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6 Things You Should Know Before Selling Your Business

Many Entrepreneurs build their business from scratch and grow it as their baby. For Every entrepreneur there comes the time or rather should come that time (if you have not yet) where you should have a plan to have an exit strategy or to sell your business.

As expected every entrepreneur are very much enthusiastic about building their business to launch new products, add new clients and successfully getting a few number of deals.
And as a Business Owner you might always dream of getting the buyout offer for a huge Sum. For entrepreneurs, their emotions are attached to their startup which makes them too difficult to make a decision to sell his company. Particularly when he has seen his product growing that he created with all the hardship. Emotions can possibly sometimes cause you to miss the big opportunity to grab the potential buyout.
How to get prepared for the big day and make the right move to exit or sell your business?

Selling Your business should never be the spur of the moment.

You must be prepared to know following points before considering to sell.

1. Valuation of your Business- First step that ever comes to you when deciding to sell is, how much the valuation your buyer is giving to your business? If your company run by family or company founded by family members then most of your expenses may go through the business which can ultimately make your business to write off the expenses with your business expenses and making your business look less profitable. This may affect you during the business valuation process.

2. Is your business ready to sell? Now you have to make sure your business is generating enough revenue so that you have a right valuation to impress your buyer. Buyers will never acquire the business that has no revenue stream to prove that’s this business has a value. So if you are thinking you got the idea of worth of million dollar or even a billion dollar you must genuinely start working on it from the ground up to prove its worth. Big companies or investors don’t invest in business with potential alone.

3. Wait is it profit or Revenue? This should struck your head with a hot rod now. Yes, this is something very debatable and can make a life-changing decision while evaluating the business. Evaluating the business is all maths. Sure Revenue does sound good isn’t it? If you got some big number to show to impress. But it all comes to the final numbers, how much profit you are able to make with that revenue. This is the thing mostly successful business investor (I would not say all) will be interested to see profit in business rather than revenue in the business.
Business with high revenue with little or no profit is less valuable to the investor than with a low revenue but high profitable business. So you might always want to keep this point in mind when thinking about selling the business.

4. Best time to sell: This is little difficult question to answer. Many entrepreneur will be desperate to sell or thinking to sell their company when their business is declining (May be for any reason). This is the worst time when owner is left with no other option to sell his business. But according the some business investor and venture capitalist, it’s more profitable to sell a business when it’s going well. Because Buyer won’t be interested in buying and repairing stuff most of the time if you want a premium cash in return.

5. Good Attorney before making the business Transaction: You would defiantly need to hire a good Attorney when deciding to sell your business. Corporate attorney must be a part of your team, they can guide you and handle the process of selling your business. Team may include expertise in tax analysis, business valuation in assets and experts in analyzing the current contracts rights and obligations.

6. Is your business depended on you: Business which is greatly dependent on the single person to succeed is very less likely to attract the buyers. This type of business is difficult to get buyout offers. So you need to make your business independent with right management team to run your business without dependent on you. The business with a right team and management team always gets the high buyout price.


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