- What you should prepare for before selling
- Ways for making your business appear market competitive
- Options for selling your small business
If you’re thinking about selling your business in Texas, there are a lot of other things to consider.
More than anything, it has to do with timing. First, think about why you’re selling. Are you and your business partners facing conflict or dispute? Are you facing illness or death? Are you planning on retiring? Have you grown bored by it? Or are you just feeling overworked? All of these are potential reasons for selling your business.
Selling your business in Texas will require you to have an attorney who is licensed in the state of Texas. But the process of selling your business is similar almost anywhere you go. Most businesses think ahead. If you’re thinking about selling, plan a couple of years ahead. There are many steps to selling your business and giving yourself ample time to prepare will make the process a lot less stressful.
Some people tend to sell their business when it stops being profitable. If this is the case, then it might not be very attractive to buyers. Buyers are also doing their homework and searching for businesses that will make fiscal sense on their end. As a seller, it is important to make your business appear competitive and market-friendly. In order to increase your chances of selling, consider sprucing up your business by enhancing your profits through some strategic changes, having a foundation of customers, and writing out a contract that lasts several years between yourself the seller and the buyer.
Below are some helpful steps to selling your business.
7 Simple Steps To Selling Your Business in Texas
1. Determine the Value of Your Company
Selling your business in Texas, no matter what it may be or what size, requires an understanding of what it is worth, but it is hard to determine this objectively. Corporation valuation is a service offered by financial advisory firms and business valuation firms. For a fee ranging anywhere from $3,000 to $7,500, a qualified professional can offer a valuation of your business from your sales, inventory, debt, assets, business potential as well as threats. Many business owners don’t realize that their business might actually be worth anywhere from three to six times their actual cash flow per year. If this is the case, then having a financial expert offer you their review might be worth considering.
2. Getting Your Books In Order
Transparency is very important to buyers. If you’re selling your business in Texas, you should ensure that your books are up to date and organized. Work with your accountant to get all of your financial statements and tax returns going back to a minimum of three to five years to make sure that your profits are on the books. If you’re a small business or a family run business, make sure that family-related purchases are not in your business books. Buyers will not be impressed by these statements. In the state of Texas, you are not required to have a general business license, but having your permits up to date and other small details such as this are very important.
3. Determine Your Exit Strategy
Selling your business is no small task. It is a big decision. Prepare your exit strategy as soon as you’re ready to sell. Plenty of things can arise between now and the day you sell your business so always be on standby. It is not uncommon that a larger corporation or business comes in to push out small businesses. Be ready for when something like this occurs.
4. Increase Your Sales
As mentioned prior, increasing your sales before selling your business is key to making your business appear market competitive and getting a good price for it. If your sales are on the decline, buyers will not show interest. Also keep in mind that if just one or two customers make up a large portion of your profits, they’ll also be less inclined to buy. If you have inventory that is bloating your business, it’s a good idea to get rid of them. Do everything you can to boost your sales through small adjustments and sprucing up your business to make it more attractive to buyers. Another key thing to keep in mind is sticking to your core competencies rather than seeking new ventures. If something has been working for you for years, stick to it. Don’t seek new business opportunities that are high risk if you’re in a position to sell.
5. Take Steps to Remove Yourself from the Day to Day Business
For small business owners, this might be hard to do, but it is an important part of the selling process. Give your customers a heads up about the changes that are about to take place, and offer them the assurance that they are in good and reliable hands with the new business taking over. With that said, do not abandon your current operations. Before removing yourself from the day to day of the business, make sure you have staff who are reliable to maintain the operations so that you do not neglect your business. Until the business is completely sold, make sure it is still operating as usual. With that said, communicate with your customers about the changes that are about to take place to maintain their loyalty with you. Part of removing yourself from the day to day also helps your business seem like a real business. If a small business has just owner there day in and day out without a reliable staff or team, it isn’t a good look. Hire a trustworthy and reliable staff that can handle management on their own.
6. Learn Your Options for Selling
You have many options for selling your small business. You can hire a business broker who will perform the business valuation and prepare a prospectus to entice sellers. Business brokers charge a five to ten percent commission but it is well worth the spend to save yourself the hassle of preparing these documents. Business brokers also have many networks and the basics on how to broker deals to get you the best sale. You can also sell directly to a private investor. As long as you have your documentation, books, and business contracts, you should be able to handle this. It is wise to hire a business attorney to help you through this process. You can also start selling your business online, but make sure all the documentation and identifications are validated. Business also requires trust. While you have options to sell online, it is always wise to have a person-to-person interaction in the process.