5 Steps to Selling Your Small Business

selling a business

You have reached the point where it’s time to divest yourself of your Memphis business. Perhaps it’s gotten large enough that you feel there’s value in the sale, and you want to start something new. Perhaps it’s not what you thought it would be. Whatever the reason, you’ll want to do it right so you make, rather than lose, money on the transaction. Learn these vital steps to selling a small business, from valuation to an expert consulting firm, that can help you get the maximum value possible.

Valuing the Small Business

The first step in selling a small business is to determine its value. This is a very complex process that, unless you’re a financial expert, you probably shouldn’t attempt to do on your own. In general, your Memphis business will probably be worth several times the annual cash flow it brings in. This can range anywhere from three to six times the annual profit, but factors such as industry health and trends, market supply and demand, your locations, and a wealth of other things go into the overall value.

Get Financials and Paperwork in Order

Make sure that your financials are 100 percent clear, in order and above the books. The more transparency you have, the better off you’ll be. You will be amazed at the questions you have to answer about your finances before you sell. It’s a risk management society, and it all comes down to your income and expenses.

In addition, make sure you’ve got all your contracts and paperwork in order. The legalities are many and multiform, and you’ll want to be as efficient as possible. Your consulting firm can help you gather all of this information.

Have an Exit Strategy

Be prepared to get out. Whether you’re being forced to sell or it’s a choice, you should have a strong strategy to exit the business. Do you want to sell to someone you know? To an expert outside agency? What’s the process of transition? Determine all of this well in advance—even when you start the business—so that if and when the time comes, you’re prepared.

Build Sales and Customer Base

The better your business is flourishing, the more it will be worth. This means that you need to put more work into building your business now than ever before. Selling is generally not an easy thing; you’re going to work harder at your business when you’re trying to sell it than you have since the day you first opened the door. The more customers you have, the more solvent you are—and the more the business is worth.

Selling a Small Business via Brokerage

It’s been said before—a professional consulting firm and brokerage can be your best bet. The fees will probably run several thousand dollars, but it will more than pay for itself in the higher value you get when you sell. If you’ve got questions about how a brokerage can help you, read about us and get in touch for more information today!

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