Owning a construction business is amazing. You get to see your passion grow, you meet new people, and you are your own boss. But there comes a time when a business has run its full course, and it’s time to let it go. But we’re not talking about closing up shop completely — we’re talking about divesting your successful construction business to someone willing to take care of it.
But selling a business in Salt Lake City is just as hard as starting one. Rushing the entire process and choosing the wrong offer can be costly, and it would be heartbreaking to see something you made and nurtured go down the drain with thousands of dollars. We came up with a list of four things to remember to avoid a crash-and-burn situation while you prepare to divest your business.
1. Plan and start early
Closing a sale on a small business isn’t quick and easy work. The average business acquisition will take roughly two years or more. That’s a lot of time for so many things to go wrong, so a good way to approach this window of possibilities is to plan. Start planning as if you already have a buyer, even when selling isn’t on the horizon yet.
One wise thing to do in the planning stage is to ensure all of your bookkeeping is in order. Always update business records and relevant information, and save important data in an archive. That way, when a buyer comes and you’re ready to sell, you can hand over the information they need without worrying if you missed anything. This will also give buyers a good impression; that you’re running a tight ship, not a sinking one.
2. Get the right person to represent you
A lawyer is important, but make sure that the lawyer you get to represent your interests specializes in mergers and acquisitions (also known as M&A) before handing the reins over. It’s a common mistake small business owners make when presented with an offer. Not all lawyers have the skills to see a business sale through the end, and hiring the wrong one will land you with much less than you hoped for.
A good way to avoid this is to interview as many brokers as possible. Learn as much as you can about them, and ask about their perspectives on the situations. The right representative will help you get the offer your business deserves, and they will help make sure your brainchild winds up in good hands.
3. Spread the word carefully
So you have a broker, you’ve consulted with lawyers, and you have an idea what you want out of this sale. Now it’s time to find an actual buyer. As the business owner, it’s your responsibility to find leads on buyers. Look back at the connections you’ve made and strategize who you tell you’re planning to sell soon to maximize potential offers. When someone expresses interest, answer questions yourself– this is your business, after all.
You also have to be careful about breaking the news that you’re selling. Dropping the ball while you still have active clients is not a good choice, and it might spook people who might be interested. Ease your clientele into it gently, and find ways to get things done as discreetly as possible.
4. Know how much your business is worth
Pricing is important. Set your asking price too high, and you could turn buyers away. Price your business too low, and you lose a lot of money in the process, as well as potentially hurting the market for other small businesses. Finding the sweet spot of a “just right” price requires careful checking of your books and an awareness of how the market in your industry moves.
If you already have a figure in mind, compare it to the prices of other businesses for sale in your area. See if there’s an average price tag, and if you’re comfortable at that level, adjust your price around that. Lowballing yourself will give buyers the impression that your business is tanking (even if it isn’t), so avoid that by all means. And as we’ve said at the beginning: don’t rush this!
The bottom line
A smooth transaction is what all people involved want: a fair amount for the former business owner, a good acquisition for the buyer, and peace of mind for the brokers and consultants, knowing that the business is in good hands and everyone got their fair share of the benefits. Selling a business is tricky work, but if you keep these four tips in mind, you’ll be off to a great start.