After a few years, you might find yourself with a successful
work from home business. At this point you might find yourself ready
for a change or retirement, only to realize that you have no idea
what to do with the business and all the customers who rely on you
if you decide to take that course of action.
Here’s what you
need to do to get out of your business without destroying it, and
come away with a good nest egg.
Selling Your
Business
A business has more value than you might
realize. As a rule, businesses are bought and sold for somewhere
between one and two years’ worth of their profits. If you wonder
why, consider that the person buying a business gets not just a
proven business model, but also all the marketing materials and
other intellectual property (trademarks, copyrights, patents), an
existing customer base and years of built-up goodwill.
Home
businesses, however, can be more difficult to sell than other
businesses, for the simple reason that they don’t come with a
business premise. You might have the best opportunity by allowing
one of your larger competitors to do a ‘takeover’ of your business.
In this situation, they’re mostly paying for your name, branding and
customers. This can be lucrative for them, as they get to both
eliminate a competitor and expand their own business at the same
time.
You’ll need to put some effort into making your
business attractive to potential buyers — do some analysis on what
each element of the business is worth. Show that you’ve made lots of
sales in the past and will make many more in the future.
Above all, buyers are looking at your balance sheet, and the
business' potential for growth. They're in this because they want
their future earnings to be more than the amount they pay, and if
you can demonstrate how they could make that happen quickly, then
they'll have no reason not to buy.
Getting the Right
Price
Don't sell your business to the first person
who offers, however good their offer might sound — you need to get
offers from everyone you can think of who might be interested. You
may even discover they're quite willing to have a meeting with you
as a group, and get into a little bidding war.
Alternatively,
if you already have some staff, you may wish to offer them the
option to bid as well, providing them with a finance agreement.
Before you do this, however, you should get your lawyer and your
accountant to advise you on the best course of action.
You’ll
do better on the price of your business if you've planned your sale
in advance, instead of waiting to the last minute. The people who
get the best prices are the ones who take years to sell their
business, and are always prepared to walk away from the negotiating
table.
Time to Skim
One thing you
need to remember when you sell your business is that if there are
any shareholders other than yourself, they need to receive their
percentage of the business’ final sale price. Depending on the terms
of the agreement, you may have to buy their part of the business
before you can sell it, or give them the option to buy your part
before you offer it on the open market.
In addition, you’ll
have to pay taxes on the sale of your business, so always consider
how much an offer is going to be worth to you after tax, not
before.
Starting from a Powerful
Position
Once you've sold your business, there's one
thing left for you can do. With the lump sum from the sale, you're
in a great position to start a new business! If the sale didn't
include your equipment, then it shouldn't be too hard to get started
again — and this time, you'll have a lot more money to invest. Not
only that, but you've proven yourself to be good to lend to, so any
financing you need should be far easier to obtain.
Keep
building businesses and selling them every few years, and you can
quickly get hold of the resources to build something truly great.
Good luck!
