With the huge group of baby boomers hitting retirement age, we’re seeing a lot of businesses up for sale—and Gen-Xers won’t be far behind.
When the time to exit rolls around, it’s extremely important to get the most value out of your company, because there are no “do-overs” when exiting your business.
Consequently, a large and growing industry has developed around the business of selling businesses. Not to question the value of those in these ancillary businesses, but let’s face it: They all take a share of your money, and the goal of selling your business is to end up with the biggest chunk of change in your pocket. Right?
This is why if you decide to sell your company, you need to explore all your options before you commit to one path. There might be popular business brokers in your community that are recommended, but they are going to take at least 10% of your proceeds, so don’t sign on with anyone just because of convenience.
Take a long look at doing a DIY or hybrid DIY sale of your business. I recommend this approach because today—more than ever before—you have excellent free resources available to you, including:
- Free advice from experienced retired owners and executives,
- Excellent internet assets, and
- A dedicated Small Business Administration (SBA).
Start early
The first major guidance for squeezing the most money out of the sale of your company is to start early. And, by early I’m talking years . . . like five years or so. Any sale that has to happen within a short time frame is almost doomed from the get-go. When you know you have to sell by a certain date, you’re forced to be more receptive to offers that you might otherwise never consider. Further, early succession planning will pay dividends from the day you begin to the day you sell.
Again, the good news is you have great DIY resources available to help you get your business in shape to command its greatest selling price on the day you are ready to put it on the market. There are good articles on the internet that will give you an overview of the steps you should take to groom your business in preparation for a sale, and this is where you should begin.
However, on a crucial issue like this, you don’t want to trust completely in “book learning.” This is a situation where the old saying about two heads being better than one applies. There’s a good chance you’re not too far away from an excellent SCORE mentor who has experience in your industry and with selling businesses. And even if you can’t find someone nearby, you can connect via email and video chat.
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Market your business
As I wrote earlier, brokers are going to take a minimum 10% cut. It’s true they provide good services for their share of the pot, but the internet has leveled the playing field in one of the most important services they provide: Marketing your business.
Almost every purchase today begins with a search on the internet, and I don’t think the shoppers looking to buy your business are any different. Any business broker is going to advertise on the internet, but you can do that without a broker.
If you’re unfamiliar with placing ads on search engines, check out the services offered by DIY business-selling sites like ExitAdviser, which include advertising credits and marketing guidance, as well as DIY tools that let you measure the readiness of your business for sale and estimate a value for your business, among other services.
Start the final countdown
When crunch time arrives for completing the sale, there are some legal and financial matters to take care of. The SBA offers an excellent 30-minute video exercise “Selling Your Business” that sheds light on some of these important issues.
Because you don’t want to make mistakes closing the sale or not be prepared for the tax implications, it’s a good idea to connect with an attorney and an accountant as you get closer to your actual sale. That’s why I mentioned the “hybrid DIY” option earlier. Despite the fact that their fees will slightly lessen your proceeds, the risks you take by trying to work without them outweigh the cost of the security you receive by working with them.
I know that a DIY business sale isn’t for everyone, but I strongly urge you to investigate this option before you sign on with a broker. Talk to others who have chosen this route and then honestly evaluate how much time you’ll have to work on your own sale.
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