5 Steps to Successfully Sell Your Small Business for Maximum Value

As a small business owner, you’ve poured tons of time, energy, and resources into your company. You nurtured it from a tiny seed of an idea into a real, tangible business that earns you money. 

But perhaps it’s time for a change. Let’s say you’re looking to sell your small business. You might be selling so that you can retire, travel, or just have some relief from the pressures of owning a business. But no matter your reasons, one thing is certain. 

Selling your business for maximum profit requires detailed organization, careful planning, and often, good timing. This article will walk you through the steps you need to take to get the best price for your business. 

Decide on the Right Time to Sell

Timing is often everything when it comes to getting the maximum price for your business. Ideally, a few different factors will align to create the perfect opportunity to get the best price.

A few factors to watch out for include: 

• If sales, traffic, and other business metrics are steady or rising

• When economic and industry trends are favorable for your business

• A time when your business does not have any major liabilities or projects in progress that you need to oversee

To understand the right time to sell your business, pay attention to these factors regularly. Then, you’ll be able to identify the right time to begin the sales process. 

Let’s take this website comparing the best nursing programs as an example. As a small affiliate business in the education niche, it would need to perform at a very high level to sell for its maximum value. 

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Here are a few things you might consider or analyze before deciding on the right time to sell this business: 

• Are monthly traffic and revenue increasing or decreasing? 

• How many affiliate partnerships do you have? How strong are these partnerships? 

• Are you following best practices for marketing and growing the website? 

• Is interest in the niche rising or falling? 

You’re more likely to get the best price for your business when everything is looking up. If your business is struggling in some way, make an effort to improve factors in your control before you decide to sell. 

This could mean investing in new marketing initiatives, adding a new product or service, or hiring consultants or other experts in your field that can help raise you up to a strong selling position. 

What to Do Before You Sell Your Business

It can take months or even years to sell your business, depending on how large, complex, and valuable your business is. More valuable businesses tend to take longer to sell. 

As you’re waiting for the right conditions to get the maximum value for your business, there are a few things you can do to prepare for a smooth sale when the time comes. 

Boost Sales & Traffic

Before beginning the sales process, make a concerted effort to improve traffic, sales, or other important business metrics. You can use a tool like Semrush to analyze the traffic of your site for example. 

Prospective buyers will want to see that the business is thriving, so it’s in your best interests to make sure that it is. Optimize your sales process, make sure your marketing efforts are in good shape, and hire and train a team that can deliver the best possible results. 

Plan Your Exit Strategy

As the owner of a small business, you can’t simply sign a few papers and walk away. You’ll need a clear transition plan for your responsibilities in the company. 

When selling your business is on the horizon — maybe two or three years away — start thinking about what it will look like when you leave. Will you stay on as a consultant for a while? Will you assign core business operations to a trusted second-in-command? 

There are many ways a transfer of ownership can work in a small business, so put together a plan that feels right for you. 

As you plan your exit strategy, be sure to think of any major projects or business ventures you have on the horizon. 

To ensure the continued success of the business you’re selling under new ownership, it helps to have a change management strategy in place. This will minimize the impact of the transition on production, revenues, and employees. 

5 Steps to Sell Your Business for Maximum Value

Once you’ve determined that the time is right to get an excellent price for your small business, it’s time to start preparing for the sale process. 

You should expect the sale to take several months. It may take even longer if your business is large and valuable. You should also be prepared to pay transaction fees or other sums for different parts of the process. 

Follow these five steps to sell your business for maximum value. 

1. Organize Your Financials & Paperwork

The first step in selling your business is to get organized. Ideally, you’ll already have some sort of organizational system in place, so this step should just be a matter of confirming that everything is in order. 

Aside from writing a business proposal, work with an accountant to make sure all of your financial records (such as balance sheets and cash flow or income statements) and tax returns are up-to-date and easily accessible to anyone who may need them during the sale. 

Protip. You can use bulk exports and report extractions in the majority of accounting software programs such as Quickbooks or Freshbooks. Cashflow reports that these programs help show the financial growth and your company’s health and that’s what buyers will be interested in.

At a minimum, you’ll want to provide three years of tax returns and records. You can also ask your Chief Revenue Officer to work on those papers (if you don’t know what they do exactly, here’s a CRO job description)

Other business paperwork is important too. For instance, you’ll want to compile all the paperwork from your LLC registration, employee records, and any deeds or titles to company property like an office building or vehicle fleet.  

Another important factor to take into consideration is your business credit. If your business is in debt, this will have a negative impact on your selling ability and price. If you’re in debt, consider working with a credit repair company before selling the business. 

2. Valuate Your Business

Next, it’s time to get an idea of what your business is actually worth. You may have estimated this on your own, but when you’re ready to sell, consider hiring a professional appraiser to conduct the business valuation. 

While your business’s value is important to the sales process, that number isn’t necessarily the sale price. External factors may impact the market for your business, and there may be opportunities for you to increase the business’s value through your own efforts. 

When working with the appraiser, make sure you consider all of your business assets and sources of income. You can utilize revenue management tools to conduct a more informed qualitative analysis to insure all relevant assets have been considered.  . In general, you’ll want to think through three categories of business assets: 

1. Physical assets: Physical assets include office space, furniture, computers, and other technology. It’s everything that can be physically sold or transferred to the new owners. 

2. Digital assets: Online content, including blogs, social media accounts, and even promotional videos, can all contribute to your business value, especially if they generate revenue through ads or sales. 

3. Other intangible assets: This includes things like patents, copyrights, and other intellectual property. These are often overlooked but very important types of assets. 

3. Hire a Business Broker

For most small business sales, it’s a good idea to hire a business broker or sales professional to assist in finding buyers and taking care of paperwork. 

According to Quicksprout, business brokers are incentivized to get the highest price, since they work on commission. That makes them experts in fetching the maximum value for your company. 

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If you go the business broker route, expect to pay some extra fees — fees that are well worth it for the peace of mind you’ll get. Your broker will conduct their own appraisal of your business and work to find the best possible buyers. 

4. Find and Screen Qualified Buyers

Once you and your business broker have agreed on an asking price, you can start searching for and screening qualified buyers. 

You should expect to field multiple offers. Make sure to do a thorough preliminary screening to avoid providing sensitive business information for unqualified buyers. 

It can be smart to think through some criteria for your ideal buyer. 

While their ability to pay your asking price is obviously key, here are some other buyer characteristics to consider: 

• Their business knowledge and experience

• Their knowledge of your industry or niche

• How their long-term goals for the business align with your initial vision

• Their attitude toward your employees or existing products and services

• Whether you’re selling to a team or an individual

To find the right buyer more quickly, you can screen for buyers that are pre-approved for loans from the Small Business Administration or another lender. You can also leverage an initial offer against another to maximize the price you get for your business. 

5. Complete Sale Paperwork

Once you’ve found a buyer and an offer that you like, all that’s left to do is finalize the paperwork and the bill of sale. 

The bill of sale is far from the only piece of paper you’ll need to sign, however. You may also need to sign a purchase agreement, noncompete agreement, and paperwork related to security, web properties, and other assets. 

This paperwork requires a lot of information about your business, so getting your paperwork in order in step one will help things move faster at this stage. For that, you can use a contract management software to help you get things done quickly and easily. 

Consult closely with your lawyer and business broker to make sure you understand all the terms of the sale. Once you’ve initiated the last line of the sales contract, then congratulations — you’ve just sold your small business. 

What To Do After Your Sell Your Business

In most cases, there’s not a ton to do once you finish signing the sale paperwork. However, there are a few things to keep in mind as you move into the post-sale phase. 

First and most important is to fulfill any transition duties the sale agreement entails. If you are staying on at the company to oversee a key project or the transition as a whole, uphold your end of the deal entirely and set a good example for your employees. 

Beyond that, here are a few other tips to keep in mind: 

• Get paid up front. Installment plans and other forms of payment invite more risk for you, so make sure you’ll receive the bulk of your payout as soon as possible. This helps you pay any fees associated with the sale and ensures that your buyer has the necessary funds. 

• Talk to your accountant. If you received a large payout from the sale of your business, you may face certain taxes or other fees. Work with your accountant to make a plan that meets your financial obligations and goals. 

• Keep emotions out of it. You’re likely very emotionally invested in your business, but for the smoothest transition, you’ll need to process those emotions after hours. Make decisions based on good business sense rather than how you feel. 

How Much Will You Sell Your Small Business For? 

Selling your small business is a big undertaking, and even more so when you’re committed to getting the maximum value for your company. 

With some organization and careful planning, you can sell your business for its maximum value with relative ease. Once you’ve cleaned up your company’s records and valued the business, find a reliable business broker who can help you seek out buyers and finalize the sale. 

Then, you can use your payout to invest in a new business venture, travel the world, or simply retire in style.

This article was provided in collaboration with Ray Hein, founder and CEO of Propel PLM, a cloud-based product success platform. He is a SaaS veteran with 20+ years of PLM, development and product launch experience in both hardware and enterprise software organizations.