Five steps to sell your business when you retire


All business owners must exit their business through retirement or new endeavors. Some leave it to the successor and others sell it. Whatever you choose, it’s never too early to start planning.

Selling your business can be a complicated process. From how to sell to what to look for in a buyer, it can be a daunting task for a small business owner transitioning to another business or retirement. Here are five things to consider when selling your business.

1. Select your preferred type of business sale

There are a few different ways to sell your business, including an outright sale where a buyer buys your business for sale and ownership is transferred. A slow sale is similar to getting a loan and the sale is financed, providing a flexible option to transfer the business. Others do leases, where the buyer and seller agree to a contract that specifies terms and fees so that the buyer and seller have temporary rights to the business. Increasingly popular are employee stock ownership plans (ESOPs), which allow employees to own part or all of the company they work for, making succession planning easier.

2. Value your business properly

To get a fair return for your business, you first want to get an accurate estimate. To get your business valued, you need to find a certified appraiser who will conduct an appraisal of your choice. For example, some businesses use the asset approach, which subtracts total business liabilities from the total value of all assets. Others use a marketing method that compares your business to other similar businesses that have recently sold.

3. Create an exit strategy

The transition period can be a volatile time for many small businesses. Having a systematic transition plan that includes supply chain considerations, financial obligations, and customer or client needs are important considerations to avoid business disruption. Depending on whether you are leaving your business to a successor or selling your business outright, your exit strategy may include training and resources.

4. Find a business broker

As a small business owner, you have experience running a business, but you may not usually be an expert in selling your business. That’s where a business broker comes in. Finding the right business broker with good experience in your area and industry can help sell your business. The International Business Brokers Association (IBBA) can help you find a business broker.

5. Estate planning, preparation of financial and legal documents

To sell your business, you need to have accurate financial documents from the past few years. You will also need to review the legal documents required to sell your local business, which may include a will, health care directive, and power of attorney.

These steps highlight the importance of keeping your business organized at all times. Make sure you keep up-to-date financial records so you’re ready to look at your business when you’re ready.

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