Starting up your own business can be much easier than what comes later. Business owners from around the country report that it’s harder for them to develop a comprehensive exit strategy and engage multiple bidders than get their business off the ground in the first place.
Choosing the Right Help
Knowing that there are brokers that can walk you through the process of receiving a realistic starting price for your business is the first place to start. The professionals at Sunbelt Atlanta have over a generation of experience helping business owners in the Atlanta area, and from around the US, understand their own financials and connect with interested bidders.
Below are a list of ways in which some first-time business owners often make mistakes when trying to sell off their business. By scheduling a risk-free appointment with Sunbelt Atlanta you can avoid some of the following mistakes, yet this list can be just as eye-opening for entrepreneurs just starting out as well as established business owners interested in finding out what their business is worth and creating sell-off opportunities.
Establish a Realistic Price
Many business owners fail to correctly appraise the worth of their business, which creates all sorts of problems later. Overvaluing your business can scare many potential bidders away while undervaluing your business can make it seem like you didn’t get your money’s worth post-sale.
The trick is to understand your business’ value in the current economic context while taking into account a few associated costs. You’ll want to reconcile the cumulative tax consequences of selling off your business with the costs of advertising your business, finding bidders and working through a sales agreement.
It’s always a good idea to see how much similar businesses in your area have recently sold for as this will inform you of a starting price. Remember that a starting price that is slightly high and one that is slightly too generous can hurt the sale of your business.
A broker can walk you through an index for finding your business’ value based on your earnings throughout the last few years. The point is, you shouldn’t sell your business based on a price that you feel your business would be worth. Consult experienced brokers and find out about indexing before putting your business up for sale.
Consider Taxes and Secondary Offerings
First, hiring a certified public accountant can help you to retain the most revenue post-taxes, from selling your business. How your business has been structured over the years as well as whether you decide to engage in an asset or entity sale will also determine your sales price and attendant tax liability.
Although some businesses prefer to sell equity or a share of their business to bidders via secondary offerings, many buyers prefer to sell their assets and liabilities via an asset sale.
Fortunately, owners of sole proprietorships, most partnerships and LLCs only have to worry about asset sales since these types of businesses don’t typically offer stocks to the public.
Crafting an Exit Strategy and Seeking Buyers
Thousands of asset sales have gone amok due to a lack of foresight and the unwillingness by business owners to create a viable exit strategy.
Sometimes short-term gains are so good that business owners fail to see long-term economic consequences.
Thinking through an exit strategy? Consider partnering up with the professionals at Sunbelt Atlanta to get the fairest price for your business.