Everybody should be building their business to sell it. Everybody.

All business owners should be creating a business that you can sell later BECAUSE one day you will want to be done.

One day you will want to retire. And you only have two options:

• ONE close down and walk away with nothing or
• TWO sell your business to fund your retirement.

You sell or  walk away like your business never happened at all.

I will ALWAYS encourage people to sell. Why wouldn’t you want some fruit from all the work you have done? Why would you choose to walk away?

Selling a business is not as easy as just putting up a “for sale” sign.

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Here are 7 urgent steps you need to take NOW so you can
sell your business later.

STEP ONE: LEARN THE PROCESS

Take some time to understand how selling a business works. We often think of selling a business as a buyer coming with all the cash and risking their own assets to buy our business.

It doesn’t have to work that way.

If you set your business up correctly, your business can fund the sale of your business. Your business credit, your vendor accounts, your merchant accounts, and your accounts payable can all be used to fund the sale of your business.

So instead of fully funding with a personal loan,  buyers can pony up a down payment and then take a loan against the business using the businesses current assets and credit. 

Do you understand how cool that is!?

STEP TWO: SEPARATE ENTITY

You cannot sell a sole proprietor. You can sell the supplies. You can sell the inventory. You can sell it all together. But you are not actually selling the business. 

This means that you cannot use the business credit, merchant accounts, or history to fund the sale of your business.

Stop being a sole proprietor.

STEP THREE: CORRECT ACCOUNTING

The SBA is not going to approve a business loan to buy you out, if you cannot show that your business can support the loan.

Start tracking your accounting correctly right now. You want details in your accounting. Single line entry accounting (where you do one entry that just says “SALES” each month) is not going to cut it. That is lazy accounting and if your CPA is charging you for that, you need to fire them.

Your accounting should easily be able to detail where money is going, how frequently, and what expenses will carry over with the business.

STEP FOUR: BUILD INTANGIBLE ASSETS

We all understand tangible assets: a building, inventory, equipment, computers. Your business should also be collecting and tracking intangible assets. These add value to your business.

Intangible assets include:

• a website
• a customer list
• systems & training
• vendor lists
• email lists
• social media followings etc.

Each of these items add value to your business. They make it easier to loan against, they show a more viable business, and they increase your asking price.

STEP FIVE: REPLACE YOURSELF

If you business is built around you and cannot function at all without you,  you will not be selling a business. You will be selling a job.

People and lenders are significantly less likely to invest in buying a job vs a business. We all have jobs and we are quite busy with them. If we are required to be in your business eight hours a day, that is a problem.

Instead you want to be building the staff and creating the systems so your business can run without you.

STEP SIX: FIND THE RIGHT SALES TEAM

Long before you list your business you want to talk to a Business Acquisition Attorney and business broker. Start vetting attorneys and building relationships right now.

In my most recent attempted business acquisition I did not hire and attorney. Because the business sale was also real estate, I thought my real estate agent was all I needed and I was assured that was all I would need. 

I could not have been more wrong.

A real estate agent cannot sell your business nor sell you a business. You need a business broker and a Business Acquisition Attorney. A realtor can only sell you property. I learned this lesson to the tune of over $5,000.

STEP SEVEN: BUILD BUSINESS CREDIT

In order for your business to fund your retirement and in an effort to make selling your business as seamless as possible you want to start building business credit right now.

You can build business credit by:

• making sure your personal finances and business finances are completely separate
• applying for a free D-U-N-S number
• opening a business line of credit and
• using vendors that report credit history

The longer your business credit history, the easier it is for your business to get funding when you are ready to retire.

For more info on building business credit join the Launch Your Business Academy and get access to our business credit masterclass. 

DON’T WAIT

There are, of course, additional things that you can do and mistakes to avoid when you are actually ready to list your business. The steps above are things you want to apply right now.

Most business funding entities will ask for 3-5 years of financials for from your business. In our most recent acquisition attempt we had to show six years of financials.

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Start this process today so your business is ready when you are ready for a new stage in life

BONUS TIPS

If you are ready to exit your business now here are a few bonus items:

• Do not shutdown – this will kill your business’s ability to self fund
• Do not hire a realtor to sell your business, even if you business includes property
• Make two copies of your books, one without the additional expenses that are unique to you as an owner (like your car that isn’t included)
• Create a business growth and potential document
• Stage your business well – just like selling a house or a car, do the work to make your business look its best.

Check out our previous blog post for more info and tips. 

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Good luck! And happy retirement.

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