Selling your business might seem like a monumental decision, ranking right up there with getting married or buying a new house. However, it doesn’t have to be a scary one. With the right amount of planning and preparation, you’ll have your business in tip-top shape and up for sale in no time.
The experts at The Vernon Company share 10 steps to help you prepare. Here are the first five:
- Define your goals. When it comes to selling a business or seeking a partnership, there are as many versions of the pot of gold at the proverbial rainbow’s end as there are individuals. Are you looking to free your time to sell more, or to spend more time with your family? Are you at a sales plateau where reaching the next level requires more resources than you’re equipped with or staffed to handle? Perhaps you simply want to sell promotional products and leave all the administrative stuff to someone else. The goals you set will shape the type of buyer or partner you seek.
- Know your value and be realistic. Selling promotional product distributorships is not the same as selling other businesses. Much depends on your customer base, gross profit margin, the occurrence of one-time large orders or steady stream of smaller, consistent orders, etc. Think hard about your historical earnings and determine realistic projections. Then, compare that to other local companies through a local chamber of commerce or regional promotional products association. Make sure you know what kind of asking price you can look for and think about an earn-out over time if you’re partnering with another business.
- Get some help. Consider finding an independent consultant to help you with the process – the ideal individual would have experience in the promotional products industry. There are companies that specialize in bringing together distributors that wish to sell or be sold. Do your homework to make sure they have your best interests at heart; you may find that aligning with or selling to a larger industry distributor makes the most sense for your company.
- Keep it confidential. While you’re deciding, limit exposure. Perhaps you have a trusted mentor in the industry you can discuss your decision with – it’s helpful to have advice from someone who knows you well and has seen your business grow over many years. Sometimes you can gain insight from noncompetitive peers. If you know anyone who has sold their business, casually ask a few questions. You don’t need to reveal anything about your own intentions.
- Determine your ideal outcomes. At the end of the process, what tangible assets do you hope to gain? It could be guaranteed order financing, credit/billing administration, a technology platform, customer support, etc. Make a list so it becomes part of your negotiation.
In January, we’ll cover the important numbers you should know before selling, as well as customer considerations, company culture and finalizing/transitioning. Insights come from the team at The Vernon Company, founded in 1902. It employs over 265 account executives, 135 administration and production employees and serves more than 25,000 customers from its Newton, IA, corporate headquarters. To learn more, visit www.lovevernon.com.