Selling your business is one of the most important decisions you'll have to make. Deciding how much your business is worth is one of the main issues you'll need to consider.
Other factors to consider when selling your business include when is the best time to sell and whether you should make use of a broker or other professional to maximise selling opportunities.
There are a number of methods for valuing a business, including valuing the goodwill component. To realistically value a business you need a good understanding of the marketplace.
Over a period of time an industry usually develops its own rules of thumb by which a business is to be valued. There are also formulas that can be used to arrive at the approximate value of a business. One of the most important factors to consider when calculating the value of a business is its future earnings potential.
What would potential buyers be looking for?
Knowing how potential buyers think will help you position the business and highlight its outstanding attributes for a successful and profitable sale.
The next step is to use the resources of your accountant and advisors and finalise the value of all aspects of your operation. Should it be sold as a whole, as a going-concern or divided up? How do you put a value on such things as goodwill and a website?
Finally, get advice from trusted advisors and/or brokers as to a realistic price and legal issues, and proceed to sale.
When you sell, or even wind up a business, you have obligations to tell certain bodies of the change in status of your business. Depending on the industry in which you have operated, there may be a range of government departments, agencies and organisations that need to know your plans:
Remember, it is good business practice to also tell people you do regular trade with and those with whom you have built up relationships over the years. This includes your customers, suppliers, business associates and advisors, and network contacts.
