Recent years have been tough for us all, and many small business owners especially have faced extreme challenges. The cost of living crisis, exacerbated by factors like the COVID-19 pandemic and the war in Ukraine has had a massive impact on the amount of disposable income that people have, and this knock on effect has meant less money to spend. So for some entrepreneurs, this has resulted in flagging sales and the difficult decision to selling their business. If you have found yourself in this position, it’s important to know what to do next- here are some practical steps to take. 

 

Assess the Situation

 

Start by making a thorough assessment of your business’s position before you sell. Analyse your company’s financial situation- find out about the causes of your company’s problems and whether they were mostly due to external factors (like the cost of living crisis) or internal problems that can be fixed by an experienced owner taking on the business. 

 

Valuation and Selling Your Business

 

After deciding to sell your business, your next step is to determine its fair market value. In the current economic climate, being realistic about your asking price is essential. To make sure you’re getting an accurate valuation, consider enlisting the help of a business broker who will be able to evaluate your business using their knowledge and expertise. During the valuation process, lots of factors will be taken into account- these include your business’s tangible and intangible assets, financial performance over time and the potential for future growth. By working with a professional, you know that your asking price is competitive and attractive to potential buyers, while still representing a fair return on your investment.

 

Prepare Your Business for Sale 

 

Before you list  your business, make sure that it’s in the best possible condition for prospective buyers. This includes cleaning up your financial records and organising contracts amongst other jobs. Be sure to address any outstanding legal or regulatory issues that could put off potential buyers. Presenting a well organised and transparent business will always make it more attractive to buyers.

 

Selling Your Business Assets 

 

When you’re selling your business, you have two main choices: sell everything, including the business name and all its debts and stuff, or just sell certain things, like equipment or customer lists. Which one you pick depends on your situation and what buyers want. Selling the entire business means selling the name, brand, customers, contracts and everything it owns. It’s good if the buyer wants to run the business just as it is. But be careful because you also transfer all debts and problems. In other cases you can choose to only sell some parts, like equipment, inventory or contracts. You keep the business name and don’t have to pass on all the debts- this is handy if you want to use the business name later or avoid transferring certain problems to the buyer. Picking between these options depends on your plans. 

 

Paying Creditors and Settling Debts 

 

Prioritise paying off creditors and settling the outstanding debts that you have- this includes loans, vendor bills and any other financial obligations your business may have. You will need to recoup any money you’re owed from customers, clients etc and pass this onto your creditors to pay down debts. Be transparent with your creditors about your situation and work out payment plans if necessary. Another thing to be aware of is that selling a business involves legal and tax implications too. You’ll want to speak to an attorney and an accountant to make sure that you comply with all legal requirements and minimise tax liabilities associated with the sale.

 

Plan Your Next Steps

 

With your business sold and debts settled, you can then plan your next steps. It can be really disheartening having to walk away from something you had so much hope in, but take the lessons that you learned and use it to build a better future for yourself. You might want to explore new career opportunities, start a different business venture or think about getting additional education or training to increase your chances of success going forward.