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There are many reasons why entrepreneurs may want to sell their business, from retirement intentions to illness. The following is a list of such common reasons.
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The most common reason owners sell their business. They plan to use the money for their retirement so they can relax and spend the rest without running the stress of running a business.
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Some people may decide to sell their business because of poor sales and repeat customers. It does not matter how hard you try if you do not get results. You will end up wasting your precious time.
Others went to see it. You will be amazed at the number of people who are willing to buy a business that is not performing well with the hope of turning it into a big brand in the future.
After all, the hardware is already done. Now they just need to keep it and make minor improvements.
Most small businesses depend on the well-being and existence of the owner. So when the owner falls ill, there is no business manager.
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And in the case of surgery, the owner can take the proceeds from the sale to pay for treatment. Some sell their business for this reason.
You may lose interest in the business or need finance to start a new business in another market or industry.
Selling your business would be the best solution here as it is probably the biggest asset you have. Also, it is not fun to do a business that you do not like.
If you want to relocate your business, it is better to sell it and invest the proceeds to buy a similar business.
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Why? Because relocation often requires you to fire an entire employee, hire new staff, sell existing assets, buy new assets, change suppliers, and so on. That’s too much work for a small business.
You can not just put random numbers on the table. Doing so will cost less or more than your business.
Hire a professional business appraiser to get a realistic estimate of your business value. They will take into account everything from unsecured loans to assets and liabilities while estimating.
Small businesses typically value three to six times their annual revenue, and things like industry trends and market growth can also affect valuations.
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Prospective buyers will work diligently on the financial side of the business on all of its assets and liabilities. Therefore, you need to make your business financial statements and tax statements as clear as possible.
Clearing the business finances will help you avoid the red flags that buyers face when performing diligence. Some buyers will request a three-year statement and may request year-to-year results.
The mistake that can easily get your claim denied is to fail miserably. No one wants to buy such a business. And again, these would mean that you have to spend for these processes.
Therefore, it is better to focus on more sales to make your business more attractive to potential buyers.
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Another red flag is when more than 20% of your revenue comes from a single customer. So work on diverting traffic sources and increasing your customer base.
You can also repaint the interior and buy some new furniture to attract both customers and potential buyers. For example, if you are a restaurant, you might consider updating the menu with a trendy menu.
If you are not lucky enough to find a buyer, consider going to a business broker. Such individuals will have access to a network of potential buyers for businesses in any industry and will evaluate the business as well. This eliminates the need for hard-working business appraisers.
Business brokers will even list sales in popular markets because their goal is to get your sales in front of them as much as possible. The only downside is the 5 to 10 percent commission on the sale price.
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Do not take this deal too far without identifying the buyer first. It’s easy to get excited when a great offer comes in, but first check that the buyer has enough money for the purchase.
Most of them cannot rely on and may need a bank loan, usually backed by the US SBA or the Small Business Association.
The bank may require you to submit a portion of the fund to show that you are interested in selling your business to a relevant buyer. I would get out of debt if I could.
There is more to be done legally. Both you and the buyer must sign an asset purchase agreement and a legal sale agreement. The deal will also include the sale of intellectual property.
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In case you are wondering what a property purchase agreement is, it is a document that includes non-competitive agreements, asset lists, employee agreements, and so on. You can get a base for under $ 1,500
Buyers are likely to call everyone who looks appropriate, if there are only a few.
You need to make some mistakes, no matter how big or small, especially if it is your first business sale. The following tips will help you clear things up.
This is the most common mistake on the list. Entrepreneurs who receive generous offers turn away from the idea that they can sell their business to make more money in the future.
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If your business is growing, both in terms of sales and popularity over the next few years, that would be great. However, this is not always the case. What if your business goes down instead? So how can you claim a higher offer? And what about all these years of hard work?
Then you start to regret the great offer you turned down months or years ago. So do not wait too long to sell your business.
No one starts a business with the intention of selling in the future, I understand, however, there is nothing wrong with planning the final stages of your business.
Do not forget to keep your finances clean and diversify your traffic and revenue sources as soon as possible that way you do not have to do much when you decide to sell your business.
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Another great way to increase your demand for offers and win the trust of potential buyers is to write a series of plans in the business plan.
You will be willing to sell your business to someone else at the right time. This way, the buyer will know that you are really planning and not selling the business in despair.
Do not pick the first business broker you see in the yellow pages. Take the time to interview several brokers and determine which one can give you the best results in the shortest amount of time.
Choosing the wrong broker or consultant will waste both your time and money because you will not get a one-month lead. Choose a broker who has a lot of experience selling similar businesses and who can get a realistic price tag that appeals to both you and potential buyers.
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Most importantly, check whether the brokerage fees are realistic and fair. It should not exceed 10 percent of the sale price.
Do not rely solely on brokers, especially when it comes to marketing and sales promotion. You should do it yourself. After all, who motivates and loves your business more than you do?
Examine whether your customer base and employees are willing to take on the business. At least they are not complete strangers to your business.
You can also print traditional and digital ads related to sales and list your business in online marketing.
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Estimating the value of any business often leads to its collapse. No one wants to buy a business that makes little or no money at a high price. Always be realistic about the numbers you bring to the table.
Say don’t drop the price too much. Why would you want to lose money voluntarily?
If the price tag is too good to be true, potential buyers will be skeptical and may decide not to go through the sale. They will think that you are hiding something from them or that the business is in a desperate phase where you are willing to sell it at a low price.
Consider everything from assets and liabilities to industry trends and market growth when deciding on a price tag. If you can not do it yourself, rent one.