Are you an entrepreneur thinking of selling your business in the Houston market? According to a Financial Times and Nikkei survey, Houston ranks as the best place for foreign investment. Many overseas companies want to invest there since Houston offers business-friendly policies, affordable costs, and excellent logistics. Investors are looking for business opportunities, including buying an existing one that they can quickly expand.
The challenge for a seller like you lies in how you start selling a business. The process can be daunting, as it involves legal and financial considerations. However, you can avoid business selling mistakes with the right strategies and professional guidance. In this article, you will learn key strategies for selling your company in the Houston market.
Conduct a Pre-sale Financial Review
What do you think potential buyers will look at when purchasing your business? They will scrutinize the financial records to ensure they invest in something profitable. Therefore, get your financial statements ready. If this is your first business sale, what financial details should I add to my statement? You will want to include the balance sheet. Why?
As reported on Forbes, the balance sheet outlines the company’s assets, shareholder’s equity, and liabilities. Ideally, a balance sheet helps buyers evaluate the business’s hidden liabilities, financial stability, and accuracy of reported financial status. You will also want to review tax returns, payroll, inventory levels, customer concentration, trends, and other aspects that affect the profitability and sustainability of the business. Therefore, organize your financial records dating at least five years back. Also, work with an established accountant to ensure your calculations are accurate.
Partner with a Business Broker
Why would you need a broker to manage your business sale? Brokers are business specialists, and the most reputable are business owners with industry knowledge, enabling them to provide sound guidance. For example, let’s say you did not get the asking price the first time you tried to sell your business.
A broker will explain why you could not get value from your sale. You may need to prepare your business sale adequately. The business valuation could have been more realistic, thus sending potential buyers away.
You get more than advertising when you collaborate with a skilled broker. You will get access to past histories of similar company sales for accurate valuation. Brokers also have an extensive network of potential buyers.
For example, when you partner with IBEX Middle Market Business Brokers, you can access an accumulated buyer database, constant outreach, and personal connections with enthusiastic buyers. Your business sale will get exposure to the right audience, thus maximizing your selling value. Brokers also handle all the legal aspects of company sales, saving you from the legal, tax, and accounting complexities.
Get a Business Valuation
The following strategy entails answering one crucial question. What is your business worth? When you know the value of your business, it is easy to price the number of hours of hard work and investments you have made in the company. Therefore, perform a business valuation. Too often, entrepreneurs rush to calculate the value of their business when they decide to sell.
However, it is wise to calculate the value of your business years before you decide to sell. Why? Knowing the value of your business allows you to set a timeline and plan your finances. As a seller, you can set expectations and work to improve the critical value drivers of business. Several factors affect business valuation, including skilled employees, economies of scale, and a loyal customer base. When you focus on improving these value drivers, you can quickly increase the sale price of the business.
Market Your Business Effectively
How do you create visibility and attract the right buyers for your products or services? Through marketing, of course. And it is the same approach you should use to maximize the value of your business sale in Houston. However, your marketing strategy should target specific buyers. These could be individuals or other business entities with a background or interest in investing in your business.
Since you have little to no knowledge about selling a business, it would be best to work with your broker to create an effective marketing campaign. To ensure the campaign is successful, your broker will use online and offline channels to reach a broad audience. Ideally, they will advertise your company’s sale on social media platforms via email marketing, place ads on billboards, and advertise on radio and TV.
Maintain Business Operations Throughout the Sale
Should you continue or stop operations when preparing your business for sale? You should maintain operations during the entire sale process to enhance the company’s value. Potential buyers will ask your broker to provide updated financial and operation details. Your broker will also require this information to keep the marketing of your business sale up-to-date.
Conclusion
Letting go of a business you have spent years building can be heartbreaking. On the flip side, you can earn a high return on investment. However, you must be strategic throughout the selling process to ensure you get value from your business sale. Consider performing a pre-sale financial review, getting a business valuation, marketing your business effectively, working with a business broker, and maintaining business operations during sales.
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