With sales of businesses up 49% in 2013, it seems more and more business owners are interested in selling their company.
“If someone is older, in the Baby Boomer generation, and they have been in business for decades and have been looking to retire for the past few years when the economy was in shambles, their personal wealth was down and their stock portfolio was down – now is a great time to sell,” says Curtis Kroeker, group general manager for BizBuySell.com, an online business-for-sale marketplace.
And while Kroeker says it’s still a buyer’s market, even younger entrepreneurs interested in selling their business can get a nice price right now, with median sale prices up 13% last year to $180,000.
Are you interested in putting your business on the market? Here are Kroeker’s tips for potential sellers:
No. 1: Make sure your business is doing well.
If your business is flailing, it’s likely tempting to try and get out as quickly as possible. However, Kroeker says buyers will be unlikely to show interest in a struggling company.
“That’s the number one thing in terms of what people are looking for: a business in good shape,” says Kroeker. “The most important things are the revenue and the cash flow a business is producing.”
So even if you’re tired of being your own boss, the best plan of action is to try and right the course of your company before attempting a sale.
No. 2: Get your finances in shape.
Even if your business is doing well, you’ll have an easier time making your case to potential buyers if you can easily document your success.
“Having your tax returns done professionally and having them organized will help you prove the financial capabilities of your business, rather than having disorganized statements,” says Kroeker.
No. 3: Renegotiate any expiring contracts.
While there’s always a transition period when a business changes ownership, many new owners will unlikely enjoy the process of renegotiating contracts with unfamiliar vendors. Kroeker says sellers can sweeten the deal for interested buyers by renegotiating contracts that are set to expire shortly after the sale.
No. 4: Transfer responsibility to staffers.
Many small business owners shoulder a lot of day-to-day responsibility, which makes a transition period even more challenging for incoming owners. Buyers will be more likely to jump at the chance to buy a business where the employees can basically run it on their own.
“When it comes to training your staff, a lot can be done in a six to twelve month period,” says Kroeker. So even if you’re itching to sell, take the time now to hand over more responsibility to your best employees.