have left. Since the selling of your business can disrupt the customer experience if the transition is done poorly, it important to reassure customers that they will receive the same great product or service once the business is in the hands of the new owner.
Consider mentoring your buyer
Studies have shown that sellers and customers prefer working with the new owner before the actual sale has taken place. As a result, it is worth considering bringing the future owner aboard as an intern (or something similar) as early as possible before the sale. This gives the new owner the benefit of learning how to deal with issues the business regularly faces as well as customer needs and expectations, maximizing the probability that the transition will be seamless when it occurs.
Know the value of your business
If you are thinking of selling your business, knowing its true value is crucial to getting a fair price or being able to recognize a fair offer. If your business is primarily service oriented, it may be better valued based on recurring revenue. However, if your business is manufacturing, the value of the assets used in production are also relevant in establishing its value. Since there are many ways to value a business, it is important to know the valuation methods used by similar businesses in your industry and bring in valuation experts when necessary.
An attorney can assist you
The sale process is full of pitfalls for the uninitiated. To ensure that it goes smoothly, it is important to have the assistance of an experienced business law attorney. The attorneys at Dunn Lambert, LLC have many years of experience in helping owners of both large and small businesses navigate the sales process. We can work with valuation experts to ensure that you are getting the best price possible and use our expertise to address and protect your long-term legal interests throughout the process.