Owning and operating a small business is a rewarding and exhausting experience. The pride of ownership comes with a heavy responsibility. Organizing staff, improving operations, and complying with all industry regulations require knowledge, diligence, and a lot of hard work. When it comes time to sell, there are many factors to consider. Experts in business law, contract law, organizational development, and accounting are available to work out the details and will ensure the process is handled in a professional and successful manner. Here are some simplified steps involved in the process of selling a business.
Communicate Decision
Once the decision has been made to sell an active business, communication with the people involved in the process is the first priority. Let the workforce know what to expect before, during, and after the transfer of assets. Will they still be employed? What changes to their contracts or working conditions can they expect? Keep employees abreast of major changes, offer town hall meetings to answer questions, and remain as transparent as possible throughout the process.
Use the same communication structure with vendors, stakeholders, and business partners. Every stakeholder, especially a loyal customer base, shares a piece of history with an established business. Honoring that relationship through clear and timely communication ensures that the reputation of the business remains intact. Without a viable communication plan, future sales and important business relationships could suffer.
Obtain Valuation
A business valuation report provides valuable insight into the current state and potential value of an active business. A comprehensive business valuation ensures that untapped potential and latent assets are not missed and provides information that can be used during the negotiation process. Strategic planning initiatives will utilize the valuation report to expand the business or leverage assets for capital funding when needed.
A thorough business valuation report helps both the seller and the buyer fully understand the state of the business. The document can be used for a variety of other purposes as well, such as public or private stock options, insurance coverage, and reputation management. Selling a business without obtaining an inclusive valuation report could be a costly mistake for either party.
Protect Interests
Perhaps the most important thing to understand about selling a business is that it cannot be done alone. Retaining professional support is absolutely vital to a successful transfer of an active business. Regardless of the size of the organization, an entrepreneur or the senior leadership team must procure the services of qualified professionals who have appropriate experience.
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Expert legal and financial support should be retained very early in the process of selling a business. It is especially helpful, but not necessarily required, for these individuals or companies to have specific industry experience. A complete understanding of the business operations will ensure that even minor details are not overlooked or undervalued. Business consultants can help with important tasks such as developing the communication plan, working with current and future employees, and establishing a successful exit strategy for business owners. Consultants can also provide security in trusted vendor and client relationships that must remain in place under the new ownership.
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