How to Sell Your Business Harwood Heights IL

Even if you aren’t planning to sell your business today, here are some thoughts on how to prepare for the future. Its worth putting the effort in now, because building a stronger organization early on makes a sale easier and more profitable down the road. Plus, the immediate benefits are self-evident.

Three Sizes of Businesses, Three Sales Strategies: There isn’t a one-size-fits-all strategy to selling your business. It is accurate, however, to look at three differently sized businesses and develop a strategy for each, because there are three distinct differences in asset value. Well look at three business models, and in an odd approach to valuation, well disregard sales and focus on the number of employees.

Here’s the breakdown: The small business, with fewer than five employees; the mid-sized business, with fewer than 20 employees; and the large business, with more than 20 employees. Why are we disregarding sales figures? Because were concerned not with the absolute valuation of your business, but rather a strategy to sell it in the first place. The price that you sell your business for is a matter of your negotiating abilities. But packaging your business for sale is a strategic decision.

Above all, we will assume your business is profitable. If not, do not even think about selling now. Find a way to run it profitably or shut it down.

The Small Business:

Your business is worthless to someone other than you. So don’t bother finding a way to sell it, because you wont find any qualified buyers, and any offer you receive will be insulting. Not to hurt your feelings, but small CI businesses aren’t an attractive buy. Why? Because chances are, you, as owner and chief salesman, have built the business around your skills. If you leave, then your skills leave, and your company’s value decreases.
Instead of trying to sell your business, find a way to ease yourself out of day-to-day operations. That’s right. Start taking long vacations (call them sabbaticals, and your employees wont be as jealous). Increase the responsibilities (and compensation) of your top employees. Cross train everyone in the organization, because without you, they’re all going to have to do more work your work. And slowly over a period of four to five years, you will find yourself not showing up but one week a month, and taking a small, but consistent salary.

Add up your salary over this five-year period, and you will find that you have given yourself a nice raise when computed on an hourly basis and this has been your buyout. Now you are in a position to be magnanimous, and start selling equity in your company to the employees who stepped up in your absence. Depending on your company’s value, and your valuation method, you can sell your equity over another multi-year period in exchange for a monthly stipend. Now that’s planning!

The Mid-Sized Business: Like the small business, you can use the easing out strategy outlined above. But since your operation most likely has a formalize...

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