The Challenges of Selling a Business
There are many reasons you might want to sell your business. Whether you want to focus on other aspects of your life, you have discovered being a small business owner is not for you, you need money fast, or you hope to start a new business, you should know what the process of selling is like before you commit to it. Unfortunately, there are a few challenges you are likely to face. This guide will go over two of the most common and major challenges a seller might encounter.
If you sell your business, that is going to put the employees in a strange position. It is natural that they will be worried about their jobs when conversations about selling the business come up. Even if they keep their jobs, how will work change under a new owner?
The key is to keep your employees in the loop. Your employees should be among the first people to know once you have decided for sure that you will be selling. This will give them as much time as possible to scope out other options. You should be completely up front about your intentions. Some buyers hope to buy a business and keep it operational, while other will buy it and make major changes or tear it down entirely. This affects your employees greatly. You can reassure them that you have no intention of selling your business unless the buyer hopes to continue operating it. No matter what, however, some of your employees may leave.
Many buyers will only consider buying if you offer financing. This would involve you receiving monthly payments for the business, rather than a lump sum. This is very risky and unappealing for sellers. After all, you are essentially already receiving monthly payments from your business. With seller financing, the biggest thing that changes is that you are no longer the owner. Additionally, it is not uncommon for sellers to default on these payments.
Unfortunately, sometimes it is unavoidable to sell with seller financing. If this is the case, make sure your contract is airtight. You should include the consequences for failing to make a payment in the contract. You should also only sell it to someone who you are completely confident in. If someone looks inexperienced, naïve, untrustworthy, or unsure of themselves, it is not a good idea to sell your business to that individual. It is a good idea to have a business lawyer in Washington, DC write up your contract and to hire an attorney if payments stop.
Thanks to Brown Kiely, LLP for their insight into business law and selling a business.