Selling a business is a common exit strategy for entrepreneurs who are ready to move on or looking for a new challenge.
But selling a startup is likely to be one of the biggest financial and emotional decisions an entrepreneur will make. After all, it likely took years of blood, sweat and tears, early mornings and long nights to create a successful operation.
In other words: It’s not something to be done without some serious thought and examining the best path forward.
Before you proceed with selling your business, ask yourself the following five questions:
Why do I want to sell my business?
You may aspire to an early retirement, see your business become an integral component at a larger organization or perhaps you want to free up time to focus on your next big idea. Regardless your reason, it’s important to ask yourself why you want to sell your business.
Understanding your intention will help keep you grounded and determine how you navigate the sale process. Your why serves as a guidepost to return to when things get stressful or challenging.
There’s no right or wrong answer to sell a business — but there’s a right answer for you.
Who can help me sell my business?
Depending on your timeline, goals and wherewithal, you may be able to sell your business on your own. But it’d be much better to seek the advice and counsel of professionals who can help guide the process.
From performing due diligence to determining valuations and countless other tasks, selling a business is a complex process that is best served by assembling a team of experts to ensure it’s a success.
Rather than going it alone, seek out a team of seasoned business sale experts, including attorneys, investment bankers, accountants and other professionals to help plot the path. Having this team of knowledgeable experts can not only make the process seamless, but alleviate stress and help smooth out bumps in the road.
Is my business ready to sell?
Is your business in the best shape to sell? Could its new owner come in, review processes, records and documents and discern the state of the business? Does its current state on paper position it in the best light possible?
If not, it’s time to take a deep dive and work to get your company records in shape.
Doing so will help you avoid unnecessary headaches during the sale process. Missing or poorly organized records can cause delays, lead to a lower-than-anticipated sale price or throw off the whole process entirely.
How reliant is the business on me?
As founder or owner, how involved are you with day-to-day operations? Does the business run smoothly without you? Or do things fall apart when you’re not there?
The answer to these questions will help determine whether your business is ready to sell.
If you are heavily involved and don’t want to stick around after a sale, you’ll want to hire or train people to run the organization without you.
Potential buyers will want to know that the organization will continue to be successful even after you depart.
What do I want to do after the sale?
Much like asking yourself why you want to sell, determining what you want to do after you sell is an equally important question to ask before selling your business.
Putting your business under a microscope during the sale process can be gut-wrenching and intimidating for many entrepreneurs, even leading them to realize they aren’t ready to let go just yet.
But if you want to sell your business, letting go is critical. Keeping your focus on the endgame – on what the sale will allow you to do – will help you to push through the challenging and potentially frustrating moments that arise during the process.
You’ve spent countless amounts of time, energy and resources building your business. If you are now ready to sell, you want to do it the right way. It’s something that both you and your business deserve.
After all, you only have one opportunity to get it right.
Taking a measured approach that begins with asking yourself these five key questions, seeking clarity on your goals and honestly assessing the state of your business will prepare you for what comes next.
Elizabeth Hale, CPA, is CEO and founder of eeCPA, a Scottsdale tax, accounting and business consulting firm.
