What do you want to gain from selling your business?
It might well be completely obvious what you want to achieve from selling your business. But, then again, it might not be.
If you’re a serial entrepreneur and have bought and sold businesses in the past, you may simply be looking to achieve the best price possible to fund your next venture.
However, in most cases, the reasons for a sale and what people want to achieve are going to be much less clear.
If you raised your business from the ground up, your emotional connection to the business will also play a part. Your values and vision for the business may well be more important than making a profit.
You don’t get a second chance to sell your business, so you need to have a clear overview of what you want before charging into a sale.
In this series, we will cover everything you need to know about selling your business.
Why is a lack of clarity a problem?
As a business owner, you will be used to making a lot of decisions daily. But selling your business is one of the biggest decisions you will make.
Actually, selling your business isn’t a single decision – it’s made up of many smaller decisions that will eventually be encoded in the agreement to sell the business. These smaller decisions include things like:
- What do you want to sell? The entire business as a going concern? Certain assets or a division? Shares?
- Who do you want to sell to?
- How much do you want for your business?
- Do you want consideration in cash or shares or some combination?
- Do you want to see the business continue as a distinct entity or are you content for it to merge into another?
- Do you want to stay with the business? If so, for how long? What do you want your role to be?
Answering these questions, and more, coherently is almost impossible without understanding exactly what you want to achieve. And, without answering these questions, it will be very difficult to plan and prepare for a sale.
So, how can you get clarity?
It’s all too easy when running a business to feel like you can’t afford to set aside time to reflect on what you want to achieve. The reality is that you can’t afford not to.
Clarifying what you want to achieve demands serious soul-searching and being brutally honest with yourself. It is you that has put in the time, effort and money needed to grow your business, so don’t let yourself be guided by other people’s expectations or what you think you ought to do if it’s not what you actually want.
Some useful questions to ask yourself include:
- What stage of your career are you at?
- Are you reinvesting the money from the sale?
- How much money have you poured into the business?
- Do you want the values you instilled in your business to continue?
- Do you want your business to be a family legacy?
The answers to these questions will narrow down your sale options considerably.
For instance, if you want your business to uphold your values you may need to retain an element of control over your business, such as through shares.
Alternatively, building a family legacy will cut down your options of whom you wish to sell your business to.
From these considerations, make a list of your criteria for the sale of your business, including your must-haves and the things you would like to have in order of their importance.
Whilst your circumstances, and subsequently your priorities, may change depending on when you plan this exit, you should have a solid base to inform your decisions.
In our next blog, we will cover the process of valuing your business.
For advice on selling your business, contact our team today.