Entrepreneurs are often faced with a difficult choice on whether to keep pushing or selling the business during tough times. It isn't easy to make since there are many things at stake. But with proper business procedures and follow-ups, you can simplify the entire process from decision-making to sale. Here are some tips from the Bryan-College Station Chamber of Commerce.
Signs That It’s Time to Sell
Most businesspeople lean toward selling the business when it encounters financial challenges. When the company doesn’t make enough sales to break even or sustain the business, it is time to think of alternative strategies.
A glance at your business finances should help you decide if you should sell your business. This is particularly the case if you have up-to-date records but your business strategy is not working to your advantage.
A competitive market can also squeeze your business out of the industry. Check on how you compare with other brands in the market. If you cannot make a substantial input over a lengthy period, then you might consider selling the business.
Lastly, if your business plan and strategy have underperformed, failing to bring in the expected results, you can plan to sell the business. For example, if you were expecting more customers from a recent development that didn't come to fruition, it might be time to consider a sale.
Preparing for the Sale
Once you decide to sell the business, there are specific documents you need and processes you should follow. This way, you will get value for your business and ensure a smooth transition and handover process. In addition, you need to follow the due legal process to avoid issues after the sale.
Determining Your Business’s Value
First, you need to determine the value of your business. It will include goodwill, stock, equipment, and any other payables. Whether you are selling the entire company or retaining some items, you must have concrete financial data.
Organizing Your Financial Statements
Taking proper financial records will help you in the sale and takeover process. You can quickly note your assets and current financial position, which will help you understand your business's valuation. It will also help you know how you can gain from the sale of the business.
You need to ensure you fulfill all your financial obligations, such as paying your creditors and invoicing for your services. Proper invoicing improves your financial records while also ensuring you get paid quickly. This way, you eliminate any delays with your money.
To keep proper invoicing records, it’s ideal to invest in cloud based invoice software. Not only will it be easier to track invoices, but with online payment options, you’ll get paid quicker as well. Some software even offers alerts whenever an invoice is opened and paid.
Finding a Buyer
Finding a buyer can be a lengthy and complicated process. You can start this process as soon as you decide to sell the business. Some buyers will demand to know more about the business by looking into your financial records. They can also scrutinize the business’s performance in the market by sending their representatives to benchmark and draft a sale agreement.
Whether you’re selling a struggling business or a thriving one, utilize the tips above. Once you’re ready to sell, follow a checklist: make preparations, determine what your business is worth, use invoicing software to ensure customers keep paying your promptly, and start looking for a buyer.
For more great tips, join your local chamber of commerce today.