You decided: “I want to sell my business”. But selling a business in a period of economic turbulence is not an easy and thankless task, because fewer and fewer people see the crisis as a time of opportunity. The number of offers to sell businesses during the crisis increases, but there are fewer solvent buyers and investors. But with all the difficulties of selling a business at any time, it is just now it is especially important to maximize the preparation of the business for sale. Let us tell you how to do this.
How to sell a small internet business: what you should know?
- When to sell a small business?
Now we will need to determine the signs that it is time to sell small businesses, as a WebSite Closers advice:
Economic reasons for selling:
- For a long time, the business gives less return than you can get without risking or straining. ( For example, by investing the same funds in currency, gold, etc.);
- Chronically insufficient working capital, as a result, the firm does not work at full capacity and is gradually eating itself up;
Organizational reasons:
- Failure to select a good team, establish a decent management system, payment system, stimulate results, etc;
- Failure to find and close loopholes in the leakage of funds, information, customers, etc.
Production and commercial reasons:
- Failure to effectively promote the product, withstand competition, and update equipment, and product assortment;
- The sales system is vulnerable and weak;
- The firm itself is in decline, losing ground and close to losing the market;
- Significant structural shifts in consumers (e.g., due to the crisis).
Psychological reasons:
- The business owner himself switches to a new business, busy with other problems that distract him from the business;
- In the character of the owner – dislike of routine, pedantic monotonous maintenance of the business.
Of course, it is impossible to list all the possible reasons, but in one way or another, they indicate that the business is experiencing some limitations.
- Where to sell a small business?
Experts advise using paid promotion tools on bulletin boards, otherwise, your offer will quickly get lost among others.
Bulletin boards give great coverage, but there are some disadvantages to using them:
- competitors may find out interesting information about your company, passing themselves off as buyers;
- there is a risk that employees will stumble across the ad and decide to quit;
- suppliers and landlords can also see the ad and tighten the terms.
Targeted advertising on social networks and bloggers will help sell your business faster.
- How do you value a small business to sell?
When you have prepared a business for sale step by step, you need to figure out how much it is really worth. There are several methods for valuing a business. In the case of selling a small business, it makes sense to consider three valuation options:
– cost;
– profitable;
– comparative.
The cost method is suitable if the business is not profitable and the owner wants to return the funds invested. Here, the invested funds and all costs will become the approximate value. Of course, buyers will expect a discount, because they do not have to pay for your mistakes and low efficiency.
The income method of valuation is as follows. You need to calculate the average net profit for the last year and multiply it by the number of months of payback. Up to 12 months of payback is considered normal market value. This approach is ideal for simple businesses without complex assets.
The comparative method speaks for itself: you need to compare your business to similar businesses. If you decide to go this route, you will need to find similar proposals in the market in terms of parameters and put a close price. The disadvantage of this method is that there may not be similar businesses in your city.
Steps to selling a small business
You need:
1. Prepare the business for sale.
Evaluate your business, taking into account its value and established market practices.
3. Gather information about your proposal in an understandable form for the buyer, deal with the selling points and give information about the business itself, this is called – packaging.
4. Launch an advertising campaign and show your offer to potential buyers.
5. Conduct initial telephone conversations to identify only those who are really interested in buying, among brokers and other intermediaries, unpleasant personalities, just interested without money, rival scouts, as well as other lovers of conversation; this is called – qualification.
6. Conduct meetings-shows of your business to properly convey all the meanings and help the buyer make a decision.
7. Go to the stage of processing the deal and understand how to conduct it safely for all parties.
Selling a company is quite a long and time-consuming process. Perhaps, even at the preparation stage, having organized all the business processes and tightened documentation, you will look at the company in a new way and decide not to part with the business you love. So whether you sell the business or not, having organized it, you will definitely become freer at the expense of leaving the operation and happier, because there will be time for other areas of life.