Between the weather and Valentine’s Day, it’s been an interestingly busy week in the middle of February. One of my more interesting meetings this week was with three business partners who were trying to find a buyer for their business. This was a passion project they created a few years ago. It was a fun side-hustle at the time. Now it’s grown to a point where it is taking up more time than they anticipated. Overall, it’s a good problem to have if you’re running a business. But since it’s a new position for all of these partners, we settled in with our coffees to discuss their options.
Common Ways to Sell Your Business
There are plenty of complex ways to sell your business. You can create intricate mechanisms with all kinds of tax implications. But more commonly, you can sell your business in three main ways:
- Find a buyer who will take over the business entirely and continue to operate it;
- Find a buyer who will merge the business into their own business; and
- Sell your interest in the business to one of your current partners.
If none of these are options, you can also simply close down the business and each partner can go their own separate way. This fourth option is often the least desirable since you really aren’t selling your business.
How Much is My Business Worth?
One of the best ways to determine how to sell your business is to figure out how much your business is worth. Is it a profitable business that can survive without you? Do you have inventory to sell? Does it solely rely on you to make it run? Is there a license of some type to operate it? If there’s a license, can it even be transferred? Is there demand in the market for your business?
These are a few generalized questions that may come up. For a more concrete look at what your business is worth, you can get a professional valuation of your business. A buyer who doesn’t know your business well would be able to use this as evidence of the health of your business.