Are you selling your construction business to employees or a family? Here are 5 tips for success!

The construction industry is booming, and there seems to be no end in sight. If selling your small business is on your radar, this is great news.

As someone who has built a successful business, you’re probably starting to think about the next chapter of your life. It could be starting a new job or preparing for retirement. Either way, selling a small business is an exciting endeavor, but it requires purpose and preparation.

If you are thinking of selling your business Employees or family members, then you have one of the main parts of the sale in place. You have a potential buyer! Thinking ahead of the buyer changes the process. You probably won’t have to hire (or pay) a business broker, and you won’t have to go through the process of marketing your business or vetting interested parties.

It’s still important to make sure you’re mentally prepared for the transition and have everything you need to successfully navigate the sales process.

Selling a small business to employees or loved ones

For contractors and other small business owners, selling what you’ve worked so hard to build can be bittersweet. Moving on to the next phase of your life is exciting, but you want to know that your business is in the right hands.

Selling to a key employee or family member can be a very satisfying experience. They already understand what you’re doing, and in the case of key employees, they know your business’s ins and outs. Your best employees share your work ethic, understand your vision for the business, and are well positioned to successfully take over assignments.

So, if you’re getting ready to make the leap, here are some tips on how to best prepare for handing over the reins. Being intentional in your preparation will help facilitate a successful sale.

1. Find out why

As with all big decisions in life, knowing your “why” will give you direction and perseverance. When you can remember and reflect on the reasons why you keep going with your business, it will motivate you when challenging times occur and the finish line feels out of reach.

The truth is, selling a business can be exhausting. Even if you already have a buyer in mind, and that buyer is someone you know, this can sometimes be a complicated process that requires patience and strength.

2. Plan ahead financially and personally

Give yourself enough time to prepare for the sale of your business. This is a big decision and if you plan better, the process can go much smoother. Work with financial professionals to make sure your financial house is in order. This can help your buyer understand the current state of the business and calm their fears about taking responsibility for the company you’ve built.

Maybe your timeline for selling the business is a few years down the road. If this is the case and you have an employee or family member interested in buying the business, take the time to mentally prepare your shoes to fill.

The mindset of an employee is very different from that of a business owner. To prepare your target audience for success, teaching them what you know outside of everyday activities is key. Teach them what you know before They have taken over. This will probably ensure that everything goes well after you exit the business completely.

3. Get professional pricing

Determining the value of anything can be complicated. A business that is good for one person may not be worth it for another. A more motivated buyer may be happy to pay more than asking price to secure your business if they have their heart set on it. A less motivated buyer, however, may not be willing to pay the same top dollar.

Having an independent professional determine the fair market value of your construction company is of great importance. When selling a business to employees or family members, it’s more personal so emotions can be involved. Removing emotion from the process demystifies sales and can save valuable relationships.

Having an objective third-party appraisal provides a good starting point for negotiations and can help avoid misunderstandings if you and your buyer aren’t on the same page about price.

4. Determine the sales structure

Affiliate marketing is a common way to structure small business sales to employees. In a installment sale, you as the seller typically hold a promissory note and agree to receive monthly payments from the buyer for a specified period of time. Promissory notes are usually backed by the assets of the business and the buyer’s collateral, which helps reduce risk.

A partial sale can be a good solution for both parties. Your employee or family member may not have the money or financial support to complete the sale. Making continuous payments can help them achieve their dreams of business ownership. Because you’ve built a stable business with steady cash flow, you have a good sense of future performance barring major economic changes.

5. Inform your customer

You’ve worked hard to earn your customers’ trust, and that’s priceless. Maybe there are people who will hire you on an ongoing basis. Those relationships are the lifeblood of a successful company.

Whether these key customers are homeowners, interior designers, or home builders, keep them out of sight once the business is finally changing hands. Selling a business to employees or family members means you’ve invested more in a smooth transition. Communicating clearly and effectively with your customer can set your buyer up for success.

Be prepared before selling your small business

Selling a business to employees or family members can be an incredibly rewarding experience. You can turn over what you built to someone who will give it as much care and attention as you did.

Even if you already have a buyer in mind, selling a small business can be a daunting process. It shouldn’t be.

Knowing your “why,” planning carefully, getting a professional appraisal, determining your sales structure, and communicating it to your customers will set you up for success as you move into the next phase of your life. They also help you position your key employees or loved ones for the fulfilling work ahead.

CG Capital is located at 139 Genesee Street New Hartford, NY 13413 and can be reached at 315-765-6032. Underwriting and advisory services offered through Commonwealth Financial Network®, Member FINRA/SIPC, Registered Investment Advisor. Permanent insurance products and services offered through CES Insurance Agency. Certified Financial Planner Standards Board Inc. The CFP Board holds the CFP®, CERTIFIED FINANCIAL PLANER™ credential in the US, which is awarded to individuals who successfully complete the board’s initial and continuing certification requirements.