5 Steps You Can Take To Prepare Your Business For Sale

Small business owners put a lot of themselves into their companies, and they will often be looking to make sure their businesses will be able to succeed even when they are no longer involved. A person may choose to sell their business for many reasons, including because they plan to retire, because they want to pursue other opportunities, or because they believe that others may be able to take the business in new directions and take advantage of changes in the marketplace. If you are looking to sell your business, there are several steps you can take to ensure that you will be able to maximize your profits and ensure its future success:

1. Start planning early – In many cases, it is a good idea to begin the preparations for selling a business at least one to two years before the planned date of sale. This will allow you to make any adjustments needed to ensure that the business is operating efficiently, while also making sure you will be able to make a successful transition to a new owner.
2. Build a strong management structure – If you do not already have an organization chart in place, it is a good idea to create one and determine how involved you are in different areas of managing the business. As you prepare your business for sale, you can make sure other people will be able to fill different roles, ensuring that the business will be managed correctly after you are gone.
3. Enhance value and create a plan for future growth – To make your business more attractive for prospective buyers, you can take steps to streamline processes, improve efficiency, reduce expenses, and make sure policies are in place to ensure that it will be able to operate smoothly. You can also look at areas where the business may be able to expand in the future and pursue new opportunities, and by documenting these plans and goals, you can demonstrate value to buyers.
4. Perform a business valuation – Once you are in a position to transition ownership of your business, you can determine its market value. A valuation may be based on the business’s assets and liabilities, its income and growth opportunities, and a variety of other factors. By establishing the correct value, you can ensure that you will be able to receive a good purchase price and realize a return on the investments you have made.
5. Prepare financial and legal documents – You will want to provide buyers with all of the information they need, including financial statements, tax returns, sales contacts, and records of supplies, equipment, and inventory. You will also want to compile other necessary documents, such as the business’s operating agreement, contracts with vendors or other parties, licensing agreements, employment contracts and policies, licenses and permits, and lease agreements. This will ensure that a buyer will be fully prepared to assume control of the business.

Contact Our Illinois Small Business Lawyer

If you are considering selling your business, Gierach Law Firm can help you create a succession plan, and we can work with you to ensure that you are fully prepared to transition to new ownership while realizing profits from the investments you have made. Contact our Naperville business law attorney today at 630-756-1160 to learn how we can help.

Sources:

Investopedia

KCSourceLink 

NFIB