Running a business is hard work. Furthermore, being a business owner isn’t for everyone. We see evidence of this in the 50% of small businesses that meet their demise before they make it to year five.
Of course, some businesses thrive and make their owners incredibly successful (and wealthy). Yet, even successful business owners need to know when enough is enough. At some point, whether you’re ready to retire or need to get out of a struggling company, you’ll need to think about selling your business.
We’re here to help you through the process. Keep reading to learn about the top factors of consideration before you sell your business.
Business Partners, Investors, and Employees
When selling your business, it’s important to think about all the people involved. Who will be affected by the sale of your company? This typically includes business partners/investors and your employees.
Even if the new owner agrees to keep the current staff employed, their management style will likely differ from yours. Your employees will either have to adjust to the new management or find a new job. In some cases, the new owner will clean house and start with a fresh staff, which means all of your employees will find themselves out of a job.
Your Business Valuation
Determining your business’s market value is an important step in the selling process. This comes down to many factors, such as:
- The company’s assets
- The business’s annual sales
- A cash flow analysis
- The demand for your products or services in the area
- And more
However, it’s important here to remain objective. You probably have a lot of emotions and sentimental value tied to your business.
Don’t let these feelings fool you into believing your business is worth more than it is in reality. Furthermore, you need to pay equal attention to buyer psychology. What is going to make the buyer more likely to give you an offer for your company?
How the Sale of Your Business Will Effect Your Taxes
Depending on why you’re selling your business, you could stand to make a lot of money. Conversely, it could help you get out of a tight financial situation.
Regardless of circumstances, there are tax consequences of business sales. We recommend consulting with your CPA or hiring a tax lawyer to help you navigate this complicated field.
It’s important to understand how selling your company will impact you financially. If you’re going to owe Uncle Sam a pretty penny after selling your company, it’s best to prepare for it in advance.
Your Financial Security Moving Forward
One of the most important selling tips is to plan ahead to ensure your financial security. Once your company is sold, what means of revenue will you rely on to get by? Do you have enough in savings or have you set up a retirement fund?
If not, you need to think twice before selling your company. Of course, if your business is limping along or costing you money, the sooner you get out of it, the better.
Thinking About Selling Your Business?
If you’re considering selling your business, we hope this article put a few things into perspective for you. This is not a decision to be made lightly or without planning.
For more personal or professional advice, don’t go anywhere. Browse through the rest of our blog to find more concrete ideas, advice, and guidance. Our website was created to help people like you.