There comes a time when we all have to retire. Many baby boomers are set to leave their businesses to retire, which is why it is crucial for them to be prepared for their next big move. Creating a business exit strategy is the way to go.
As most potential retirees tend to lack a formal transition plan, it can be difficult for them to transition. Without proper knowledge of what to expect, you would be unable to navigate selling a business and retiring.
Not every business that is up for sale sells. To ensure that you successfully sell your business and retire, you should consider the following tips.
1. Plan
There is no reason for you to wait until the last minute to plan. With more and more baby boomers attempting to sell their business, planning goes a long way. Beat their lack of readiness by planning. It will help boost your odds at selling your business.
When it comes to selling your business, for example, a software house, you need to start planning. You have to inform yourself about the stress that comes with selling. Similarly, you also have to be educated on the complexities of a business sale.
By planning for the future sale, you will be in a better position to sell the business. Define a timeline for the transaction and consider speaking with a specialist to help you prepare the best plan.
2. Have a Clear Vision of What to Expect
Another tip that will help you sell your business and retire is having a clear vision of what comes next. The biggest mistake that business owners make when trying to sell their business is that they lack a vision.
Many business owners simply cannot imagine losing ownership over their business as they fear the unknown. This causes them to walk out of a deal at the last moment. Having a clear vision of what is to come will help make sure you get cold feet.
Thinking about what comes next should excite you rather than make you feel nervous. You could finally work in a different occupation or give back to society through charity work. There is so much more to life than just owning a business.
To create a vision of your future, you need to introspect early on. It will encourage you to convince potential investors to take an interest in your business. Thus, a successful sale would become inevitable.
3. Learn Important Facts About the Business
Selling a business is an art in itself. The secret to a successful sale is being armed with important facts. Now, it is natural to feel pride for your business as you have spent years of tears, sweat, and blood building the company from the ground up.
Instead of basing your conversation on facts, you need to share facts about your business's performance. The fact is that buyers cannot understand your legacy. This is why you have to tell them the facts that they want to hear.
Before meeting with any potential buyer to discuss the sale, you should perform pre-sale diligence of the business. You should view the business from the eyes of buyers. This will allow you to identify issues and focus on detailed facts about your business.
The most successful sellers are those that can answer detailed questions. Base your answers on facts rather than anecdotes. This will instill confidence in potential buyers and persuade them to make the purchase.
4. Minimize Surprises
Let’s face it - we all like birthday surprises. However, the same is not true for selling a business. Although you might feel that it is best to avoid discussion on negative issues like estranged customer relationships or lack of proper cash flow, it will only come to bite you later on.
Related: 12 Factors That Will Make Your Business Harder to Sell
Proud business owners tend to have too much pride in their business. They feel that the issues would be confidently resolved by the potential buyer. But, buyers do not have the confidence they do as they do not have a proper understanding of customers.
Potential negative issues should be identified during the pre-sale diligence to keep surprises at a minimum. Then, you should disclose these issues immediately as you negotiate the sale.
After you have signed the letter of intent, any negative surprise in the due diligence would reduce the purchase price. It could even result in a failed deal. Therefore, you have no option but to disclose all the negative issues with the buyer. It will also help establish credibility.
5. Do Not Take Things Personally
Selling your business can be extremely difficult, especially if you have never sold one before. With emotions at an all-time high, you have to avoid taking things personally. The fact that you have set a business is a huge accomplishment in itself.
Due diligence is bound to find potential issues that decrease the purchase price, you should be prepared for negative issues to come up. It is standard business practice.
When someone buys a business, they are likely to ask questions about everything. Hence, you should not feel attacked. Instead, all you need to do is respond to all the questions and keep your emotions in check.
Every business owner that has sold their business knows that it is pointless to take things personally. It would be best if you are patient while you sell your company. Once you have responded to all the questions, the sale would eventually be made.
Sell Your Business and Retire
Once you have gone over the tips mentioned above, you should have no trouble selling your business and retiring. Even if you are not planning to sell the business anytime soon, it is always better to be prepared.
Related: Selling vs Transferring
You never know when an unexpected illness or financial difficulty could result in you negotiating with buyers sooner than anticipated. Therefore, you should take advantage of the tips shared here to increase your odds for a successful sale.
