Selling your business - part one

It can take a lot of work to get your business up and running and it is common to spend a huge amount of energy into fine tuning it before reaping the rewards. But eventually, for one reason or another, you may decide it's time to put your business on the market and take advantage of the benefits from years of hard work.

So where do you start? The main thing to outline early is whether you want to proceed with a sale either by yourself or employ the assistance of a professional to help with the process.

Selling your business by yourself

When it comes to selling your business the process involved is never going to be simple. Selling a business can be a very challenging and time consuming practice so if you decide to make the sale yourself you need to be prepared for the challenges that lie ahead.

Below are six reasons that make selling your business a challenging task.

It's not easy to determine the worth of your business

Putting a dollar value to what your business has achieved and where it can go in the future can be difficult for a number of reasons. For example, it may be that you are too emotionally attached and overvalue your business or it could be that hand over value is hard to determine due to emerging industry trends.

It's hard to keep information about the sale to yourself

Your employees and customers deserve to know about the future of the business, but initially when sounding out a price and sorting the finer details, it may be better to keep things confidential. If employees and customers learn about the future of your business prior to you making a sale, you may find yourself losing important people and accounts.

Also, there is the possibility your suppliers will cut back credit terms out of fear of not getting paid.

The due diligence process

The due diligence process refers to the period your business is investigated prior to a contract being signed. This can often be a very time consuming process as you have to provide proof for your income and expenses, but also deal with the complex contract in itself.

Buyers will generally be more prepared to bargain with private sales

When negotiating a price, potential buyers will always use private sales as an opportunity to bargain a better deal. Therefore, you may find that interested parties are willing to pay a lot lower price when making a private purchase than they would be if they were negotiating with a professional

Even after you have made an agreement on a sale price, there is still a lot of work to be done

Unfortunately the process doesn't end with an agreement, after the sale has been agreed there is still a lot of ground work that has to be completed. For example, an asset purchase agreement will be required to provide values of your assetsand this will be the result of another due diligence process.

Selling your business alone is one option that has the potential to save you a lot of money by avoiding commissions. But the most important thing to remember is that the sales process is often long and complex so if you don't have the patience it may be worth calling on the experts to take the stress off your back.

Next week we'll look at how you can use the assistance of a broker to ease the process of selling your business.

Looking to buy rather than sell? Check here for some tips.

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