More than likely you hope that someday someone will want to buy your business. You've worked hard to start it and grow it and you are ready to find that "needle in a haystack" who has similar skills to yours to come in and buy it.
Your business is a living, breathing entity that employees people, utilizes vendors, engages customers and has put bread on your table and a roof over your head for a period of time. You have done all you could to grow it and you want to sell it for a fair price. But what is the fair price for your business?
You'll need a detail profit and loss statement for three years and three years of tax returns to begin understanding how to find the appropriate number. Depending on the type of business - customer contracts, employee contracts and noncompetes as well as furnture/equipment will all be taken into consideration. Many businesses will require a third party valuation so that there is an objective price available for discussion. Small businesses, generally with under $500,000 in revenue, rarely need such an evaluation. A reputable business broker will be able to come to a reasonable asking price by using the above-mentioned financial information and getting detailed discretionary spending information directly from you (the owner/entrepreneur).
This friendly sale generally requires that the current owner offer some training time to the new owner. The time for this can be anywhere from a month to several years. The compensation for this training time is also something that will be negotiated before the sale.
The outside sale generally does not reap the greatest reward for an entrepreneur as there are no economies of scale to benefit the buyer. The business transfers from one small business owner to another and in best case scenarios continues to thrive for years to come...and may even have a growth spurt due to the enthusiasm of new ideas from a new owner.
As with any sale of a business, the sooner the (entrepreneur) YOU begin planning your exit strategy the better chance you'll have of getting a great price for the business. Selling a business is NOT like selling your home. There is little emotion in the price a buyer will pay. You may have a lot of emotion about the business you started and how much it is part of you - BUT - at the end of the day the business is only worth what the numbers say it is worth!
Work with a reputable business broker to get the most money for what has been your life's work.
If you are still waiting to be inspired to begin the exit strategy process, I look forward to hearing from you..