Whether you are trying to keep your struggling business afloat or your California company is experiencing more success than you can handle, the idea of selling may not be the first option that comes to mind. Many entrepreneurs start their businesses with the dream of creating a legacy to hand on to the next generation. However, there may come a time when selling will provide better opportunities for a legacy than holding on to the business will.
This is why many founders of successful businesses advise new entrepreneurs to always have the sale of their company in mind from the earliest days of its establishment. If and when the time comes to sell, a well-prepared business owner may have a better chance of getting a fair or even lucrative deal.
Plan today to sell tomorrow
While selling your business now may not be on your agenda, you may be surprised at how quickly that day may come. Taking steps well in advance may improve your leverage when the time is right. Some important ways to remain ready include the following:
- Maintaining accurate and precise financial books from the first moment your business opens will allow potential buyers to get a fast and complete picture of your profits and losses.
- Carefully screen employees before hiring since the value of your business will likely include your team as an asset or liability.
- Training and cross-training your employees so that the company operates smoothly in your absence can make your company attractive to potential buyers who want a seamless transition to new ownership.
- Know what your company is worth, and be ready to set your emotions aside and negotiate for a sale price that you deserve.
- Acknowledge that it may be difficult to let go of your business, so it may be important to remind yourself of your goals and plan for your next venture.
Remaining alert to your revenue and profits over time will help you know when the time is right to sell. For example, if you are seeing consistent profits and cash flow month after month, this often indicates your business is successful enough to sell for a profit. You may even find that other larger companies are watching your success, and they may approach you with an offer to buy your business.
If this all seems intimidating to you, that’s understandable. The game of buying and selling companies is a complex one. Fortunately, there are savvy professionals who have experience navigating the legal waters of buying and selling businesses, including providing general counsel from the beginning of your venture.