So you want to sell your small business that you built from scratch! That’s great, but are you going to sleep at night? Here are a few tips you should consider when selling a small business:
- Know what your small business is worth. Compare your small business to the industry, and the regional market share you possess. If you are the value of your small business, you will have a hard time selling it for what it is worth.
- Make a liquidation plan of your small business. There are “asset sales” and “stock sales” of a small busines corporation. Find out the difference and consult a financial advisor about which would be better.
- Value your small business by its individual assets, first. This valuation will help you understand your tax picture. You should know this before you sign the contract to sell, or maybe before you accept an offer.
- Don’t warrant anything. Your small business financial statements are probably not audited, so don’t act like they are. If they are audited, let the CPA attest to its validity. Be careful of what assurances you make about your small business.
- Have you considered the option of consulting to your small business after you sell it? This could build a comfort level in the buyer and intice them to make the deal.
- Consult your financial advisor before making any decisions to sell your small business. It could be the difference between crafting a great deal, or life-long regret.
Perhaps, from personal experience, first, get to know your buyer well enough to determine if they will have a positive or negative moral impact on your clientele. Having sold two businesses, I can tell you I sleep perfectly from the second sale because I knew the moral integrity of my partner, that he would instill continued great care. The first, I had suspicions of what I thought to be minor infractions. In my great hope and anticipation for moving on, I neglected to consider this important factor.
Thanks for reading Ralph. Yes, I remember the first sale. I will never forget walking our of the lobby to the examining room. I passed this new doctor and he was easting a taco in the hallway, salsa dripping down his arm. The whole office smelled like Taco Bell.
‘Yo quiero Taco Bell’
–The LA CPA