How To Sell A Small Business By Owner, Fast.
Do you ever have those days when, regardless of how much you love your business, you feel like you want to sell it - like NOW? Selling a business isn't easy and how to sell a small business, fast, by owner, is an even bigger challenge.
The number one mistake business owners make -and I’ve been there too- is believing that they can sell their businesses quickly. They underestimate the time it takes to prepare, market, and close a sale.
If you think that selling your business will be done and dusted in just a few months, you might need to adjust your expectations. Optimally, even with a well-prepared business, expect the sales process to take between 6 to 12 months from preparation to closing. If your business isn't immediately appealing to buyers, exit-ready, or not valuable enough for you to want to sell it -which is true for about 80% of businesses- the timeline could extend to several years, rather than months.
Therefor, understanding how to prepare for your exit is crucial. Without the right strategies, implemented early, you risk making the sales process longer or having to compromise on price.
If you're unsure about the right approach, don't worry. This in-depth article will guide you on the appropriate time and method to plan your exit.
How Long Does It Usually Take To Sell A Business?
Most business owners don't have a realistic idea of how long it will take to sell their company. Once you decide to sell, you must find a buyer who is interested in your business. This can take weeks or even months. Once you've found a prospective buyer, you'll need to negotiate a sales price and agree on terms. This can also take some time.
“Due diligence was supposed to take 90 days instead it took 6+ months. Even with clean financials and great process documentation. It was not anyone's fault but once you get the lawyers involved things slow down.” Nathan Hirsch founded and sold Freeup.net
Once you’ve found an interested buyer, it can take several weeks or even months for the buyer to raise the necessary funds and review all the accounting and financial documents, known as the due diligence and closing process. This process may take several months — a similar timeframe to the process of selling a home — so be prepared.
How fast can I sell MY business?
As mentioned above, there’s no hard and fast rule about how long the selling process will take. Besides the exit-readiness of the business, there are many other factors at play, including the size and profitability of your business, the current economic climate, and the buyer's financing. Small businesses typically sell faster than larger ones because there are fewer details involved. But that doesn’t mean there can’t be delays.
That said, most businesses that end up selling, sell within a year of being put on the market.
If you're looking for a quick sale, you may need to be prepared to accept a lower price.
Alternatively, if you’re not in a rush to sell, you could try to find a buyer who is willing to pay a premium for a business that is turnkey and ready to go.
Get clear on the reason WHY you want to sell, now
Is now a good time to sell your business? You've invested so much time and effort into starting it. Are you sure you want to sell it?
It's essential to be clear about why you're selling:
Maybe you need to sell your business fast because of personal reasons, such as taking care of your health, paying off debts or loans, handling a divorce, or simply feeling overworked and finding your business too demanding.
Or, perhaps you want to sell your business fast for financial reasons, such as estate planning, paying taxes, making investments, or needing capital for a new business idea.
If you’re considering selling your business on a tight turnaround, potential buyers will be curious as to why. However, if your company generates a stable profit, has a significant number of customers, or long-term contracts that guarantee its consistency in the future, buyers will consider it attractive regardless of your reasons.
Figure out if this is 100% what you want to do and why. If you’re in doubt, then maybe it’s not the time to sell.
Proven Tactics: How To Sell A Small Business By Owner
Before taking the bold step of selling your business, it's crucial to have a well-thought-out plan. This will not only ensure a smooth transition but also helps you maximize your profits.
“I’d love to say I started my business with an exit plan in mind. But truly, it didn’t occur to me till about year 12! Now that I started another business, it has a radically different business model as I’m in a different stage of life. Owners need to plan for that too.” Leona Watson, exited founder of Cheeky Food Events.
9 Steps To Sell A Small Business By Owner, Fast
Step 1 to 6: Preparing For The Sale:
Step 1: Start planning from the start of your business (or now)
Step 2: Get an independent business valuation
Step 3: Streamline your business operations + strategically increase value
Step 4: Determine the ideal timing for your exit
Step 5: Organize your legal and financial documents for the due diligence process
Step 6: Develop a robust transition plan for your exit
Step 7 to 9: The Sales Process:
Step 7: Contact a business advisor or a business broker or a platform
Step 8: Due diligence on the buyer (Look for a pre-qualified buyer)
Step 9: Negotiate and finalize the sale
9 Steps To Sell A Small Business Quickly
Steps 1 to 6: Preparing For The Sale
Step 1: Start planning from the start of your business (or now)
“The best time to plan your exit was when you started your business, the second best time is now.”
The journey towards preparing and selling your business for maximum value begins the moment you draft your business plan. Businesses that are built to sell choose different growth strategies and set up the business in such a way that the selling process is much easier in the future.
Step 2: Get an independent business valuation
Valuing a business is a common stage of the selling process, but to sell your business quickly, you need to ensure that your valuation aligns with what a buyer is willing to pay for your business. In the same breath, you need to be careful not to undervalue or overvalue your business.
Knowing what your business is worth, and what criteria buyers (or their advisors) will value it against, is crucial. This will help you improve certain areas of your business – like your intangible assets – and develop an explanation for areas you cannot improve or update.
Although the topic of valuing a business is beyond the scope of this article, you can read our in-depth valuation guide “How Much Can I Sell My Business For?” for comprehensive guidance, methods, benefits and examples.
If you want to know how much your business is worth right now, then calculate it now with our free and independent Business Valuation Tool:
Step 3: Streamline your business operations + strategically increase value
A business that operates smoothly and effectively is always appealing to prospective buyers. Strive to ensure your business is efficient and all processes are well-documented. Your team can triple your exit price, so have a team that runs the operations, and a second-tier management to rely on.
“Three things we’ve never cut corners on for our startups: Lawyer, accountant, and foundational software. When selling your company, you need to be able to move quickly. These three things are the backbone of your operations.” Melissa Kwan, exited entrepreneur and current cofounder of ewebinar.com.
Step 4: Determine the ideal timing for your exit
Timing your million-dollar business exit is an art and it significantly impacts the outcome of the sale. Ideally, you should sell when your business is thriving and market conditions are favorable. Avoid selling during a market downturn or when your business performance is subpar.
With 2,400 businesses for sale every day, we are currently in a buyer’s market, which will likely last for at least another decade. There are more businesses for sale than there are buyers looking to acquire. When they have the luxury of choice, you as the seller need to build an irresistible business for acquirers.
Advice: Do not wait until you're burned out or the market is in a slump. Stay informed about industry trends and seek professional advice to determine the best time to sell. By planning ahead, you will sell your business on your terms.
Exited business owner and current CEO of Create & Grow Georgi Todorov testifies that exiting fast is possible when you are ready and the market time is perfect:
“I sold my online business within one month. But that’s because I had prepared all details in advance. Also, I was proactively looking for a potential buyer.”
Step 5: Organize your legal and financial documents for the due diligence process
Having all your legal, financial and operations documents organized and readily available instills confidence in potential buyers and it will make your life less stressful once you start the selling process. Having your documents in order also increases your business's value.
“I think the smartest thing I did was implement a reward system for documenting processes, and made it a competition with staff, with random prizes given out. Every week for 6 months a new process was documented across all areas (Sales, Ops, Finance, Tech). The team owned the creation, the implementation and the updating. When I went to sell years later, the operational documents were all ready. It made us look professional, organized and best of all…valuable.”
Leona Watson, ex Founder and CEO of Cheeky Food Events.
Step 6: Develop a robust transition plan for your exit
A comprehensive transition plan, made upfront, makes your business attractive to potential buyers. It demonstrates your commitment to ensuring a seamless change of ownership.
Tip: Draft a detailed plan outlining how the new owner will assume control of the business.
Steps 7 to 9: The Sales Process
Step 7: Contact a business broker or choose a platform to sell your business
There are a number of small business marketplaces to sell your business on. If your business is in a niche industry, you may want to look into industry-specific resources to list your business.
In order to choose what platform to sell your business on, consider what type of buyers you are looking for. Are you looking for strategic buyers who will be interested in acquiring your business in order to expand into new markets? Or are you looking for financial buyers who will be focused on maximizing the value of your business? Once you have a good understanding of the type of buyers you are looking for, you can begin to narrow down your options.
Next, consider what type of transaction you are looking for. Are you looking to sell your business outright, or are you open to a partial sale?
Lastly, consider your timeline. Are you looking to sell your business immediately, or do you have the luxury of waiting for the right offer? Knowing your timeline will help you choose the platform that best suits your needs.
If you’re thinking: “I need to sell my business fast”, then hiring a credible business broker can help expedite the process.
Experienced business brokers will help you navigate the sale. Brokers can help with marketing plans, negotiations, and maximizing the value of your business to safeguard the best deal.
Although it is possible to sell a business on your own, hiring a qualified broker can speed up the process – particularly the due diligence phase. But it’s important to remember that brokers can be expensive. Brokers take commission from your sale, which will decrease the amount of profit you make from the deal.
Prepare a confidential information memorandum (CIM). A CIM is a written overview of your business that answers key questions nearly every buyer will ask.
Confidentially market your business. When selling your business, determine if the ideal buyer is an individual, competitor, or private equity firm; then create a plan that’s customized to attract your targeted buyer.
Step 8: Due diligence on the buyer (Look for a pre-qualified buyer)
Screen buyers and email them your CIM. Most buyer inquiries come through email. Include basic information about your business and ask the potential buyer to sign a non-disclosure agreement (NDA) before you send them your CIM.
Share information and meet with qualified buyers. Share your CIM and normalized financials with interested buyers. If the buyer asks a few follow-up questions, answer them if the buyer sends you a long list of questions, set up an in-person or phone meeting.
Step 9: Negotiate and finalize the sale
Negotiate and accept an offer. Ask the buyer for a letter of intent (LOI). Be persistent. If the buyer is serious, they will provide one. But make sure the buyer is financially qualified before you negotiate.
Manage the due diligence process. Due diligence should be a routine process if you are adequately prepared. Stay on track, be organized, keep a checklist, and keep the momentum going.
Handle the closing. Begin preparing for the closing weeks in advance. Keep the momentum moving and keep all parties organized with checklists and timelines.
One Factor That’s Hard To Control: Timing
Ever wondered if there's a secret to perfectly timing the sale of your business? Imagine leveraging AI to make strategic decisions on the right time, so you can sell your business for maximum value.
In today's fast-paced digital world, tools like ChatGPT can provide valuable insights to help you determine the best time to sell. Most entrepreneurs miss out on their big exit because they don't know when the right time is to sell.
Let's change that.
How Shifting Priorities Led To Her Agency Sale.
Yasmin Vantuykom never imagined selling Efluenz when she started it six years ago.
With just 15,000 euros in revenue during the first six months, her company grew rapidly, generating an annual revenue of 2.7 million, employing 25 people, and operating three offices in two countries.
Yasmin's personal life also flourished—she got married, had two kids, and renovated her home. Despite this success, she began questioning her future and the future of Efluenz.
Read her full exit story here.
Your Exit Strategy Challenge
Reflect on the steps provided in this article and start creating your exit strategy.
Consider the exit-readiness of your business.
Share your plan with trusted mentors and business owners to get valuable feedback.
So, when that feeling pops up again of wanting to sell your business now, be ready for it.
Prepare your business now to sell it for maximum value later.
Frequently Asked Questions:
How long does it usually take to sell a company?
There is no guaranteed timeframe for selling a business, but the consensus is that it takes anywhere between 6 and 12 months to sell. However, this timeframe can decrease or increase depending on the size of a business, its industry, and its operational efficiency.
How do you value a business?
There are many ways to value a business. The simplest way is to add up the value of all your assets and deduct your debts and liabilities from this. This will give you a general understanding of how much your business is worth, but not an exact valuation.
If you want to know how much your business is worth right now, then calculate it now with our free and independent Business Valuation Tool.
How do you sell a business quickly?
You can sell a business quickly by taking your preparation and valuation seriously. You can also sell your business quickly by hiring a broker, creating an effective business for sale listing, and encouraging a collaborative and respectful selling process.
How do you sell a business without a broker?
You can sell your business online via marketplaces like BizBuySell, Flippa, Baton and others, without using a broker.
If you’re thinking of selling your without a broker, you’ll need to prepare for certain challenges. These challenges might manifest in the financial and legal elements of selling a business. But you can certainly overcome these on your own. You’ll just need to conduct appropriate research on selling a business before you go to market.
Can you sell a failing business?
Yes, you can. But the process will look different. Some steps you can take to sell a failing business include:
Understand why your business is failing
Emphasize the value in your assets and potential growth
Get an accurate valuation and be transparent about the financial health of your business
Maintain a healthy and professional relationship with the buyer
What is the most efficient way to sell a small business?
The most efficient way to sell a small business is to prepare it for sale well in advance. Make sure your financials are up-to-date and organized, and gather all the necessary documentation. Next, establish a reasonable valuation for your business. You can then either market the business yourself or engage a professional broker to help find a buyer. Be ready to negotiate and prepare a sound sales agreement that protects you and the prospective buyer both.
What are the key steps to sell a business privately, without a broker?
To sell your business privately, first follow the 6 steps above, to prepare your business for a sale. Ensure that your financial records and other documentation are in order. Set a realistic valuation for your business and create an attractive business profile.
Then take the above steps 7 to 9. Use business listing websites (also called ‘marketplaces’ or ‘platform’) and your network to advertise the sale, and carry out your own due diligence on potential purchasers. When an offer comes in, negotiate the terms and work with a solicitor to draft the sales agreement.
What documents are necessary for selling a business?
You’ll need various documents when selling your business, such as financial statements, accounting records, tax records, and your business plan. It’s also important to provide agreements, contracts, and licenses, like lease agreements, supplier contracts, and relevant permits. Other necessary documents include employee and customer records, a list of assets and inventory, and any intellectual property documents.
What factors can increase the value of a business for a quick sale?
To maximize the value of your business and achieve a quick sale, focus on improving your financial performance, such as boosting cash flow and reducing expenses. Ensure your documentation is well-organized and up-to-date, and upgrade your assets and infrastructure where necessary. Strengthen your customer base, diversify your supplier relationships, and develop a talented, stable management team to make the business more attractive to potential buyers.
READ our In-Depth Guide: How To Increase The Value Of My Business, Before Selling It?
How do buyers finance a business acquisition?
There's no single answer to the question of how to sell a business fast. However, one important factor to consider is financing. Purchasing a business can be a major financial investment, and buyers will often need to secure funding in order to complete the purchase.
There are a variety of funding options available for business buyers, from traditional bank loans to private equity investments. The right choice will depend on the buyer's financial situation and the terms of the sale. The way the buyer chooses to finance will often affect the speed of the sale.
Buyer owns their money
One of the ways to sell a business is when a buyer purchases the business outright. It’s advantageous for the seller because it allows them to walk away from a sale with money in the bank and a clean break from their business. However, these deals limit the potential buyer pool to only buyers who have enough cash on hand, and it may take you some extra time to sell your business.
Seller Financing
Seller financing means you, as the business owner, finance a portion of the purchase price. This increases the likelihood that your business will be sold quickly as it’s more attractive to buyers. However, you, the original owner, will continue to be financially tied to the business even after the sale is complete. If the business thrives, you, the former owner, are paid your money back with interest. But if the business fails or the new owner is unable to pay their debts, you, the original owner, could suffer.
