Tips for Selling a Business

1. Make sure you and your business are ready to sell.

Get your financials, inventory details, etc up to date. Advise your accountant you are planning to sell and make sure your tax and corporate responsibilities are up to date. You should also discuss the structure of the sale with your accountant. This information will need to be entered in the contract of sale. Need an accountant? (Click Here)

2. Figure on recasting your financials.

Many small businesses show little profit. That's good for tax purposes, but bad when it comes time to determine the value of what you've built. You want to show prospective buyers the business in the most positive and accurate light possible. We recommend sellers have an accountant recast profit-and-loss statements to reflect adjustments for what the business owner takes out of the business in terms of salary, health care and other benefits, and automobile expenses and other perks. This can be especially useful when dealing with a buyer who would operate the business himself. Need an accountant? (Click Here)

3. Identify the key selling points of your business.

A business summary description will be helpful in selling your business. Include the key selling points like name, location, market share, future growth, goodwill, future growth, etc. This summary can be sent to potential buyers.

Research the marketplace.

Find out what similar businesses have sold for. This will help you determine the right price for your business. Consider the timing of the sale as a factor, is this a good time to sell?

5. Determine a value, factoring in your bottom line.

Determine what your business is actually worth. There are lots of formulas for valuing a business. Buyers may base a purchase offer at least in part on the value of the assets in your business, the cash flow, gross revenues, annual growth and other factors. No matter how many numbers are cranked into how many equations, sale prices typically depend on profits. The sale price is almost always a multiple of the business's profit. That multiple varies from industry to industry and business to business. Coming up with a value for a business is a little like coming up with a sale price for any product or service: There's a lot more to do before you actually make a sale. A broker can help you determine this value or your accountant. Need a broker or an accountant? (Click Here)

6. Don't count on a cash sale.

More than half of all small-business owners finance the sale of their businesses. You could find yourself lending as much as 70% of the purchase price to the new owner. This is commonly known as vendor finance. Terms on these financing deals vary, but many owners and buyers agree on payoff periods of four to five years. Part of the process will involve getting information on the buyer's financial records and background, just as the buyer will need information on your business's history.

7. Prepare a contract of sale.

This will need to be prepared as soon as possible so that you can be ready to offer it to a potential buyer. You may also like to think about preparing a confidentiality agreement for your potential buyers to sign. Need legal representation? (Click here)

8. Register with listabusiness.com.au as a seller

Keep up to date with what the market is doing, who is buying and selling and for what prices.

Lastly, good luck with the sale of your business. Please be patient and flexible as this will help you eventuate.