How to sell a business quickly in 5 steps
March 20, 2023 ⋅ 12 min read
Selling a business can be a very complex process. It takes time and hard work to successfully sell a business. No matter the reason you’re looking to sell, the goal is often the same: To sell your business as quickly as possible for as much money as possible.
Because selling your business is such a complicated process, It can take an average 6-9 months to sell a small business, and many don’t end up selling. Many small business owners have a lot on the line, as 80-90% of their net worth is tied up in their business. Any delay in the selling process can be a financial and logistical hassle for the owner.
If you’re looking to sell your business as quickly as possible, it's important to know what steps to take to get the process started. By understanding the selling process and putting together a solid plan, you can ensure that your business is sold relatively quickly and for the best possible price (assuming you have the right advisors around you). Below we’ve outlined five steps to sell your business as quickly as possible.
How fast can I sell my business?
There’s no hard and fast rule about how long the selling process will take. There are many factors at play, including the size and profitability of your business, the current economic climate, and the buyer's financing. Small businesses typically sell faster than larger ones because there are fewer details involved. But that doesn’t mean there can’t be delays.
That said, most businesses that end up selling, sell within a year of being put on the market. If you're looking for a quick sale, you may need to be prepared to accept a lower price. Alternatively, if you’re not in a rush to sell, you could try to find a buyer who is willing to pay a premium for a business that is turnkey and ready to go.
You can speed up the process of selling by working with advisors as early as possible like Baton and having the information needed for due diligence in order.
How long does it usually take to sell a company?
Most business owners don't have a realistic idea of how long it will take to sell their company. Once you decide to sell, you must find a buyer who is interested in your business. This can take weeks or even months. Once you've found a prospective buyer, you'll need to negotiate a sales price and agree on terms. This can also take some time.
Once you’ve found an interested buyer, it can take several weeks or even months for the buyer to raise the necessary funds and review all the accounting and financial documents, known as the closing process. This process may take several months — a similar timeframe to the process of selling a home — so be prepared.
Step 1: Prepare Your Business for Sale
The first step in selling your business quickly is preparing. First, make sure all of your documents are in order. This includes your accounting records, articles of incorporation, any licenses or permits you need, and other tax records. Having everything in order will make the sale process much smoother and will help to ensure that the buyer can hit the ground running.
Next, take a close look at your finances. Buyers will be interested in things like annual revenue, profit margins, and outstanding debts. If you're not sure where your business stands, now is a good time to get some professional help.
You’ll also want to develop some sort of plan to market your business to potential buyers. This includes a plan to target prospects, including a way to pre-screen buyers so you don’t waste time pursuing a buyer that wouldn’t be a good fit. You can also start working with an advisor.
Prepare for questions from buyers
When selling a business, owners need to be prepared for prospective buyers to ask tough questions during the due diligence process. This is a critical time in the sale, as potential buyers are assessing whether or not to move forward with the purchase. While it's impossible to anticipate every question a prospective buyer may have, there are some common ones that business owners can prepare for.
Some prospective buyers may ask about the financial health of the business, such as profitability and revenue growth. Others may want to know about the business's competitive landscape, key customers and suppliers, and intellectual property. Or they may inquire about the management team and their ability to continue running the business effectively post-sale.
By being prepared to answer these types of questions, business owners can increase their chances of successfully selling their businesses. However, it's also important to remember that prospective buyers are ultimately looking for a good deal, so owners need to be realistic about their asking price and be prepared to negotiate.
Step 2: Determine the value of your business
A business valuation or "business appraisal" is a process whereby a business’s assets and financials are evaluated to get an understanding of what the business could be worth to an external buyer. The key to selling a business successfully (and quickly) is aligning your valuation expectations with what a buyer is willing to pay. If you’re starting to consider selling your business, having an understanding of how others will value it is a great starting point.
Additionally, having an understanding of what your business is worth and how others calculate that value is a great way to increase the value of your business. By focusing on the right metrics before you want to sell, you may be able to dramatically increase what your business is worth when you’re ready to do something else. Factors like how much profit your business is generating, the value of your assets, intangible items like your reputation and brand, and the industry your business is in, all factor into your company’s valuation.
There are a few different methods you can use to value your business. One common approach is simply looking at your company's assets and liabilities. This will give you a concrete understanding of what your business is actually worth, but it doesn't take into account things like intellectual property. Another approach is to look at comparable businesses in your industry. This can give you a good idea of what potential buyers might be willing to pay for your business. To learn more, check out our guide to valuing your business.
Step 3: Choose a platform to sell your business on in order to find qualified buyers
There are a number of small business marketplaces to sell your business on (like ours!). If your business is in a niche industry, you may want to look into industry-specific resources to list your business.
In order to choose what platform to sell your business on, consider what type of buyers you are looking for. Are you looking for strategic buyers who will be interested in acquiring your business in order to expand into new markets? Or are you looking for financial buyers who will be focused on maximizing the value of your business? Once you have a good understanding of the type of buyers you are looking for, you can begin to narrow down your options.
Next, consider what type of transaction you are looking for. Are you looking to sell your business outright, or are you open to a partial sale? Lastly, consider your timeline. Are you looking to sell your business immediately, or do you have the luxury of waiting for the right offer? Knowing your timeline will help you choose the platform that best suits your needs.
How Baton can help
Baton can help small business owners sell their businesses more quickly by connecting you with a network of small business and finance experts, providing valuations, recommendations, and vetted partners.
Baton provides business owners with a free, data-backed business valuation estimate, along with personalized feedback to help enhance your small business’ value before you sell. You can track your business’ value over time and build a business sale plan of action using our tools, which can help streamline the sales process.
Should you sell your business yourself or get a business broker?
One way to sell your business is by using a business broker. There are pros and cons to using a business broker to sell your business. Business brokers provide the expertise, insight, and knowledge that can help you maximize the value of your business and make sure you get the best deal. But, not all business brokers are created equal, and many can be expensive. Plus, if you have experience selling businesses and don’t want to lose control of the sales process, you may want to go at it alone.
If you want to sell your business as quickly as possible, it may help to use a business broker, as they often help ensure the due diligence process — one of the longest portions of the sale process — goes efficiently and smoothly. They can help develop a marketing plan for your small business, accurately value your business, and find and vet qualified buyers for you.
However, keep in mind that brokers cost money — up to 20% of the total sale, which can limit the amount of profit you bring home. You can sell your business with Baton where we only take 6% of the sale.
Step 4: Clean up your accounting records & financial processes
If you're thinking of selling your business, it's important to make sure your financial statements and records are in order. Having a clean financial bill of health is a requirement to be able to sell your business, something that buyers will actively look for.
Take a close look at your financial statements. Are they up to date? Do they accurately reflect your income and expenses? If not, now is the time to make any necessary corrections. You should also make sure that all of your financial records are organized and easily accessible. Buyers will want to see things like profit and loss statements, tax returns, and bank statements. You’ll also want to make sure you have certain documents ready to go, including annual business planning and budgeting documents, cash flow forecasting documents, industry benchmarks and analytics, and any other metrics or dashboards.
Buyers will also likely want to review key business operation documents including procedure manuals, organization charts, employment agreements, process documents, and more. Having these documents ahead of time can speed of the process, so you don’t have to waste time hunting down information after the sale process has already begun.
You may want to consult with a financial advisor, bookkeeper, or accountant to get their professional opinion on your financial statement. They can do the work to help you clean up your finances and help you identify any areas that may need improvement before you put your business up for sale. By taking these steps, you can be confident that you're presenting your business in its best light — which will make it more attractive to potential buyers.
What's the best way to sell a business?
There's no single answer to the question of how to best sell a business. The process will vary depending on factors such as the size and type of business, the current marketplace, and the personal finances of the owner. However, one important factor to consider is financing.
Purchasing a business can be a major financial investment, and buyers will often need to secure funding in order to complete the purchase. There are a variety of funding options available for buyers, from traditional bank loans to private equity investments. The right choice will depend on the buyer's financial situation and the terms of the sale. The way the buyer chooses to finance will often affect the speed of the sale.
Buyer owns their money
One of the ways to sell a business is when a buyer purchases the business outright. It’s advantageous for the seller because it allows them to walk away from a sale with money in the bank and a clean break from their business.
However, these deals limit the potential buyer pool to only buyers who have enough cash on hand, and it may take you some extra time to sell your business.
Seller financing means you, as the business owner, finance a portion of the purchase price. This increases the likelihood that your business will be sold quickly as it’s more attractive to buyers.
However, you, the original owner, will continue to be financially tied to the business even after the sale is complete. If the business thrives, you, the former owner, is paid their money back with interest. But if the business fails or the new owner is unable to pay their debts, the original owner could suffer.
Many owners decide to sell for personal reasons like wanting to invest capital in something more interesting or profitable or wanting to spend more time with family. Here are some key questions to ask yourself when deciding the right time to sell.
Though there are a number of steps you can take to sell your business quickly, it's important to remember that rushing the process could result in leaving money on the table.
By taking the time to prepare your business for sale, determine its value and find the right platform to market it on, you'll be in a much better position to get top dollar for your company.
When you're ready to take that step, Baton is here to help. We offer free business valuations to help you understand if it’s the right time to sell and provide guidance to help you maximize your valuation. Get started today and see how much your business could be worth tomorrow.