6 Tips to Selling Your Small Business in Southern California

But when faced with reality, you will need to make the tough decision to put your small business up for sale. But to make your small business worthy of selling at the best price, you need to take some actions. Let us first look at what small business is.It can become very difficult when selling your small business in Southern California. You have already put enough thought and effort into this business, so selling it will be hard at first.

Photo by Daria Obymaha from Pexels

To sell your business at the best value, you need to repair the office, prepare all documents, contact an experienced broker, and research the selling price

What Is a Small Business?

Corporations, partnerships, or sole proprietorships that are privately owned, and have small staff and employees are generally known as small businesses.

A small business does not necessarily mean that the business brings small revenue. There are other ways to classify a business as small, like shipments, sales, or assets. However, the most common classification of a small business is based on its employee numbers.

California follows U.S. Small Business Administration programs. According to these programs, it is declared that a business is considered a small business if the number of employees is less than five hundred.

If any company has over five hundred employees, then it will not be considered a small business even if its assets or shipments are equal to a small business.

Preparing Your Business for Sale

Let us look at some steps you can take to increase the value of your small business in Southern California and get it ready for sale.

1. Identify the Reason Behind the Sell

Although this might seem personal, a potential buyer might want to know the reason for you to sell. The best approach is to honestly tell the customer the reason instead of hiding any information about your business.

There can be multiple reasons for selling like retirement, internal dispute, too much pressure. Whichever the reason may be, come clean to the customer. This will increase the likelihood of your business getting sold.

2. Contact A Broker

A broker can help you handle your selling procedure and make things much easier. For example, a broker will be able to easily find a buyer for you and prepare all the necessary documents.

An experienced broker will also help with your exit strategy. Look for a broker that is near to you and contact them. Since you are in Southern California, you will easily find the best southern California business broker online. You will find many experienced brokers present in California online.

3. Make the Right Preparations

If you want to sell your business, then you must take some time to get prepared and to make up your mind about whether to sell your business. This is especially important for entrepreneurs with small businesses.

If the answer is yes, then prepare your business to make it appealing to the buyers at this time.

4. Conduct Necessary Repairs for The Office

The buyers will not be interested in a business that has a dirty or damaged office. This will automatically put a stain on the company’s reputation, and even if the business is a stable one, it will not get any good value in the market. So, the office needs to be in top condition.

Hire a professional and get the whole office cleaned. If there are any damages, then call someone to get the repair work done. You can search listings online to get the right repairman in California.

For water leaks, call a plumber. To repair problems in electric devices, contact an electrician and conduct a thorough inspection. You may even need to clean the place from VOC or asbestos.

5. Prepare the Necessary Documents

Now, the most important factor while selling a small business is the legal documents. According to the California laws, the following documents must be prepared:

  • Tax Return Report of at least three years.
  • Business Balance Sheets for the last three to five years
  • Bank statements
  • Current lease information
  • List of all the furniture that is getting sold with the business
  • Agreement records of all vendors and contract papers
  • Employment Contracts
  • Interim Financial reports

6. The Right Value of The Business

Now comes the toughest part, setting the right price for your business. If the price is too high, the buyers will not be interested, if it is too low, then you will face a loss. To determine the perfect price, first you need to understand the average market value. There are generally two prices.

The price the buyer asks, and the price the seller sets for the business. Now, there is no fixed price for a business as the price completely depends on the business itself.

Your broker can help you decide a price for your business as well. For example, a cannabis cultivation business in California could be sold at $25,000 depending on the size.

The Mistakes to Avoid

Now, as you make preparations for selling your business, you must also avoid making these mistakes. These include:

 Waiting Too Long

It might seem the right idea to wait a while and find the right buyer. But sometimes this might make the situation worse.

The longer you wait, there is the possibility to lose buyers instead of finding the right one. So, whenever you find a buyer who is asking for a suitable price, sell your business.

Handing Everything to The Broker

Well, the broker will indeed help in your selling procedures, but promoting the business is your job.

Your broker will not know too much in-depth information about your business and might not have the same passion as you have for your business. So, promoting your business should be done by you.

Final Thoughts

Selling a business might seem difficult at first, but with the right preparation and procedures, things will work out much smoother. The business may not always outshine your day job and doing both office and personal business can be tiresome. If things are getting too overwhelming, follow the steps listed in this article, and selling your small business in Southern California will become much easier.