Table of Contents
1. Make sure your decision is right
Before you start selling your business, you need to sit down and evaluate to know if you are making the right decision. Before you make your final decision, ask yourself: Why am I selling my business? Is it because of financial problems or because you want to venture into other business opportunities?
For instance, if you are thinking of selling your business because of a financial crisis, you should seek professional advice from financial consults before selling just to be sure that you are making the right decision. Many things come with selling a business such as tax from asset sales and employee entitlements. So make sure you are certain that you are making the right decision.
2. Decide on whether to hire a professional
When selling a business, you have to decide on whether it is necessary to hire a professional or not. If your business has many legal aspects that you need to comply with, then it is advised that you hire a reputable commercial lawyer, accountant, or broker to help you in the selling process. Business brokers are experts and will help make the selling process smooth and stress-free by helping you understand government requirements and the legal process involved in the selling process. They will also advise you about the marketing trend in your industry and what to do to ensure that you get the most when you sell your business. Before you hire a business broker, ensure that you check their track record before hiring their services. Consult a family member, friend, or colleague to help you make a wise decision.
3. Determine what is for sale
Another very important thing to do is to determine the exact thing about your business you want to sell. This will help you know the value of your business. So make sure you know the asset that you want to sell before you make your final decision.
4. Know how much your business is worth
If you don’t want to regret it later, you must know how much your business is worth. This way, you will sell your business at the right price. There are multiple techniques you can use to determine the value of your business. They include:
- Evaluating your market
This technique includes comparing your business with other similar businesses within your niche that have been sold recently. Although this technique will not provide you with an accurate value, it will help you know the possible value of your business.
- Calculate the net worth of your business
Calculating your business net worth is simple. You only need to compare the difference between your business assets and liabilities. When calculating your business asset, you need to consider both tangible and intangible assets.
- Determine your business return on investment ROI
This technique involves determining your business’s net profits.
5. Find the right buyer for your business
There are many different techniques you can use to find the right buyer for your business. They include:
- Marketing your business on traditional or digital media
- Hiring real estate agent or business broker
- Using word of mouth
- Use your existing network which includes your friends family or employees
- Using your current or former customers.
Before you put your business on the market, inquire to know the information that you are allowed to disclose to your potential buyers about your business.
6. Negotiate with the buyer
Once you find a serious buyer, you need to negotiate wisely so that you don’t end up overpricing or underpricing your business. Important things that you need to agree with the buyer include:
- The sale price
- The deposit (should be at least 10% of the sales price)
- Settlement period
- Handover training (if the buyer needs it)
- The transition of the existing staff
7. Prepare a contract
Once you have agreed on important details with the buyer about the selling process, the next crucial process is to create a sales contract. Before you create a contract, check with your state to find out if there are any special requirements you need to comply with when creating the contract. It is also advised that you have a solicitor check your contract to make sure that it abides by all legal requirements. Important things that your contract need to have include:
- All relevant assets that will be transferred. This includes things like stock, fitting, fixtures, equipment, property, and rights to use any names.
- All relevant liabilities, including the lease of business premises and creditors
- Employee entitlements and the responsibilities of the employee. You need to specify whether employees will be retained or not upon the sale of the business.
- A detailed statement of what will happen in case any issue arises.
Some contract clauses may restrict you from trading or competing directly against the person you are selling the business to. Make sure you know all these terms before selling your business.
8. Make sure your employee welfare is well taken care of
When selling your business, it is important that you talk to your current employees and tell them about your decision to sell the business. Also, let them know their fate. This means that you should let them know if they will still work under the new owner or if their employment contract will end when the new owner takes over. Also, make sure you give our employees early notice regarding their fate when the new owner takes over and ensure that are compensated accordingly. If your employees had certain entitlements, make sure you inform the new owner about those entitlements that is, if he/she is planning to retain the employees to make the transition smooth.
9. Comply with tax and legal issues
Before you complete the process of selling your business, make sure you comply with tax obligations. For instance, if your business is registered for goods and service tax (GST), then you should include it in the price. Make sure you are aware of tax obligations that will arise from the sale of your business and plan for them accordingly to avoid getting into debt. Also, make sure you comply with all legal obligations.
10. Hand over the business to the new owner
Once you have complied with all legal and tax obligations and the buyer has made payment as agreed, transfer the business to the new owner.
