8 Golden Tips For Selling Your Small and Medium Sized Business

As one of my mentors would always say; ‘Business is business, no sentiments in business’, it was easy to chant this until I tried starting up my first business then I realized just how easily you can get sentimental about something that you watched grow by your hands from ground up.

Selling a business is a topic that many entrepreneurs wish would never come up in their business lifetime, but often times it does come up anyway and too many are either reluctant to sell their businesses or are too naïve in the process.

Fact: Selling your business is not the death of your business, it can actually be a sign that you are a great entrepreneur; it is like a good mother who knows what’s best for her ‘child’. I have set up a few tips that I think are pure gold and will help you get through the decision and the process.

8 Golden Tips For Selling Your Small and Medium Sized Business

1. Ask Yourself: Is it Right To Sell?

There are entrepreneurs who are chronic starters, they have no qualms with selling a business and starting afresh. This question is for those who are really faced with a hard decision.

Identify the root consideration; if your business is in financial distress, then selling shouldn’t be a first resort, there are a number of ways you can raise funds and finance your business provided the amount needed is such that your business can cope with in the long term
At such times if you have a strong business and business model, it may be in your best interest to sell to larger companies that can fund the advance that the business needs.

Again, if the business distress is such that it is connected to your person, like people don’t want to do business with you as a person and the business is suffering because of it, walk away. Live to fight another day

• Ask yourself; is it about me? If it is, then I will advice you sell.
• Ask yourself; can we really fund this business to the next level? If you can’t and you love that business, I advice you sell.

 

2. Ask Yourself: Is it The Right Time To sell?

if it is a “distressed” sale, then you have to ask this question, While it is great advice not to procrastinate once the facts are clear, you have to try to come off as less distressed than you actually are. If you do not you wouldn’t get a great deal for your business at the negotiations. Find out if you need some time to put some things in order, set some smaller parts of the business aright before you put it up for sale.

If it is not a distressed sale, this can be difficult to answer, external market factors like interest rates, input prices, new competitors or innovations, income tax issues, regulatory changes, economic forecasts, etc. all could impact your decision. As always, do your homework and consult experts when necessary.

 

3. Properly Evaluate Your Business

You may think your business is worth a certain amount based on emotions and considering the time and sweat you have put into it over the years. Professionally however, businesses are evaluated after completely different parameters.

To help you price your company correctly (depending on its size) try to hire the best professional valuation expert you can afford. Let them help properly appraise the market value of your business.

 

4. Be Honest

Don’t exaggerate the facts; be honest and straight to potential buyers and on the documents. You have to disclose everything. Don’t worry no one expects to buy a perfect business. 99% of the time no one would sell a perfect business anyway.

 

5. Arm Yourself With Facts

If you were the type that didn’t know much of the details of the business, before you go to the negotiation table, arm yourself with every little detail of the business.

Be ready to answer lots of questions, make sure your financial records (and all your legal documents) are in order. Most buyers want to verify revenues and profits. If you can, have available at least three years of financial information. Audited statements are best.

 

6. Don’t Do it Solo

Having a great lawyer and advisers present at negotiation can be the difference between a great deal and a horrible one, so don’t go solo. It is not the best.

7. Retain A Claim In The Business Where Possible

If you really are uncomfortable with leaving the business out rightly, then try to get a spot in the board of the buying company or stake a claim or share in the business during negotiations, though you may lose in some other areas.

In 2010, Altium Limited, an Australian owned public software company acquired Morfik Technology Pty Ltd., a developer of visual design tools for engineering and deploying cloud-based software applications. Aram Mirkazemi, was the CEO of Morfik at the time and decided to sell, today, he is the CEO of Altuim Limited. Talk about, making the right choice!

 

8. Be Professional and Confident

Negotiations can be very mean experiences. Trained negotiators can smell your distress and excitement even if the papers don’t make it obvious. Your comportment and how well you know the business and the facts can go a long way in getting you the right price for your business.
When the business tides align, jump on it!

Chidike Samuelson is an Entrepreneur, a Lawyer, business and Relationship Counsellor, Author and blogger. He loves giving practical advice that can cause a change in a business, person or organization. He is the CEO at TheCouchmentality, where he does just what he is passionate about along with other gifted people.

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