When you own a business, there may come a time when you want to sell it. This can be for several reasons, such as wanting to move on to new challenges or needing to raise money quickly. Whatever your reasons, selling a business can be a challenge.
You can easily make costly mistakes if you don’t know what you’re doing. You need to learn how to sell a business fast without compromising your gains from the sale. So, how do you sell a business fast?
Here are some tips on how to sell a business quickly and get the best price possible.
Prepare Your Business for Sale
Selling a business can be a complex process involving numerous tasks. Therefore, it’s important to start preparing for the sale at least two years in advance so you have enough time to get your financials and other critical records in order.
Potential buyers will need to ascertain the real value of the business and its profitability. If you plan to sell the business immediately, you’ll need to organize older records dating back at least three years.
The records will help them accurately assess the value of the investment they are about to make. Proper preparation will also ensure a smooth transition once the sale is complete.
Any shrewd buyer will avoid a business that doesn’t have proper records or data. Ensure you do the following if you want to sell your business fast:
- Organize your financial records and tax returns
- Get all legal documents in order, including contracts, agreements, and leases
- Gather relevant information about your customers
- Document organizational structure, systems, and business operations
- Have proper records of inventory and business assets
Determine the Worth of Your Business
Another valuable tip on how to sell my business fast is to determine the true value of the business. You don’t want to price your business too low or too high. Consider finding a reputable business appraiser to perform a valuation.
The appraiser will create a comprehensive explanation of the business’ worth. The valuation report will make the asking price more credible. It’s worth noting that several external factors can affect your business’ price tag, including:
- The economy
- Your industry
- Potential legal requirements to stay in the market
You should not depend on casual advice from friends and inexperienced advisers in valuing your business. You don’t want to end up with a valuation that is too low or too high.
An abnormally high valuation may prolong the selling process until you make a price concession. On the other hand, you will leave money on the table if the valuation is too low. A proper valuation process is the only way to know if you’ve priced the business at market value.
Here are a few tips to accurately estimate your business’ value:
- Sum up the value of all the business assets, such as real estate, equipment, and tangible goods. Then, subtract liabilities.
- Determine how much the asking price should be based on the business’s annual revenue. A professional appraiser or broker can help you in this case. For many industries, the asking price is 2-3x the yearly income.
- Use EBITDA multiples. EBITDA (earnings before interest, taxes, depreciation, and amortization) measures a business’s overall performance. It can serve as an alternative to the net income in certain situations. You can base your company’s worth on multiples of its EBITDA, which can be 2-10x, depending on the business size.
- Conduct a discounted cash-flow analysis. This process involves using a formula to determine how much the business can generate in the future based on past earnings. You can then discount the future earnings to present value.
- Consider other strategic factors such as geographical location, competitive edge, online reputation, brand strength, and established processes. While putting a monetary value on these factors is not easy, factoring them will help determine your business’s true value.
Create a Confidential Information Memorandum (CIM)
A lesson on how to sell a company cannot be complete without mentioning a CIM. It is a written company overview, answering critical questions buyers often ask.
Preparing a CIM is a significant step in selling a business, and you will share it with prospective buyers after signing a non-disclosure agreement (NDA). Below are some of the notable benefits of a CIM:
- It significantly reduces time wastage with potential buyers.
- It ensures a seamless selling/buying process.
- It can increase your business’ value and minimize the risk of litigation.
You should leave the task of creating a CIM to a professional who knows what prospective buyers want in a business they intend to buy. When creating a CIM, you’ll need to determine the attributes of the buyer most likely to purchase the business. Understanding the ideal buyer demands a solid understanding of the industry and the business.
Hire a Business Broker
When looking for answers to “how to sell my company fast?” you should realize that selling a business is a big decision. Finding an experienced and reputable advisor to help you with the process is critical.
If you want to sell a small business fast without making costly mistakes, consider finding a business broker to guide you through the process. A good business broker will help you with the following:
- Get a current valuation for your business. The broker will also explain the factors used to arrive at the valuation.
- Develop a marketing plan to sell the business. An experienced broker can help you create written promotional materials and identify prospects that understand your company’s value.
- Identify your reasons for selling the business. Prospective buyers usually want to know why you are exiting the business, and a good broker will know how to answer this question.
Choose the Right Platform to Sell Your Business
Where to sell my business is another common question among entrepreneurs looking to sell their business quickly. In today’s digital world, you can’t run out of platforms and websites where you can sell your business.
The most popular options are online business brokers and private sales. A major factor you should consider when thinking of how to sell a business quickly is a large pool of potential factors.
If you decide to sell the business through a private sale, you should be ready to find interested buyers yourself. This can translate to a significantly slow sales process.
However, if you have good connections in the industry or have invested heavily in advertising, you can generate sufficient interest to accelerate a private sale.
If you don’t have adequate connections or don’t want to arouse competitors’ curiosity, it is best to use a broker. Established business brokers can grant you access to large pools of qualified buyers that would otherwise be out of your reach.
Professional brokers also vet prospective buyers, saving you from unserious buyers who would waste your valuable time. They also provide a single point of contact, ensuring seamless communication between you and prospective buyers.
Be Ready for Due Diligence
Once you find a buyer with a strong interest in purchasing your business, you should provide the necessary documentation to facilitate the due diligence process. To ensure a fast sales process, have detailed and well-organized records ready for due diligence before you put the business up for sale.
The records should highlight the hidden value of the business and overcome potential objections. With this approach, you won’t have to worry about seller fatigue during the due diligence and sales process.
Honesty Is an Important Virtue
When looking to sell your business fast, it can be tempting to cover up any issues that would undermine the sales process. The truth is that failing to disclose problems that your business has will often work against you.
Savvy buyers usually take the time to research a business they intend to buy. If they discover any issues you have not been forthright about, it can lead to mistrust and jeopardize the sale.
Honesty is an important virtue if you want to sell your business fast. You should be truthful about every aspect of your business so the buyer won’t take long to make an informed decision.
It will also build mutual trust and valuable respect between you and the buyer. Upholding honesty does not mean that you should focus on your weaknesses; it is also critical to highlight your strengths.
A valuable lesson on how to sell my business fast is knowing how to express what sets your business apart and makes it valuable. You should demonstrate your business’s value honestly, whether it is your product, customer experience, revenue figures, or any other attributes.
Business Sales for Professional Business Consulting
When it comes time to sell your business, you want to ensure the process goes as quickly and seamlessly as possible. You will need to implement several things to make this happen, and you should start by preparing for the sale a few years in advance.
The preparation will help ensure all documentation and records are in order. You will also need to determine the value of your business to avoid pricing it too low or too high. Another critical step in selling a business is preparing a CIM.
You may also need a business broker to guide you through the process. Also, remember that honesty is the best policy if you want to sell your business quickly. Now that you know how to sell a business quickly, you can turn to Murphy Business Sales if you need professional help selling a business.
They can also help if you want to learn how to buy a business in Sacramento, CA. If you are interested in buying or starting a business in Sacramento, CA, please visit this page.