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Selling your business is a significant decision that requires careful planning and execution. Too often, a business owner waits until they are ready to sell their business to start planning their exit. While it can be done on the fly, a lack of planning often leads to an unnecessary decrease in value. If you’re thinking about selling your business in the next few years, here are the essential steps every business owner should consider taking in 2024 to sell for maximum value:

Preparation: Begin preparing three to five years in advance, if possible. This allows you to improve financial records, strengthen the business structure, and optimize the customer base to make the business more attractive to buyers.

1. Business Valuation:  A top reason businesses don’t sell is directly related to the asking price. Too often business owners have an inflated sense of what they think their business is worth versus what it will actually sell for. This disparity creates unrealistic expectations and ultimately delays the sale of the business. Get your business valued a few years before you’re ready to sell to help set expectations and have time to increase the value if needed.
2. Financial Records and Legalities: Ensure all financial records are accurate and up to date. This includes tax returns, profit and loss statements, balance sheets, and cash flow statements. Also, make sure all legal aspects, such as licenses and permits, corporate books, and state filings are in order.
3. Improving Business Appeal: Streamline operations and increase profitability. Cut unnecessary expenses, improve customer satisfaction, and enhance business efficiency. A growing, thriving business is more appealing to buyers.
4. Exit Strategy Planning: Develop a comprehensive exit strategy. This involves deciding on the type of sale desired (e.g., asset sale, stock sale), timing, and terms. It also includes planning for any potential tax implications.
5. Market Analysis: Understand the current market trends and how they might affect the sale of your business. This will help you time your sale effectively and set a competitive price.

Sale Process: When it comes time to sell, these are some of the high level steps you can expect to take. Keep in mind that the average time from hitting the market to closing is about 9 to 11 months.

1. Update Valuation: It’s now time to really narrow in on the value of the business to make sure you hit the market with a competitive price.
2. Hiring Professionals: Consider hiring a business broker, an accountant, and a transaction attorney who all specialize in business sales. The business broker will value the business and serve as the quarterback of the team. Together, these professionals will help navigate the complex process of getting to the closing table.
3. Confidentiality: Maintain confidentiality throughout the process. Sharing your plans to sell can cause uncertainty among employees, customers, and suppliers, potentially impacting business operations and sellability.
4. Marketing and Finding Buyers: Market your business effectively to attract potential buyers. This might involve creating a detailed information packet about your business, utilizing business-for-sale websites, and leveraging your professional network.
5. Negotiations and Due Diligence: Be prepared for negotiations. Prospective buyers will conduct a thorough due diligence process. Be transparent and provide all necessary information to build trust and facilitate a smooth transaction.
6. Transition Plan: Develop a transition plan for the new owner. This includes training, transferring client relationships, and ensuring a smooth handover of operations.
7. Post-Sale Plan: Finally, plan for life after the sale. This could involve retirement planning, exploring new business ventures, or other personal goals.

The Bottom Line: Your business is one of your most valuable assets and there is no need to leave money on the table due to a lack of planning. By focusing on the tips we’ve mentioned in this article, you will build a more valuable and sellable business. At Murphy Business, our objective is to help you navigate the complicated process of buying or selling a business so that you get to the closing table successfully. If that appeals to you, please call us at 573-335-1885. We would love to learn more about your business and objectives. You can also take our free “Sellability Assessment” here.