10 Steps To Sell Your Business Fast – A Guide
Wanting to sell your business fast probably comes from good reasons. However, selling a business is a multi-step process, and good preparation is necessary. The goal is to maximize your business value, so it’s important to have your business “built to sell.”
When you decide to sell a business, you have to start working on a successful business exit strategy that will help you achieve your defined goals. You have to take everything into account – what actions you should take before, during and after selling your business – to come out of this process wealthy and satisfied.
There are many factors that should be considered and a lot of things that should be done properly. If you are in a rush, you should act quickly and not procrastinate, prolonging any activity more than it’s acceptable.
So, if you are wondering “how to sell my business fast,” follow this ultimate guide step-by-step and reach for success.
Is It Possible To Sell My Business FAST?
Building a business takes time, investment and a lot of effort, so be aware that you won’t pop out on the market and sell a business instantly. It just never happens that way in our experience.
The average time to sell a business takes 6 to 10 months. Exceptionally, some businesses can be sold in around 3 months, and some take a year or more to sell. It’s different for every business and industry. However, everybody has their own perception of “fast”, and some might be a bit unrealistic. If you think you can sell your business in a couple of weeks for the best price, we have to disappoint you – that is impossible.
The time of selling a business depends on many things such as the business worth, the industry you serve, the demand for your business, the current situation of your company, and, of course, the current market.
Still, not every business owner has time on their side. Fortunately, there are some key steps that can speed up the whole process, which will be mentioned throughout this guide. So – let’s start.
How To Sell My Business Fast In 10 Steps?
Before getting started and indulging in this process, it’s quite important to be 100% sure and ready to sell a business. It is perhaps one of the most important decisions you’ll ever make. You know best how hard you worked creating and growing your business, and this process may be truly an emotional venture for you. Whatever is the cause of selling, you do not want to have regrets later after everything is over.
Selling a business is a complex process and can be very stressful if not done properly. First, you need to prepare your business for a sale and create a strategy, and then enter the market ready to sell.
We have come up with this 10 steps guide to help you sell your business as fast as possible for the maximum value.
Clean up the accounting records and other paperwork
Once you make financial decisions about selling a business, start with preparations. The first thing you need to do is to review all of your relevant documentation that buyers would be interested in looking at to make a purchase decision.
Accounting records are one of the first things any interested buyer will want to see. They show the snapshot of your company’s financial health and reveal your company’s potential value. Ensure they are well-organized, accurate and complete as that will increase your business value.
If you want to sell a business fast, ensure you have accurate and up-to-date records that comply with current accounting standards. This allows potential buyers to review your financial statements in less time and compare them easily with the other companies in the industry.
Practicing annual business planning, budgeting, and forecasting will show a potential buyer that your company is well-managed, which will increase its value. Effective business practice implies creating an annual business plan and a formal budget before the beginning of each year. The budget should include a sales forecast, budgeted costs, planned sales prices, a marketing plan and possibly the cash flow forecast.
Every company has specific metrics that are crucial for effective financial and business management. Therefore, it’s important to identify those weekly, monthly and quarterly metrics that increase sales and profits and track them on company dashboards.
A prospective buyer will analyze your business and compare your business performance to industry benchmarks so he can quickly see where you stand compared to other companies in your industry. Accordingly, you should evaluate your company using the same benchmarks.
Having accurate and current data for each of these enables you to sell your business fast.
Update the organizational chart and clearly define business operations
The next thing to do is remove yourself from the organizational chart and build a good management team. Start at the top (COO, CFO, HR directors, etc.) and fill lower-level positions as needed. For each position, define roles and responsibilities, and make sure you hire top-notch people. It’s also important to create job descriptions for each role, as that will help in hiring employees as you grow.
One of the biggest values to the potential buyer can be how well you manage your business operations. Setting up and documenting business processes and systems is quite important, as that helps the buyer run the company after the purchase. This includes an employee manual, an automated accounting system, a CRM system, a marketing and sales process, etc. Such systems reinforce and support the management team and provide transparency as well.
Price your business for sale
Understanding how to value your business is important because the process of selling it is both time and money consuming. Therefore, you need to build a realistic image of your business’s worth, so you know what you can expect once you market your business.
Whether it’s an asset valuation, a price/earnings ratio, a discounted cash flow or an industry rule of thumb valuation method, you need to get to know how businesses in your industry are typically valued.
There are many different ways to value a business, and they can take into account the value of tangible assets (property, machinery, stock, etc.) owned by the business, or the intangible assets as some buyers may be primarily interested in your brand and the goodwill it generates, your intellectual property, or a trademark.
Your business can also be valued based on future revenue or profit. If you have good customer retention and customers who keep purchasing from you and refer you to their friends and colleagues, you should consider the future revenue from them.
To define the best and reasonable price, you can even use the help of an online business valuation calculator.
Market your business
When you complete the previous steps and create your exit strategy, the next step is to put your business on the market. You can do it yourself, or you can hire a professional broker or M&A advisor.
If you do it by yourself, you should conduct market research and define your target group of potential buyers. Then, you need to list your business on the relevant websites, create a good presentation of your business and start with advertising. As you can assume, this takes a lot of time and doesn’t fit with that “sell my business fast”.
So, you may want to consider hiring experienced professionals in selling businesses who will help speed up the process.
Hire the professionals – business brokers or M&A advisors
Hiring business brokers or M&A advisors can not only save you both time and effort, but it can secure your business to be sold for the highest possible price.
Selling a business to a third-party buyer involves complex processes, specialized skills, comprehensive knowledge, sound judgment and excellent resources. Therefore, the crucial thing here is to pick a qualified and experienced advisor who will develop the best exit strategy solutions and guide you through the whole process.
It’s also important to pick the right advisor for your company. For a company that is worth less than $5M, a business broker is the right choice. Still, if your company worth is higher than $5M, M&A advisory services would be the best choice as it would be a significant mistake to list “down market” with an agent or a business broker. M&A advisors tend to have more experience and a better-defined deal process than business brokers, which can be really important for reaching the maximum value when selling.
M&A services often involve complex and difficult to understand activities that serve to maximize the value for a business owner after selling their business. Business brokers typically sell businesses in simple asset sales with SBA financing, while M&A advisors use a network of financing connections, a wealth of experience in modeling and structuring the right deal, and savvy negotiating skills to match the level of experience brought to the table with experienced buyers.
Work together on the business exit strategy
When you hire an advisor, they will want to learn about you, your business and your goals. Therefore, you will have a confidential conversation to provide them with every piece of information about your business, so they can create a promising business exit strategy. Communication is the key to a good business relationship which helps to speed the exchange of ideas and makes the process more enjoyable. When you are motivated to sell your business fast and when you get along with a business broker or M&A advisor, there is no doubt the whole process will go smoothly and fast.
Next, even if you did price your business, the advising company will perform the precise business evaluation of your company, including every factor possible, and come up with the best and most reasonable price.
Also, they will prepare a business summary, a 10-20 page overview of your business that answers key questions every buyer asks. Some advisors call the business summary a Customer Information Memorandum (“CIM”) or prospectus, depending on who you are working with. That can be very time-saving as you won’t have to spend time answering those questions.
Likewise, M&A advisors or business brokers will develop a marketing plan and strategy for selling your business and identifying prospective buyers that will understand your company’s value. They will also “protect” you from wasting time with buyers that have no serious intentions of making a viable offer to purchase. You can focus on your business until the prospective buyer is identified.
Screen your prospective buyers
Screening the potential buyers will prevent you from making a mistake and save you valuable time. It’s a great way to separate those who are willing to buy your business fast from those who are not really interested.
Serious buyers would want to know many details about your company, so when they contact you (or the advising company), make sure you have your business summary fully prepared. Confidentiality is very important, so send them a business summary after they sign a simple non-disclosure agreement (NDA). This will immediately eliminate those who are not motivated and interested in actually buying your company.
You can use the NDA to screen your buyers and gain more information about them too. The key questions are: “What is your net worth?” and “How much liquid cash do you currently have?” This will show if they can proceed and become qualified buyers.
Meeting with qualified buyers and negotiating
When the potential buyers sign the NDA and you send them a business summary, they become qualified buyers with whom you would want to continue the selling process. If they have additional questions or show any interest in meeting in person to discuss the selling further – arrange the meeting.
M&A advisors and business brokers are more experienced and skilled in negotiating, so you better let them do it. However, if you want to do it yourself, consult with your advisor, as they will provide you with valuable advice. Ensure you are well prepared for the meeting and negotiating. Do thorough research on your buyers to understand more the person with whom you are meeting and to give them an offer they can’t refuse.
Don’t be stubborn, and be ready for compromises. The goal should be the satisfaction of both sides. Also, remember to be honest, respectful and confident when negotiating.
When you agree on the price and terms with the buyer, the next step is the due diligence process before they finally decide whether they will purchase your company or not. Therefore, you need to provide the buyer with the necessary documentation to help them make an educated decision and a reasonable offer. We have mentioned that if you want to sell your business fast, you need to ensure that documentation is complete and organized even before you start looking for a buyer, especially because due diligence can take time.
You also have the right to inspect the buyer’s background, financial condition, and more. The advisors can help you with checking the buyer and identifying the potential “deal-breaker”.
Closing the deal
When due diligence comes to an end, it’s time to finalize the sale and officially close the deal. Prepare for it weeks in advance. Outline the terms and conditions of the sale based on what was previously agreed.
An experienced M&A advisor or business broker will protect your interest, assist you in getting the deal finalized, and ensure the mutual benefits of both parties. Once you reach the agreeable price and terms, the buyer can sign a contract, and you have just sold your business!
Now that we have answered your question “how to sell my business fast,” you can start with the sales process.
Even if you feel like this process will never come to an end – it will happen. If your business grosses $1M in revenue or more, you can get the best exit strategy solutions and sell a business even more quickly by working with our experienced advisors at IAG.
At IAG, we focus on providing M&A advisory services. Most clients we help sell their businesses in the range of $1 million to $150 million. By working with one of our trusted transaction advisors, clients know that they have maximized the value they can achieve when trying to sell. Our M&A advisors then “take the company to market,” using a tried and true competitive bid process system. By working on fixed timelines and driving numerous buyers into competition with each other, business owners can rest assured that they have achieved maximum value in the sale.Our experienced M&A Team of pros can help you with all of this and more! __________________________________________________________________________