Question: How To Sell A Business

What paperwork do I need to sell a business?

Compile the following documents in preparation for your business sale:Profit & loss statements for the current and past 2-3 years.Current balance sheet.Cash flow statement.Business tax returns for the past 2-3 years.Copy of the current lease.Insurance policies.Non-disclosure/confidentiality agreement.More items….

Can you sell a business that is losing money?

Did you know it’s still possible to sell a business that is losing money? Obviously, it’s not a traditional transaction, but if you’re willing to be creative, you can relieve yourself of this burden and still sell a business that is losing money!

Why is my business not making a profit?

This is probably the most common reason why your business may not be making enough money. … If your business isn’t making enough money, start by assessing your prices to determine if you’re charging enough. Also, find a way to add more value to your products and services to justify the price increase.

How do I prepare to sell my small business?

How to Sell a Small Business in 7 StepsDetermine the value of your company. … Clean up your small business financials. … Prepare your exit strategy in advance. … Boost your sales. … Find a business broker. … Pre-qualify your buyers. … Get business contracts in order.

What are the steps in selling a business?

10 Steps to Selling Your Company from Start to FinishStep 1: Define the Owner’s Goals and Potential Exit Strategies. … Step 2: Determine a Range of Value. … Step 3: Enhancing Value Prior to the Sale. … Step 4: Gather Financial Information; Present Financials. … Step 5: Compile Due Diligence Information. … Step 6: Target Buyers. … Step 7: Qualify Potential Buyers. … Step 8: Negotiate the Deal.More items…•

How many times sales is a business worth?

Often, businesses are valued at a multiple of their revenue. The multiple depends on the industry. For instance, a business might typically sell for “two times sales” or “one times sales.” If you have a good stockbroker, he or she may be able to help you research typical sales multiples for your industry.

How can I sell my business fast?

Here are the necessary steps needed to make sure that a business gets sold fast:Create a business summary.Scout for possible buyers.Choose an offer.Seal the deal.Liquidate assets as a last resort.

How do I advertise my small business for sale?

How to Advertise Your Business for SaleGive More Information on Your Business. … Optimize It for the Likely Buyer. … Think Outside the Box. … Business for Sale Classifieds. … Feature Your Ad – And Never Give Up. … Hire a Business Broker. … Networking is a Game You Should Play – Both Online and Offline.More items…•

What is the rule of thumb for valuing a business?

The most commonly used rule of thumb is simply a percentage of the annual sales, or better yet, the last 12 months of sales/revenues. … Another rule of thumb used in the Guide is a multiple of earnings. In small businesses, the multiple is used against what is termed Seller’s Discretionary Earnings (SDE).

Can a business survive without profit?

No business can survive for a significant amount of time without making a profit, though measuring a company’s profitability, both current and future, is critical in evaluating the company. Although a company can use financing to sustain itself financially for a time, it is ultimately a liability, not an asset.

How do I approach a business for my business?

7 Vital Steps to Position Your Company for AcquisitionStart preparing years before you want to sell. … Before you shop your company around, clean up your act. … Reflect on the past two years. … Focus your company so that someone will want to buy it. … Determine what you’re really selling. … Look for strategic fit in a buyer.More items…•

How do you avoid capital gains when selling a business?

For business sales, the use of an Installment Sale Agreement can help to significantly reduce the tax you pay. For this reason, it’s becoming an increasingly popular option. An Installment Sale Agreement is a method through which investors can defer a certain amount of capital gain to future tax years.

How do I calculate what my business is worth?

To find the value of your business, subtract liabilities from the assets. For example, if you have $100,000 in assets and $30,000 in liabilities, the value of your business is $70,000 ($100,000 – $30,000 = $70,000). With the asset-based method, you can find the book value of your business.

What do you do with your money when you sell a business?

Minimize Your Taxes on the SaleStructure the Transaction Beneficially. … Seek Capital Gains Treatment. … Take a Loss on Other Investments. … Consider Tax-Free Investments. … Remember Charitable Donations. … Consider Gifts. … Max Out Your IRA or Other Retirement Plan Contributions. … Prepay Your State and/or Local Taxes.More items…

What is a business worth to sell?

There is plenty of room for judgment, but by and large, a profitable, reasonably healthy, small business will sell in the 2.0 to 6.0 times EBIT range, with most of those in the 2.5 to 4.5 range. So, if annual cash flow is $200,000, the selling price will likely be between $500,000 and $900,000.