I have been involved in buying and selling businesses in the past and I have discovered that many people have no idea how to go about buying or selling an existing business. The greatest problem that most buyers experience is the lack of reliable information about businesses available for sale. The sellers also have their share of challenges. From my extensive experience, I have gathered helpful tips for sellers because I believe they experience significantly greater challenges than the buyers.
I know of two main ways of selling a business enterprise. The first and probably the most convenient is selling shares or introducing other partners to contribute additional capital. The second approach involves selling everything including assets, business systems, and goodwill.
If you are thinking of selling the business together with assets, I would advise you to start preparing several months before. Every potential buyer wants to see clear records including financial statements. This means that you will have to streamline your business keeping procedures and ensure you record every material transaction. Keeping sound records is quite easy if you have basic accounting knowledge or you have employed a reliable accountant. Apart from the records, you must ensure all the assets registered under your business are in order. If you do not want to dispose of some of the assets together with the business, this is the right time to change registration or sell it first.
Once you are set to sell your business, you must focus on getting the highest value, get paid instantly and avoid ongoing potential liabilities like guarantees or warranties. At this point, you need to evaluate the legal, commercial and financial aspects of your business to figure out if there exist liabilities and business risks that might affect the business in the near future. In my opinion, you should settle any legal matters, cancel engaging contracts, settle debts and comply with the regulations before searching for a buyer. This is undoubtedly the best way to avoid ongoing liabilities.
If your business has numerous assets, you can consider engaging a professional to determine the value of the assets. It is also important to think of the due diligence questions that the buyer is likely to ask and the best way to respond to them before marketing your business. Unlike in some years back, the leading online markets allow you to buy, sell your shop, business or partnership conveniently. Once you find a buyer, you should remember to draft a sale agreement and ensure there is mutual understanding between you and the buyer.