Selling your business is a big decision. If you’re looking to sell a small business on my own without the help of brokers or agents, it can feel like a daunting task. However, with the right steps, you can navigate the process successfully and keep more of the proceeds in your pocket.
In this guide, we’ll walk you through the essential steps to sell your business on your own—from getting your business ready for sale to closing the deal and moving on to the next chapter.
Why Sell Small Business on My Own?
There are a variety of reasons why business owners may choose to sell a small business on my own, rather than working with a broker:
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Save money: Brokers typically take a commission (often around 10%) for their services. By selling on your own, you keep more of the profits.
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Full control: You’re in charge of the sale process. This includes setting the asking price, deciding on who to negotiate with, and how to market the business.
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Personal touch: As the owner, you have the most knowledge about the business and can speak to its value and potential in ways no broker can.
While it may seem like a lot of work, selling your business without a broker can be a rewarding and cost-effective option if you’re willing to put in the time and effort.
How to Sell Small Business on My Own: The Essential Steps
Step 1: Prepare Your Business for Sale
Before you can put your business on the market, it’s essential to prepare it for sale. This process helps ensure that your business is in its best shape, making it attractive to potential buyers.
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Organize financials: Ensure that your financial records are up-to-date and easy to understand. This includes balance sheets, profit-and-loss statements, and tax returns for the last 2-3 years.
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Fix any outstanding issues: If there are problems within your business (unresolved customer complaints, operational inefficiencies, etc.), address them before listing your business for sale.
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Make the business independent: Buyers will be looking for a business that can operate successfully without the current owner. If you’re overly involved in day-to-day operations, this could reduce your business’s value. Consider delegating tasks or developing systems to ensure smooth operations in your absence.
The more organized and “turnkey” your business looks, the more attractive it will be to buyers.
Step 2: Determine Your Business’s Value
You wouldn’t sell your home without knowing its value, and the same applies to your business. To sell a small business on my own successfully, you need to determine a fair price. Overpricing or underpricing your business could delay the sale or lead to a less-than-ideal outcome.
There are several ways to calculate your business’s value:
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Comparable sales: Look at what similar businesses have sold for recently. Many online platforms, like BizBuySell, list businesses for sale and their final sale prices. These can serve as benchmarks.
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Revenue-based valuation: A simple way to value your business is to apply a revenue multiple. For example, if your business generates $500,000 in annual revenue and your industry’s multiple is 2x, your business might be worth $1,000,000.
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Profit-based valuation: Another common method is applying a multiple to your business’s profits (EBITDA). For example, a business with $200,000 in annual EBITDA might be worth $600,000 if the industry’s multiple is 3x.
Once you know the value, you’ll be ready to set a fair asking price.
Step 3: Create a Marketing Plan
To sell a small business on my own, you’ll need a solid marketing plan. This step is essential for reaching potential buyers and getting the word out.
Consider listing your business on:
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Business-for-sale websites: Platforms like BizBuySell, BusinessBroker.net, or Flippa are great places to list your business. These websites attract a wide range of serious buyers.
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Industry-specific sites: If your business is in a niche market, consider listing it on industry-specific forums or websites where potential buyers are likely to be looking.
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Social media: Utilize your business’s social media channels to promote the sale. You can also post about it in LinkedIn groups or relevant Facebook groups.
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Networking: Reach out to your business network—suppliers, customers, competitors, and partners. Letting them know your business is for sale may help you find the perfect buyer.
Remember to create a compelling listing. Highlight your business’s strengths, financial stability, growth potential, and unique selling points.
Step 4: Screen Potential Buyers
Once you start receiving inquiries from buyers, you’ll need to screen them carefully. It’s important to find buyers who are both qualified and serious about purchasing your business.
Ask potential buyers:
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Why are they interested in your business?
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What experience do they have in the industry?
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Do they have the financial backing to complete the purchase?
You can also ask for a letter of intent (LOI), which shows that the buyer is serious and committed to negotiating the deal.
Step 5: Negotiate the Sale
Now comes the negotiation process. This is a crucial step in how to sell a small business on my own, as it involves finalizing the sale price and terms.
Some important things to negotiate:
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Sale price: Make sure the buyer understands the value of the business and is willing to pay a fair price.
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Payment terms: Determine whether the buyer will pay a lump sum or in installments, and outline any contingencies, such as earn-outs or seller financing.
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Transition period: Many buyers want the seller to stay on for a period of time after the sale to ensure a smooth transition. You’ll need to decide how involved you’ll be after the deal is closed.
Step 6: Close the Deal
Once both parties have agreed to the terms, it’s time to finalize the deal. This typically involves:
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Drafting a purchase agreement: Have a lawyer help you prepare a legal agreement that outlines the sale terms and any conditions.
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Transferring assets: Ensure that all assets, intellectual property, contracts, and licenses are transferred to the buyer.
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Receiving payment: The buyer will make payment according to the agreed terms, and you’ll transfer ownership of the business.
Helpful Tips for Selling Your Business on Your Own
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Be patient: Selling a business can take time. Stay patient and don’t rush the process.
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Seek professional advice: While you’re handling the sale on your own, having a lawyer or accountant review the documents and agreements can help prevent legal issues.
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Stay confidential: Keep the sale process as confidential as possible to avoid unsettling employees or customers.
FAQs
1. How long does it take to sell a small business?
The sale process can take anywhere from 6 months to a year, depending on the complexity of your business and the buyer’s readiness.
2. How do I find buyers for my small business?
You can use online business marketplaces, industry-specific websites, social media, and your network to find potential buyers.
3. Should I hire a lawyer to sell my business?
While you can sell on your own, having a lawyer assist with the sale agreement and legal matters is highly recommended.
4. How do I ensure a smooth transition after the sale?
Work with the buyer to create a clear transition plan, including training, introductions to key contacts, and knowledge transfer.
Conclusion
Selling a small business on your own is a process that requires preparation, patience, and attention to detail. By following these essential steps to sell your business on your own, you can take control of the sale and potentially save on broker fees.
Ready to get started? Begin by determining your business’s value, preparing your business for sale, and marketing it to the right buyers.