Starting a business is one thing, and we often read many articles about the pitfalls to avoid and ways to make running a business easier. But what happens when we want to sell our business? Selling a business is a widely different thing and it can be even more scary than starting your venture in the first place, and today we are going to look at some things to think about when you plan to sell up.
#1: Potential Doesn’t Pay
The main thing which a lot of people don’t seem to understand when trying to sell on their business is that people don’t pay for potential. You might have a wonderful idea and plans in motion which have the potential to change the world, but do you have any evidence? You will need to seriously think about your business valuation before you think of selling up because potential doesn’t equate to real world value and it doesn’t mean you should be paid that much.
#2: They Want Profit
When it comes to business and deciding to sell up, have a think about what your profit is each month and what your revenue is. A lot of people get these two a little mixed up in their mind and this can make selling up a little tricky. Although buyers might acknowledge a great monthly revenue, they are more interested in the profit you make each month. In other words. If you make $25,000 in revenue each month but your expenses are $15,000, then you only make $10,000 profit. There is a big difference and this will impact the price you can sell for.
When you are planning to sell on a company and you claim that it earns x amount from several sources, the buyer will want proof of these sources and the impact they have on your revenue. Make sure that you keep records of absolutely everything to do with your business and ensure that you show them all of your transactions and profits so that they can see that they aren’t being scammed by you. Trust is a big thing when investing so much money.
#4: Don’t Dwell on the Past
If 3 years ago you had a time where profit was booming for you, it can be tempting to bring this up in conversation and try to show your buyer that the company does have that potential for more. But it is important to remember that your buyer only cares about recent profit, because this will best reflect what they should expect when they buy. You can bring something up about the past briefly, but focus on the here and now for the best results.
#5: Be Honest
When selling your business you will want to bring it out in the best light you can, but this doesn’t mean you should hide the ugly parts. When you are selling up you need to be honest and show them where things haven’t worked in the past and this will give them the information they need to make an informed decision.