What you need to know when selling your business

Every business, no matter how promising it sounds, undergoes all the stages of business lifecycle. It experiences rise and downfall; reaches the pinnacle of success and descend to taste the failure. The journey from introduction to growth to maturity and finally to decline is full of challenges for businesses of all natures. A business should be able to negotiate the crests and troughs of this cycle in order to subsist through the competition. However, the pace at which each business covers this lifecycle is different for different establishments. And things like approach, determination, agility, etc. decide the duration of stay of each player in the market. And according to stellar business advisors, like businesses, even entrepreneurs are liable to go through the lifecycle which ends at the decision of exiting from the business. Hence, it is perfectly okay to consider exiting from your business at one point or another.

 
Why business owners leave a business?

No one would want to abandon a business on one’s own will. It’s all about the circumstances that compels an individual to leave the business and move on with some better alternative, but that doesn’t mean the business is not going to do any good to the next owner.

Some of the most common reasons for leaving a business are:

·        The retirement age
·        Other better offers for the business
·        To encash all the assets
·        To realise benefits on the business’ goodwill and success
·        The time to bequeath the business to family’s younger generation
·        Change in circumstances such as poor health, divorce, etc.
·        Move to another location
·        Facing stiff competition
·        No prospects of making profits

What are the ways of exiting?

There’s always a legitimate plan for exiting from a venture, which is established in all respects. All it depends on the preference of the owner as how to do the exit without incurring losses. There are many ways of leaving a business; some of them are:

·        Selling it
·        Bequeathing it
·        Opting for mergers or takeovers
·        Shutting it down
·        Forced closure
·        Liquidating
 
What are all the issues that need to be addressed before selling your business?

  1. Get the valuation of your business – Each business owner will look forward to making gains as much as he/she can. But, the exact value of the business does not always impress the business owners. Before you end up acquiring an underrated value of your business, it is advisable to get your business’ valuation from reliable business advisors or assessors.
  2. Make the offer known via various means – The ways of making the offer known is by letting the brokers and agents assume the role and help you in this regard, newspaper advertising, trade publications, other trade contracts and word of mouth.
  3. Attract buyers – As the most effective way of attracting buyers, you must consult a business broker or other professional who can help you in arranging the sale. The role of an intermediate party is vital as anything. With the aid of the brokers, you will be able to attract “worthy” buyers.
  4. Other factors to consider – Other factors, such as time of selling, how and what to sell, how much goodwill of a company is established, etc., play a crucial role at the moment of selling your business. If you plan to sell your business at the time when the venture does not seem profitable, then it is not going to be well valued.   
  5. The way of structuring the deal – If you have left our points like payment terms, taxation implications, etc. from your considerations, you should bring them right now into the calculation.
  6. Completing the sale – Leaving some financing in the business or not is one last thing to consider before closing the sale. It is better for all the parties involved in selling and buying a business to leave no scope for confusions to enter the deal. Present all the clauses and terms of the deal in clear and concise words. Whether it is the letter of intent or the final closing of the deal, during each stage, every aspect of the business should be made clear to the business owner.

Selling the business you once saw germinating from a seed of idea, would not be easy for you even if it is now deemed to be the most necessary thing. If you are selling a business in Australia, there are a number of qualified brokers, such as BPA Brokers, who can ensure the process not to get on your nerves. Hire them for the job!

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