5 Important Factors To Consider Before You Sell Your Business

You deserve it. You have spent decades making financial, personal and emotional sacrifices, and now is the day to reap the reward. As a fellow business owner and a family of small businesses, I know firsthand how the sigh of relief sounds when you sell. But, don’t rush to put the for sale sign up too quickly. First, you must consider maximizing your value, tax strategies and life after work. To help, I’ve listed five critical factors to consider before selling your cherished small business.


Business owners often sell to a key team member or family with back-of-the-napkin math. This math is often rooted in what the owner thinks it’s worth or how much the owner needs. Both of those methods fall short. I suggest you consider completing a valuation comparing your business to similar businesses recently sold in the marketplace. Ideally, but not entirely necessary, you can pay for a certified valuation that adds a layer of detail by someone who is an expert in valuing businesses.

Ensure Your Books Are In Order

I’m sure you expense your gas, weekly lunches and maybe even some dry cleaning on your profit and loss statements. As you move closer to the exit, you must take the personal items off the books. This exercise will also wake you up and help you realize how much your business supports your lifestyle. Cleaning up your books makes it easier for buyers to value the business and, simultaneously, enables you to understand how much money you need in life without the business.

Practice Pivoting

Your identity has been in the business, and your exit will be more emotional than a freshman moving to a new high school. It’s important for business owners to think deeply about what time they get up in the morning and what they do after that first cup of coffee. You don’t want life to be only news and gardening, so it’s important to think of your life outside of the business.

Identify A Successor

According to a UBS survey, 89% of business owners who plan to sell and consider keeping the business within their family cite a lack of interest from their heirs. Selling to a stranger is likely not what you had in mind when your toddler sat in your desk chair. Because the next generation is not expected to grab the baton, it is imperative to gauge interest from multiple potential buyers. Business brokers, industry groups and peers can all play a role in finding the right partner. And, just like real estate, the price tends to go up with multiple bidders competing.

Consider Gifting Equity

If you are charitable, you may want to consider gifting a portion of your business to a donor-advised fund (DAF) before signing any selling agreements. This gift will allow you to receive an immediate tax deduction and avoid paying capital gains on a portion of the business. Of course, please speak to your tax advisor to discuss your unique situation to ensure it works for you.

Being a business owner is undoubtedly one of our country’s most magnificent opportunities. But hard work isn’t enough; I want you to finish strong. Think deeply about what life looks like post-transaction and consider all alternatives before inking the deal. If you take your time and have wise counsel, you can sell with no regrets.

The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.

Originally published on Forbes.

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