Entrepreneurial success is born of hard work, business savvy, and a little bit of good luck, on your side. While staying in the black is a tall order in competitive commercial markets, dedicated business owners consistently rise to the challenge, taking home profits, year after year. When good fortune shines on your commercial venture, your options grow. Is it time to expand? Can you streamline operations, in order to make more money? Will diversification make your business stronger and less susceptible to negative market forces? Or is it time to sell your small business, cashing in your hard earned status as a profitable entrepreneur?
In the same way you must cover all the bases, keeping your business afloat, there are also a number of important things to consider, when the time comes to sell it. If you plan to part ways with your small business in 2019, attending to critical details gives you the best chance for success, closing a deal you can take to the bank. Inc. recently shared the following tips for getting the best possible price for your business and executing a trouble free sale.
Strike When Conditions are Strong
Transitioning to a new calendar year provides an opportunity to assess performance and articulate an annual business plan. For some small business owners, 2019’s planning includes preparations for the sale of a commercial enterprise.
If you’re positioned among entrepreneurs considering a sale, data suggests you’re approaching the possibility at a good time. Robust business sale prices have created favorable conditions, leading 60-percent of small business owners to conclude they’d land a satisfactory price for their ventures, if sold at the present time.
A well-conceived plan is essential for striking the best possible deal and orchestrating a smooth, straightforward, transition. Inc. consulted several small business experts, soliciting informed advice for small business owners considering a sale in 2019. They concluded 2019 may be a good time to follow through with a sale.
Markets appear poised for favorable outcomes in 2019, but conditions continually change, so the positive outlook may not continue beyond the present year. 2020 is a presidential election year, which have historically been characterized by declining US sales. Paired with the prevailing sense that the GDP will slow, leading up to next year, the election year sales lag may be enough to thwart a positive selling environment for entrepreneurs seeking to shed small business ownership. As a result, some small business experts suggest moving ahead with plans to sell during 2019, rather than waiting until next year to consummate a deal.
In addition to general market forces and the pending election year, another interesting trend is at work, shaping conditions for business sellers. Retiring business owners from the baby boom generation are increasingly bringing businesses to market, which may place negative pressure on sale prices in coming years. According to one analyst enlisted by Inc., reports still indicate rising small business sale prices. But with baby boomers expected to sell or transfer $10 trillion in assets in upcoming decades, generational factors could reduce business sale price potential in the years ahead. Taking action under favorable conditions is the best way to cement strong terms for your 2019 business sale.
Invest For Success
As the old sports adage dictates: It isn’t over, until it’s over. The principle applies to your small business sale, reinforcing the importance of staying focused on your professional responsibilities, until you’ve completed the transaction, selling your business. Neglecting your business, after deciding to sell it, can have catastrophic consequences, undermining your effort to secure a buyer.
Rather than turning away from your responsibilities, it’s important to invest in your business, taking a proactive approach, preparing it for market. Start by identifying key sales points, focusing on the feature’s that’ll help you draw interest from prospective buyers. One business advisor supporting Inc.’s recent report suggests the following measures, leading up to a sale:
- Upgrade Equipment – Capital investment may seem counterintuitive with a sale approaching, but upgrading equipment sends a strong message to potential buyers. New fixtures and equipment add value to your business, when you need it most, as well as illustrating your commitment to keeping your enterprise on the cutting edge.
- Increase Marketing Efforts – Visibility helps sell businesses. Not only does a strong marketing push provide reference points for potential buyers, but it may also help boost sales in time for them to see evidence of growth.
- Shed Excess and Obsolete Inventory – Bringing a neglected business to market doesn’t put your best foot forward, potentially delaying a sale. Obsolete inventory raises questions among buyers, detracting from your commercial presentation and giving the appearance your business has been “let go.”
Ready Your Financials
When it comes down to it, buying a business is largely about the numbers. In a competitive marketplace for business sales, wise investors dig deeply, exploring debt, revenue, and profitability. Coming to market with your financials in disarray risks being passed over, whereas presenting clean, consistent financial reports, builds confidence among buyers, making it as easy as possible for them to commit to purchase.
According to Inc.’s panel of business experts, favorable conditions currently exist for entrepreneurs with businesses to sell. With an election year approaching in 2020, and general uncertainty surrounding most commercial matters, 2019 could be owner/operators’ best window for producing equitable business sales. If your venture is definitely coming to market this year or the possibility is on your radar, presenting strong financials, investing in your business, and striking when the market is strong, are three ways to draw interest from buyers and sell your enterprise, without delay.