10 Questions to Ask Before Selling Your Business

September 2022

Are you thinking about selling your business? Whether you're ready to retire or looking for a new challenge, selling your business can be difficult. There are umpteen things to ponder before taking the plunge. 

Here are ten critical questions to ask yourself and the stakeholders before you put your business on the market

1) What is my Business's Worth?

This question is never easy to answer, as many factors can impact the value of a business. But we got you! First, assess the value of the tangible assets of your Richmond business -- this would include things like inventory, property, and equipment. Then, consider the value of intangible assets such as patents, copyrights, and relationships with customers and suppliers. Also, don't forget about the future earnings potential of your business.

2) What are the Tax Implications of Selling My Business?

Tax implications are complicated, period. Hence, it is sensible to speak to a tax professional to determine the tax implications. Depending on the structure of your business, the sale may trigger a capital gains tax liability. There could also be implications for state and local taxes.

3) What are my Employees' Rights if I Sell the Business?

Your employees may have rights to severance pay, the continuation of health insurance, and other benefits. They may also have rights to continued employment with the business's new owner. It is advisable to reach out to an attorney to determine employees' rights and how to protect them during a sale.

4) How Much Money Do I Need to Retire?

When individuals retire, they typically rely on Social Security benefits and personal savings to cover living expenses. However, for business owners considering selling their company, it is important to consider many factors, including age, lifestyle, and health.

5) What Will I Do After I Sell My Business?

It is imperative to ask yourself what you will do after you sell your business. This is because adjusting to a new lifestyle can be difficult after years of running your own business. You may find yourself at a loss for what to do with your time or miss the challenge of running a business. 

But if you have plans laid out to kill time recreational fishing in Richmond's Bryan Park or Crump Park after selling your business, we have no say in this matter.

6) How Can I Get the Best Price For my Business?

Many factors will affect the sale price of your business, including the current market conditions, the potential buyers, and the unique features of your business. Understanding these factors can help ensure you get the best possible price for your business. 

If you are unsure of what your business is worth, you can always consult with a professional appraiser or business broker.

7) What are the Costs of Selling My Business?

A few costs are involved in selling a business, such as a cost of preparing the business for sale, marketing the business, and hiring a broker or advisor. The seller must also pay outstanding debts (if any), taxes, or other liabilities. 

It is also important to factor in the time and energy you will need to put into the sale. If you are unprepared to handle these costs, it may be best to wait until you can do so.

8) How will the Sale Affect My Employees?

Your employees are a crucial driver behind your financial success. Let's not forget how things should pan out when they jump the ship. Typically, a business sale can significantly impact employees, both positive and negative.

Some key questions to ask on this front include:

• How will the new owner treat my employees? Will they keep the same staff and policies in place, or will there be changes?
• What will happen to employee benefits and compensation? Will they stay the same, or will there be cuts?
• Will my employees be able to keep their jobs in the first place?
• Will their roles change? (If yes, will they be affected financially?)

9) When is the Right Time to Sell my Business?

Timing is everything. If the economy slumps, it may not be the best time to sell as businesses are typically valued lower during these times. Also, if you need money, you may be forced to think that selling your business may be your only option. 

One should also consider their age and health. Say that the business owner is getting older or their health is declining; they may want to consider selling the business while they can still do so.

10) How do I Know If I am Getting a Fair Deal?

Look at the potential buyer's track record and history with similar businesses. This will give you a general idea of how much they may be willing to pay for a business like yours. Also, it will help if you compare the offers from different buyers.

Ask yourself the following questions to find the right deal for your business:

• What is the current market value of my business? 
• How does this compare to similar businesses that have recently sold? 
• What are the key factors that will impact the sale price of my business? 
• The terms of the sale, such as the payment structure, etc.
• Your personal goals and objectives.

If you are unsure of what your business is worth, we advise you to consult with a professional appraiser or business broker.

Wrap-up:

Be sure to ask yourself the ten questions above first. We are sure you will set yourself up for a successful sale and transition by taking the time to do this.