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Is your business performing below par? Are you considering selling it off and starting another or perhaps, becoming an employee? If so, you’re on the right page. According to Bloomberg, 8 out of 10 entrepreneurs who start a business fail within the first 18 months. Perhaps you’re among the 8 and now, you’re considering plan B.
One of the major reasons why entrepreneurs sell off their business is definitely when the output is below expectation. If the output is smaller compared to the input, a reasonable entrepreneur will definitely seek for the next line of action, which is to either allow the business to be acquired by another or perhaps, merge with a bigger firm.
In this article, I’m going to guide you, to know when to sell your business and how to sell it. Pay attention, you don’t want to make a mistake you will live to regret.
KNOW WHEN TO SELL YOUR BUSINESS
Most entrepreneurs don’t sell their business because of financial desperation or issues, sometimes, it’s to seek for other opportunities. While a huge percentage do that because the business is taking the shape of failure. Whatever the case might be, when is the right time to sell that business of yours? I will guide you in this section.
1. LOW RETURNS
If your business is taking all your time, energy and finance and yet, the returns aren’t impressive, the first line of action is to discover the root of the problem and put a fix to it. If the problem is caused by competition that you can’t beat, selling the business and looking for another lucrative goldmine might be an option to consider.
2. BUSINESS FAILURE
If your business has crumbled to the ground, due to numerous unmentionable factors, selling the business becomes the best second alternative to go for. What then is the first alternative? DON’T GIVE UP! Failure in business isn’t really failure until you’ve given up. A lot of big business today rose from the pit of failure. Failure isn’t enough trigger to sell your business. If you think it is, then go ahead.
3. LUCRATIVE OPPORTUNITY
There are times when an opportunity surface, an opportunity that will require selling your current business in other to get finance. However, you need to look before you leap. Countless entrepreneurs, in their quest for more have jumped from frying pan to fire.
Before you sell that business in pursuit of gold, make sure you’re convinced beyond every reasonable doubt that it will work. If you feel uncomfortable, please listen to your gut.
HOW TO SELL YOUR BUSINESS
Selling your business, especially here in Nigeria might seem like a hectic journey that never ends. But if you follow the steps below, you’ll discover that it’s not really as hard as it seems.
1. BUSINESS VALUE
Before you forge ahead to sell your business, what actually does it worth? A third-party valuation can provide realistic estimates of what your business is worth. The evaluation entails everything such as sales, receivables, inventories, assets etc. these are things that determine the value of a business.Knowing the value of your business helps in the negotiation process. In fact, it makes you objective and straight forward when the activity begins.
2. FIND A BUSINESS BROKER
If you don’t know how to go about selling your business, please get a broker to help out. His fees are not extravagant or unreasonable. It might be 3% – 5% of the value the business is sold. Most importantly, getting a broker entails making sure the business is sold. One unique function of a broker is to perform the business valuation, which helps prospective buyers know the worth of the venture, thereby attracting them to place a bid.
3. PLAN YOUR EXIT
After selling your business, what next? Do you plan to start another? Do you plan to acquire another flourishing business? Do you plan on looking for jobs, becoming an employee? Now is the right time to plan your exit before selling off that business of yours.
Most entrepreneurs make this hideous mistake of not planning their exit in time. They were more interested on the money that will be realized when the deal is struck. In the end, they end up with no money and no business.
As an entrepreneur, I would recommend not making that mistake. Make sure that your plan B is already in action, before you hand over.
4. LEGAL CONSIDERATIONS
This is the part where you involve your lawyer to prepare all the documents and legal permits needed for a legitimate transfer of business ownership. The buyer will place huge emphasis on this, to avoid been duped of his hard-earned money.
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