Selling Tutorial

Is it time to sell? Selling your business is a major decision!

Congratulations! You’ve made the decision to sell your business – a significant step towards a new chapter. Whether you’re pursuing retirement, seeking fresh challenges, or ready to hand the reins to someone else, Axon & Associates is here to guide you through the process every step of the way.

You have devoted your time, money, and energy into building, running, and operating your business. It may well represent your life’s work.
If you have already decided that now is the right time to sell, you want the very best professional guidance you can get.
This is when working in tandem with a professional business broker can make the difference between just getting rid of the business and selling it for the very best price and terms!
Following are some of the most common topics and questions frequently brought up by sellers.
If you have any questions that we have not covered, please don’t hesitate to contact us.

Congratulations on taking the first step

For Business Sellers

We have designed this section to address commonly asked questions about the process. Feel free to reach out to us with any additional questions you might have.
Understanding Your Worth:

Naturally, a crucial question on your mind is, “What is my business worth?” While we can’t provide an exact answer without assessing your specific details, know this: Axon & Associates goes beyond simple valuations. We delve into your business’s unique strengths, growth potential, and market trends to arrive at a realistic and achievable selling price. Remember, the true value lies not just in financial figures but also in your company’s story and future possibilities.

Is Selling Right for You?

Before diving headfirst, take a moment for introspection. Ask yourself:

  • Are you truly ready to let go? Selling your business is a life-altering decision. Ensure you’re prepared for the emotional and personal shifts that come with it.
  • What are your motivations? Is it financial gain, a desire for change, or something else? Clarity on your “why” will fuel your journey and help you make informed decisions.
  • Have you explored all your options? Sometimes, restructuring or finding a strategic partner can be viable alternatives to a complete sale.

Insider Tip

It doesn’t make any difference what you think your business is worth, or what you want for it. It also doesn’t make any difference what your accountant, banker, attorney, or best friend thinks your business is worth.
Ultimately, only the marketplace will determine the true value of your business.

Preparation is Key:

The First Steps

Selling your business isn’t a quick fix. Preparation is critical for a smooth and successful transaction. Here are some key steps to take:
Okay, let’s assume that you have decided to at least take the first few steps to actually selling your business. Before you even think about placing your business for sale, there are some things you should do first.
Here’s a checklist of the items you should get together:
  • Gather your financial documents: Get your tax returns, profit and loss statements, and other financial records up-to-date and organized.
  • Assess your business: Take a critical look at your operations, strengths, weaknesses, and market position. Identify any areas requiring improvement before presenting to potential buyers.
  • Understand your buyers: Research different buyer profiles and their motivations. This knowledge will help you tailor your approach and attract the right fit.

If you’re halfway through the current year, make sure you have last year’s figures and tax returns, and also year-to-date figures. Make sure all of your financial statements presentable. It will pay in the long run to get outside professional help, if necessary, to ensure these documents are thorough and accurate.

You want to present the business well “on paper” and give prospective buyers insight into your cash flow. This includes the profit of the business, as well as the owner’s salary and benefits, the depreciation, and other non-cash items. Not everything is dependent on your bottom line.

Notes If you’re like many small business owners, you’ll have to search for some of these items. After you gather all of the above items, you should spend some time updating the information and filling in the blanks. Have all of the above put in a neat, orderly format as if you were going to present it to a prospective purchaser. Everything starts with this information.

Insider Tips The big question is not really how much your business will sell for, but how much of it can you keep? The Federal Tax Laws determine how much money you will actually be able to put in the bank. How your business is legally formed can be important in determining your tax status when selling your business.

For example: Is your business a corporation, partnership or proprietorship? If you are incorporated, is the business a C corporation or a sub-chapter S corporation? There are also tax rules that impact certain businesses on seller financing. The point of all of this is that before you consider price or even selling your business, it is important that you discuss the tax implications of a sale of your business with a tax advisor. You don’t want to be in the middle of a transaction with a solid buyer and discover that the tax implications of the sale are going to net you much less than you had figured.

Who Will Buy Your Business?

Understanding your potential buyers is crucial. Here’s a breakdown of common buyer types:

  • Individual Buyers: Often driven by career aspirations, seeking ownership and control. They may have industry experience or be looking for a fresh start.
  • Corporate Buyers: Aiming for strategic expansion, market access, or product/service acquisition. They bring resources and different growth goals to the table.

Building a Buyer Profile:

While each buyer is unique, here’s a general profile of an ideal candidate for your business:

  • Motivated and decisive: Ready to move quickly and committed to the purchase.
  • Financially qualified: Has the resources to secure funding and complete the transaction.
  • Strategic fit: Shares your vision for the business’s future and aligns with its values.
  • Cultural fit: Compatible with your company culture and team dynamics.

Preparing Your Business for Sale:

Beyond financials, presentation matters. Here’s how to make your business shine:

Spruce up the interior and exterior: 

Create a clean, professional environment that reflects your brand and instills confidence in buyers.

Organize your operations: 

Streamline processes, document procedures, and ensure seamless transitions for potential owners.

Highlight your value proposition: 

Clearly communicate what makes your business unique and attractive to buyers.

Insider Tip: Eliminating surprises is key.

Address any potential issues upfront, and be transparent about your business’s strengths and weaknesses. Building trust fosters a smoother negotiation process.

Not all buyers are created equal. Avoid those solely driven by short-term gains or unrealistic expectations. Axon & Associates can help you identify and attract qualified buyers who value your business and its potential.

Next Steps:

Selling your business requires careful planning and expert guidance. Axon & Associates offers a comprehensive range of services to navigate every step:

  • Business valuation: We determine the fair market value of your business, considering various factors and industry benchmarks.
  • Marketing and buyer outreach: We leverage our extensive network and marketing strategies to connect you with the right buyers.
  • Negotiation and deal structuring: Our experienced team negotiates on your behalf to secure the best possible terms and price.
  • Closing and transition support: We guide you through the legal and financial aspects of closing the deal and ensure a smooth handover.

Ready to start the selling process? Contact Axon & Associates today for a free consultation. We’ll answer your questions, address your concerns, and provide a personalized roadmap to achieving your selling goals.

What Can You Do to Prepare?

There are various activities you can begin to prepare for selling your business. For example, creating an operations manual will help the new owner understand the inner workings of the business. Creating such a manual will be time well-spent.
The time to replace that old worn-out piece of equipment is before you decide to sell. Don’t assume that a new owner will want to do it or that the price will just be slightly lower because you haven’t replaced it. The time to “spiff up” the business is now, even if you aren’t selling. Fix the sign, replace the carpet, paint the place – make it look good. Even if you’re not selling, it’s just plain good for business, and you never know when the time to sell will occur. Keep in mind that anything that increases sales also increases profits and the all-important cash flow!
There are other things that add value to your business. Don’t discount the value of customer lists, proprietary products and/or techniques, well-maintained equipment, secret recipes, customized software programs, or good employees. These are termed “off-balance sheet items,” and although not used in most pricing models, they add to value. Look at your business very carefully so you don’t overlook those items that make your business more attractive to the buyer.
Long before you put your business on the market, eliminate the surprises! Review every facet of the business and remedy any problems that could appear during the sale process. No one likes surprises – most of all potential buyers. Whether legal, accounting, environmental, or anything else – solve it now.

Insider Tip

This may sound like something that should have been done when the business first started, so it may be “after-the-fact”.
You should create an operations manual. You may already have one, or started one years ago, or simply, have thought of doing one. Now is the time! It may actually create added value to the business. Even if it doesn’t, it will impress buyers that you have your business “act” together and should help you sell more quickly and effectively. The truth is that preparing a manual on how to operate your business can also be helpful even if you are not ready to sell. It doesn’t have to be elaborate, just cover the basics.
A collection of ads that you have placed in a catalog or sample of products, publications, or menus (if the business is food related) is also impressive. Include anything to do with the business that might be helpful for a new owner. However, don’t include anything that is proprietary, such as customer lists, suppliers or secret recipes, etc.

Those buyers are not realistic buyers for small businesses

Buyers who want to go into business strictly

It might also be helpful if you took a good look at your business from the perspective of a buyer. Try to put yourself in a prospective buyer’s shoes and imagine what he or she would find attractive in a purchase.
Below you will find a few recommendations that will help in our marketing efforts when you decide you are ready to sell:
  • Tidy-up outside premises.
  • Repair non-operating equipment or remove it if you are not using it.
  • Remove items that are not included in the sale and unnecessary items, especially if inoperative.
  • Maintain inventory at a constant level. If you let your inventory slide, your business will look neglected. If anything, increase it so your business will look busy.
  • Repair signs, replace outside lights, etc. You don’t want your business to look as if it has been neglected.
  • Keep normal operating hours. There may be a tendency to “let down” when you put your business up for sale. However, it’s important that prospective buyers see your business at its best.
  • Spruce-up the inside of the business. etc.

What would you do to make it more attractive or more saleable?

Obviously, the financial records of your business are critical to the sale of your business, but how it looks is also important. First impressions really count! If a potential buyer doesn’t like the appearance of your business, the rest of it may never get a chance. If you have any questions, please don’t hesitate to call us. We look forward to hearing from you!

Do you have other questions?

Be sure to visit Seller FAQ for answers to the following questions

  • How long does it take to sell my business?
  • What can business brokers do – and, what can’t they do?
  • What can I do to help sell my business?
  • What happens when there is a buyer for my business?
  • Why is seller financing so important to the sale of my business?
Visit Seller FAQ Section

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