Choosing when to sell your company is not an easy decision. “When I reach the age of 65, I will retire and sell the company,” a business owner may declare. Unfortunately, many business owners never reach the age of 65 and are forced to sell their company much before they or their business are ready.
Making a choice to sell based on your age might have a significant impact on the price you get for the company.
Consider the following situation. After 30 years of operation, a small company owner decided to sell. Regrettably, she had health problems at the age of 25 and battled for the following five years to work in her company.
Revenues gradually fell as she became physically unable of leading the company and her desire to operate it diminished. Regrettably, her company had little worth at the 30-year milestone, and she ended up shutting it after 30 years.
The Business Trade Centre is the ideal location for those who want to sell a business. They maintain a list of companys for sale until they are sold and get hundreds of prospective buyers each week. Additionally, they rank for hundreds of company for sale keywords on Google.
A Business Plan For Sale
To optimize your business’s sales price, here are five things you can do to prepare.
Determine what “inspires” you to sell? Each business has its own life cycle. To maximize the value of your company, you should sell it at the pinnacle of its life cycle. This is often expressed by company owners when they declare, “I am earning more money than I have ever earned.”
It is also the time when the majority of owners are most passionate about their businesses. This is the optimal moment to sell a business in order to optimize the sale price. If maximizing the value of your company is a priority for you, you may want to investigate this technique.
The following are indicators that you have reached the top of your life cycle:
- There are few contenders.
- The economic market is thriving
- Profitability at its peak
- Rapid expansion
As though you were going to sell tomorrow, prepare your company. Once you’ve identified the trigger and made the decision to sell, you’ll need three to five years’ worth of tax returns. If you have not been maintaining “clean” books, you will not have time to do so.
By “cleaning” the books, it means eliminating any non-essential write-offs, such as the annual family vacation to France to place orders for new items. This may detract from the value of your company, and in order to optimize your selling price, it should be eliminated.
This also implies that you should have a growth strategy and an active marketing plan in place, as well as secure your best workers. If you anticipate that we will sell, put in place retention procedures to ensure that your best staff stays with the organization.
Keep a close eye on the market environment for clues of when to sell. Numerous businesses missed the “peak” in 2007 and saw their corporate worth decrease during the Great Recession. Determine which elements will serve as markers of the peak and keep an eye out for them. Procrastination reduces the worth of your company and your net.