Selling Your Startup Business
Selling your startup business is a monumental decision. You have decided to sell. You have given every thought, every moment, and every penny to start this successful business. How do you start the selling process?
First the Financial Reports
The last thing most entrepreneurs want to do is paper work. Most owners do not understand the financial statement or accounting, hence they hire someone.
Thomas Edison had two nails on the wall, one for bills owed and one for bills paid. But businesses and the world have changed. Much more information is needed now.
The first thing buyers will look at is the profit. A sale usually requires at least three years of financials and three years of taxes and a knowledge of how to twist and turn these figures into a more positive future. Expenses that were one time or equipment that was replaced but will not need replacing soon will be added back into the income. It will not be a necessary expense in the near future.
Charitable contributions can be added back. Employee one time expenses, like parties, prizes for special achievements, also get added back. The income begins to look better.
Has the company invested in inventory because of a special offer from a supplier or to introduce new versions of a product? Add it back.
Objectives
What is the company objective; to make money, to make the best and most recognizable product, to build a company reputation of honesty and loyalty to customers?
The objective, according to Alexander Djerassi, is what drives the company and its future, even when it changes direction or ventures into a different product.
Objective is the overall concept that employees, and customers learn to respect or expect. It has a lot to do with success.
What Buyers Want
First, prospective buyers look at the profit.
Second, come the benefits, what is left after the costs are deducted.
Third, buyers look for what drives the company, what their goals are, what their objective is.
Alexander Djerassi says what buyers look for is a “statement of purpose, monetary targets, corporate culture, and promoting methodology”.
The Seller
Selling is not an easy prospect and as owners, you might not be the best judge of its value. You can sell your business yourself. You may already have a buyer in mind.
You may find a broker, who will charge a fee. That fee is difficult to expect, but a broker who knows the business may have a much wider range of client selection and be able to sell your company for a better value.
Brokers know how to present the company and how best to arrange for the sale. He may make you much more than his fee including what you had originally estimated your business worth.
A broker is prepared to make different types of sales, including cash, stock, or payments.
Patience
Now that the decision has been made, have patience. Business sales usually take from 6 – 12 months.