Sellers, Get Your Shit Together!

Welcome to Paradise!

Congratulations on the recent sale of your business!

That’s what we all want to hear at some point, right?

Unfortunately, that’s NOT likely to happen for you. Only about 20% of all businesses end up selling. That’s 1 in 5. According to the SBA, 1 in 12 businesses simply close their doors every year, no sale at all. The statistics are not in your favor, due primarily to poor planning, or really, no planning at all. 72% of business owners don’t have an exit plan of any kind, yet more than half expect to leave their business within the next 10 years.

So come on! Let’s get your shit together!

The sale of your business will no doubt be the largest transaction of your financial life. Way bigger than selling a vehicle and probably much larger than any house you’ve sold. IF you’re able to sell at all. Plus, you want to be able to leave on your own terms, not because of economic hardships or health reasons or plain old burnout.

We’ll start with the basics. The 9 steps to selling your business. We’ll run through all 9 steps pretty quickly, then dive into each of them a bit more. On a couple of them we may go deep; even do some public math.

1. Calculate a preliminary business valuation

2. Based on that valuation, consider what price and terms you may be willing to accept

3. Write a business memorandum

4. Clean up and organize bookkeeping and financials

5. Begin to plan for the transition of your business to the buyer

6. Make a list of potential buyers

7. Assemble your deal team

8. Work to increase the value of your business

9. Live happily ever after! (Harder than you think)

Close your eyes for a minute.

Can you hear the Beach Boys playing…Bermuda Bahama, come on pretty mamma. Smell the salty air. Feel the sun on your brow…

Take a deep breath. You’re considering selling your business. Picture all the things you’re planning to do after the sale.

Retirement, a fresh start, ahhh, you can almost taste it.

The Pina Colada.

The tropical retreat and white sand beaches.

The little sports car you’ve always wanted.

The vacation to make up for all the vacations you’ve passed up on as you poured your blood, sweat and tears into your business.

The golf club membership so you can play every. single. day.

And of course, easy money for your day-to-day living expenses.

You start to do the math...

“That probably adds up to about $2,000,000, so that’s what I’ll sell my business for. Not a penny less,” you’re thinking. “I missed half of my kids’ birthday parties and most of their ball games. (At least it got me out of those horrid musicals.) But I’m not missing out this time! I’ll sell my business for $2,000,000, maybe a hair more. Get me a broker and line up the buyers!” as you greedily rub your hands together.

Wake up! You’re dreaming!

This is a common, but inaccurate valuation method I’ve seen too many times. Known as Pie in the Sky. Also referred to as the Your Full of Shit Business Valuation Method.

Or look at it from your buyer’s perspective. Are they going to be wondering, how the hell did you come up with that price?

Valuation doesn’t work this way. Your business does have value, hopefully a ton of value, but it requires some math and a little logic.

The first step to selling your business is to determine a true value based on numbers and circumstances.

Gather up the last five years of tax returns, and next time we’ll walk through a simple but effective valuation formula anyone can use.

Peace Out!

Della

Ready to sell your business?

https://www.shift-n-gears.com/9-steps-to-selling-your-business