Selling a business is a tedious process, however it provides great rewards, and could be life-changing. If you have decided to sell your business, there are three things that you should consider before finalizing a buyer. These will help you prepare and maximize your chances of success. Without knowing these key points, you may ruin your hopes of a splendid success through the sale, and it could also waste your precious time. These three points are generic for any type of businesses.
- Don’t Expect Huge Pay
It is misconception among start-up owners that potential of their business will make them millionaire over the night after they sell it. However, most of the business buyer looks for proven business model that is already established. So, concentrate on establishing your business, and try to convert the potential of business into real profit for making a successful acquisition.
- Profit Matters, Not Revenue
Another delusion among the fourth-generation entrepreneurs is that revenue figure can result to successful selling of the business. Truly it matters, but on paper when buyers thoroughly go through the account statements they gradually settle themselves towards profit. Here is an example how a company with a lower revenue can make better profit from the acquisition.
Firm A: $ 60,000 Monthly Revenue, $ 40,000 Monthly Expenses, $ 20,000 Monthly Profit, results to $240,000 annual profit.
Firm B: $ 30,000 Monthly Revenue, $ 5,000 Monthly Expenses, $ 25,000 Monthly Profit, results to $300,000 annual profit.
In this scenario where a company with half of revenue of other is making more profit, then why a buyer will go for revenue, instead of profit?
- Make Yourself Ready to Answer Plenty of Questions
In this disruptive internet business era, where people are looking to quit nine-to-five jobs to stay independent, you may have to face some inexperienced buyers who will like to know everything about the acquisition like a kid. They can ask you verification of every financial claims that you are going to make. So, make sure you are ready to answer all the questions.
You can take assistance from the experienced business broker in preparing your business for sale. Moreover, they can also represent you in deal negotiation. If you are looking for one of such M&A firms, then count on ValleyBiggs to meet your needs. They have been in the business for several years, and can provide you the best assistance in the industry.