You’ve put in the years, labored long days, sweat the bad times, and high-fived in the good as your business grew. Now, it looks like it’s time to step away into the next life stage, slay the next dragon. It’s time to sell. (You think.)
Whether you’re headed to another career or a seaside retreat, get what your business is worth before you walk away.
Because if you’re not careful, you won’t.
And, by the way, there are TAX implications that will absolutely come into play if you’re considering this. Your entity structure can make a big difference for what is possible. And we might want to consider together what entity formation you’re operating under, if you have this in mind.
Let’s talk: 757-857-1880
And one more thing before I dive in…
Wednesday, September 15th is the due date for third-quarter estimated taxes. If you’re reading this, and it’s already past … don’t fret, just pay it now … there’ll be some small penalties, but nothing crippling. The idea is to avoid LARGER penalties if the clock continues to tick.
Things To Consider Before Selling Your Hampton Roads Business
“Everything you’ve ever wanted is on the other side of fear. ” -George Addai
When you’ve been in the grind of running your business for a while, there inevitably comes a point where you begin to daydream about selling your business and moving on. The funny thing is, the actual sale can often show up right out of the blue. And since that’s true, you don’t want to be caught off guard by a lack of preparedness.
Think, what would you want to see if you were the prospective buyer? (Solid numbers, for starters.) How do your assets compare with your liabilities? What’s your income stream?
Make sure your annual financial statements are on hand and up to date showing your financial position, cash flow, and operations expenses. Have a professional (someone like yours truly) audit your financial statements going back about three years – which makes for a good-looking record, complete but not too long, especially concerning your profits.
Don’t forget to include more recent financial info like Paycheck Protection Program (PPP) loans, if you had one. (Related to this topic and depending on your business, be prepared to talk with prospective buyers about any recent supply chain troubles.)
This whole process lets you spot and highlight your best numbers for an eventual buyer. More importantly, you can find and fix any money or tax issues – because nothing can kill your deal faster.
Get what you’re worth.
It also puts you in a position to talk up how you beat your competition. By the way, you’ll want industry standards on hand to show how your Norfolk business stacks up – and, more importantly, to make sure you get a good sales price.
What if some of the numbers aren’t great? Then admit it. A buyer worth your time isn’t going to expect perfection in your operation, and it’s way better they hear about a problem from you now than unearth it in their due diligence.
The buyer doesn’t want any surprises during this sale process. You want them even less.
Your books are only the start when getting ready to put your business on the market. Here’s what else to do.
Make nice with the taxman. Tax troubles are another surefire deal killer. If you have any doubts with any of the tax jurisdictions you deal with – your state or the dreaded IRS – make a call to see if you can check off that your tax history with them is squeaky clean.
Be sure all of your filings and payment obligations are up to date. Keep your tax preparer in the loop – which leads us to the next possible trip-up.
It’s time you got professional help. Selling your Hampton Roads business is one of the biggest deals of your life. Do NOT risk tackling this without the help of a lawyer and/or tax expert. Remember: Odds are your buyer is going to know more ins and outs of this process than you do and probably with their own professionals advising them. Don’t go it alone.
Ditto with marketing the business sale. Without experts to help, you might find yourself with fewer potential buyers – and you definitely don’t want that.
Your employees aren’t leaving, remember? Do you have key people right now that the business is going to want to keep? Talk early and often with a prospective owner about how to retain those folks. Sweeten the pot?
This one gets overlooked a lot: If you’ve got a major account that depends on just you, groom an employee now to take it over. Your buyer is going to want to know that losing you doesn’t mean losing that account.
Don’t forget — you do still have a job. Big, life-changing deals are exciting – and distracting. Don’t become so wound up in the sale that you forget the day-to-day management of your Norfolk business. It’s not going to impress the potential buyer if you drop the ball on the current sale or your inventory comes up short because you forgot to place a big order. Force yourself to keep paying attention.
Have a plan. Really, are you ready for this move? How exactly does the sale fit into your plan?
Let’s say you aim to retire. Are you ready emotionally to leave the rat race? Got a plan to fill your suddenly free days? And whether you plan to kick back or immediately go into another business, is this sale going to net enough to meet those goals?
This could be one of the biggest things you ever do, so take the time to think through and prepare for it — and find a professional you can trust to walk you through the process.
We’re always here to help you… and your Hampton Roads business.
To your bottom line and a beautiful exit,
Virginia Accounting Services