Strategies That Can Help You Sell Your Business

1. Optimize Your Insurance Coverage

In Florida, businesses with four or more employees are required‌ ‌to carry‌ ‌workers’‌ ‌compensation‌ ‌insurance. Although this is the only insurance that qualifying businesses must have in place, your company may be more appealing to buyers if you have general liability insurance in place to protect it against property damage, third-party bodily injury, personal injury, and advertising injury. Having the right coverage can both reassure buyers and keep you protected while you still own the company.

2. Separate Personal and Business Assets

Entrepreneurs often make this mistake after‌ ‌their‌ ‌business‌ ‌begins‌ ‌making‌ ‌money. Instead of using company money to pay for those random expenses for the business, they make an exception and use their personal credit card. Before long, the personal and business accounts are no longer separate entities.

This is referred to as commingling, and can open up business owners to personal liability for business debts. Commingling also muddles your company’s accounting measures, which is not an attractive feature for prospective buyers, so make sure that all business purchases are made using company resources.

3. Make Sure Your Company’s Taxes and Essential Documents Are Up-To-Date

When you sell your business, you will have to produce a great deal of information. You must show prospective buyers your balance sheets, cash flow statements, tax returns going back several years, supplier contracts, employment agreements, and much more. You might want to furnish copies of other documents to further justify your asking price. A Florida small business lawyer can advise you what these documents might be in your particular situation.

4. Establish a Diversified and Recurring Revenue Base

When examining your company’s cash flow, prospective buyers are interested in seeing that revenue is consistent and comes from many sources.

The danger of having a significant chunk of your revenue coming from one source is that, if you lose that client, your cash flow is negatively affected. Similarly, if the company focuses on project-based instead of recurring revenue, the income stream may come across as unstable. You’re more likely to sell the business if you can show prospective new owners that income will remain steady while they acclimate themselves to their new investment.

5. Make Sure the Company Can Run Without You

When‌ ‌you prepare to sell your business, it is a good idea to consider how reliant the business‌ ‌is‌ ‌on you. Can you take a vacation for more than a few days at a time? ‌How critical is your unique knowledge to the company’s operation?

A buyer might be worried if they see that too much of the company’s success depends on you. Buyers ask themselves: if I buy this company, will it continue to perform after the founder leaves? Make sure that the answer is yes!

Conclusion

When‌ ‌a‌ ‌buyer‌ ‌knows‌ ‌a particular business is right for them, they want to close the deal as soon as possible. ‌As‌ ‌a‌ ‌business‌ ‌owner,‌ ‌you need to think like a‌ ‌buyer. ‌When you do the work, you can eliminate major stumbling blocks that can prevent someone else from buying‌ ‌your company.

At the Florida Small Business Center, we can assist you with the legal aspects of the transaction, such as drawing up a Buy-Sell agreement and protecting your interests during negotiations. If you have questions or would like to schedule a consultation, call 1-866-842-5202.