If you’re thinking about selling a business in California, you’ll need to do some planning first. To start, you’ll need a clear understanding of your business’ competitive position. It may take effort to establish an appropriate price, and to investigate a buyer’s suitability before sitting down to negotiate.
Selling your business may not be as easy as you’d think, and you’ll need to really dive deep into the accounting books, update old operating systems, and organize messy storage if you want to really command a high asking price.
As you plan on selling a business in California, here are some things to consider:
1. Establish the Value of Your Business
It’s wise to hire a third-party to calculate a realistic estimate of what the current business value is. Hiring a qualified professional to review the business will give you a better understanding of how much you should ask for. Often emotions or value placed on an expected future prevent a business owner from seeing the current monetary value of their own business clearly. Getting an outside perspective will help you understand the strengths and weaknesses of your business in a new way.
2. Clean Up Finances
Prospective buyers want transparency and will invariably look into a business’ financials when buying. Avoid any red flags by having an accountant organize the books for at least the last three years to make sure all income and expenses are accounted for. The accounting doesn’t just need to be accurate, it also needs to be easy for new eyes to understand.
3. Increase Sales
Buyers want to buy a business that’s successful! So take action to boost your sales as much as possible. Do what you can to increase your revenue and reduce inventory to make the business look optimally desirable to potential buyers.
4. Have a Change-Over Plan
Plan how the handing over of the business would go ideally. What time of week or month would be best for the official changing of hands? Why? What guidance will you need to offer new owners so that employee pay and benefits aren’t disrupted, security and alarms aren’t a barrier, and other aspects of the switch go smoothly?
5. Work with Professionals
If you really want top dollar, you’ll want to make sure you have a team of professionals in your corner. Find a business broker to help locate the right buyers. Also, work with a trusted escrow company to ensure all paperwork is correct and you’re protected from fraud when the sale closes. Don’t take risks you don’t have to.
For guidance on your business selling adventure, call Bay Area Escrow at 925-831-9099.