Before Closing Your Business, Get Some Professional Advice
You have invested years of blood, sweat, and tears building your business. You and your family made many sacrifices to ensure your company was a success. Likely you haven’t developed an exit plan for your business. Then the pandemic happens, and sales drop to a level that appears below the point of no return. You may be thinking, “I have to close permanently and walk away”.
Before you shutter your business and walk away, seek professional advice. It breaks my heart to see businesses that don’t take a moment to at least research the possibility of selling. Just walking away invalidates all those long days and hard work.
Whether your business was bustling or puttering along, it may have value. Client lists, proprietary processes or software, even inventory; all this will have value – and if the company is not significantly profitable, its highest value is likely to a competitor or a turnaround specialist. Whether the business is large or small, selling it is the first option you should consider.
Even if your business is only marginally profitable, get a professional business broker to look into it. A good broker will be able to see the value of your business, even when you cannot. Good brokers know how to market your business and to qualify buyers, allowing you to focus on running your business. But make sure you ask the right questions beforehand.
Here are a few tips to qualifying a business broker:
Check the broker’s background: Look for those with an education and credentialing offered by the International Business Brokers Association (IBBA) or other state broker associations. A broker with IBBA’s CBI (Certified Business Intermediary) designation has met the educational requirements and high ethical standards of the IBBA.
Ask for details on how the broker will promote your sale: The broker should have a strategy for how they will advertise and market your sale and the steps they will take to maintain confidentiality.
Ask how many other listings the broker is currently managing and how many businesses they sold last year: If the broker is representing too few listings or hasn’t represented many in the past, it could be a sign that they aren’t experienced, motivated or capable.
Determine how the broker will screen prospects: A big part of the broker’s job involves separating the tire-kickers from serious buyers. Good brokers have an established screening process and usually meet with potential buyers before allowing them to proceed further down the sale path.
In any case, don’t wait too long to discuss selling your business with a broker. It may take some time to find the right person to represent your business.
When it comes to accepting an offer for your business, you will want someone who can provide sage advice. Taking the first offer may not be a wise choice. Evaluate your options and make the best selection for the long term. Ask yourself, is this the best person to buy and run my business? Or, can they quickly connect with my customer base and learn how to market effectively? When the business sale goes as planned, it creates a tremendous opportunity for both business owners, and success continues.
Don’t make the mistake of letting all of your hard work and long-term investment go down the drain; reap the rewards of a successful business sale. If you have any questions or comments on selling your business vs. closing it or locating business brokers in your area, please contact me. In the meantime, I hope you have a profitable week.