When Should I Sell My Small Business?

Generally, business owners should look to sell because they want to make a lifestyle or professional change.

Don’t sell when the market is in a downturn: The value of your business is correlated to the market within which it operates – therefore, you should look to sell when business is good, not bad.

When should you sell your business?

Below are the 24 common reasons to sell your business, according to the pros:

  • You Don’t Have the Energy, Skills, or Resources to Grow the Business.
  • You Want to Take Advantage of Low Capital Gains Taxes.
  • Your Business’ Value Has Improved Significantly.
  • You’ve Been Offered a Better Job Opportunity.

What do I need to know about selling a small business?

Make selling your small business easy with these seven steps.

  1. Determine the value of your company.
  2. Clean up your small business financials.
  3. Prepare your exit strategy in advance.
  4. Boost your sales.
  5. Find a business broker.
  6. Pre-qualify your buyers.
  7. Get business contracts in order.

How much should you sell your business for?

There is plenty of room for judgment, but by and large, a profitable, reasonably healthy, small business will sell in the 2.0 to 6.0 times EBIT range, with most of those in the 2.5 to 4.5 range. So, if annual cash flow is $200,000, the selling price will likely be between $500,000 and $900,000.

How long does it take to sell a small business?

It takes an average of two to four years to sell a small business. Therefore, long-term planning is key to any successful business sale.

Why is it important to know the owners reason for selling?

Small business owners have many different reasons for selling their companies. It turns out that these motivations play a very important role in the sales process. That’s because business sales are strategic transactions, and the shape and outcome of your sale will inevitably be influenced by your sale motivations.

How do I sell my business privately?

If you’re considering selling your small business, consider these seven steps to stay on the offensive.

  • Determine the value of your company.
  • Clean up your small business financials.
  • Prepare your exit strategy in advance.
  • Boost your sales.
  • Find a business broker.
  • Pre-qualify your buyers.
  • Get business contracts in order.

How do you price a small business for sale?

What’s Your Right Asking Price

  1. Step 1: Get your financial statements in order.
  2. Step 2: Estimate the value of the tangible assets of your business.
  3. Step 3: Prepare your statement of seller’s discretionary earnings.
  4. Step 4: Estimate the earnings multiple that’s likely to apply when pricing your business.

Do I pay tax if I sell my business?

Tax Aspects of Selling Your Business. When you sell your business you may face a significant tax bill. Profit received from the sale of the business assets will most likely be taxed at capital gains rates, whereas amount you receive under a consulting agreement will be ordinary income.

How do you value a small business?

To find the value of your business, subtract liabilities from the assets. For example, if you have $100,000 in assets and $30,000 in liabilities, the value of your business is $70,000 ($100,000 – $30,000 = $70,000). With the asset-based method, you can find the book value of your business.

How much does a small business sell for?

There is plenty of room for judgment, but by and large, a profitable, reasonably healthy, small business will sell in the 2.0 to 6.0 times EBIT range, with most of those in the 2.5 to 4.5 range. So, if annual cash flow is $200,000, the selling price will likely be between $500,000 and $900,000.

Do I need an attorney to sell my business?

Selling or transferring a business can be a lot of hard work. You may need to hire a qualified business lawyer if you need assistance with the process of selling a business. Also, if you need to go to court to litigate a legal issue, your attorney can provide you with representation during those meetings as well.

What are typical business broker fees?

Most business brokers charge at least eight to twelve percent of the selling price and there usually is a minimum fee, often it is between eight and fifteen thousand dollars, depending on the brokerage, for achieving a transaction, even if there is such a low selling price that the minimum exceeds the agreed-on

Should I sell my business or close it?

Why you should sell your business instead of closing it. There is no set way to know when it’s the right time to close or sell your business. For some small businesses where the owner is looking to wind down, this may be the only real option. For other smaller ventures it may be more prudent to try to find a buyer.

What factors would influence a decision to sell the entire business?

Other factors that may affect the timing of a sale are availability of bank financing, interest rate trends, changes in tax law, and the general economic climate. You can sell your business yourself, but many owners contract with a professional business broker to handle the job.

Why do companies sell themselves?

The most common reason a business is sold is due to fatigue, boredom, and burnout. The ongoing, daily grind of managing small business stressors can be very tiresome. Beyond the actual stress, many owners simply sell because they are no longer challenged or interested in the business’ operations.