Building a business is hard work. You have to build a brand and a reputation from scratch, navigate competition, and go through the laborious trial-and-error process of finding what works for your business.
All of this hard work is worth it when you’re finally ready to turn your investment into profit by selling your business. Read on for a breakdown of how to successfully sell your business in Texas.
Step 1: Get Your Business Ready for Sale
When you first decide to sell your business, there’s a lot to do before it’s ready to hit the market. Just think about what it takes to sell a house—many people make repairs, install upgrades, and generally clean the place up before listing their house. Businesses are the same way.
Here are five ways get your business ready to appeal to a buyer:
- Conduct a Valuation: Experts like those at IBEX Middle Market Business Brokers can professionally assess your business and determine how much it is worth.
- Gather Financials: Organize all of your balance sheets, tax documents, and other financial documents and ensure they are transparent.
- Streamline Operations: If there are any areas that need cleanup in your day-to-day operations, now’s the time to make these changes. Consider working with an expert to identify and solve inefficiencies in your business.
- Review Legal Considerations: Make sure your business is in compliance with all applicable state and federal laws.
- Expand Marketing: If your business is not well-known, you can increase its value by investing in content marketing or rebranding measures.
Step 2: Consult the Experts
Once you have all of your ducks in a row, consider bringing in some experts to advise you throughout the sale process. For instance, an experienced business broker can work like a real estate agent, advertising the sale of the business and finding suitable buyers.
Meanwhile, a business attorney can help you make sure your business is in compliance with all of the applicable laws, as well as draft contracts and handle negotiations. Finally, a tax professional or business accountant can help you keep clear financial records and maximize your capital gains.
Step 3: Find a Buyer
Next, it’s time to find a buyer (if you don’t already have one lined up). If you’re using a business broker, they can help spread the word and attract potential buyers. If you’re doing it by yourself, you may want to start by approaching potential investors or competitors.
When looking for a buyer, it’s important to pick the right buyer. Screen potential buyers to see if they have a track record of success, are genuinely interested in seeing your business succeed, and are capable of managing the demands of your business.
Step 4: Close the Deal
This is the part you’re waiting for. Once you’ve chosen your buyer, it’s time to negotiate and close the deal.
Go into negotiations with an idea of the bare minimum you’re willing to accept and start a couple of notches above that. Once you’ve decided on a price, discuss payment terms. Will the buyer be paying for the business in full or will they be paying you in installments with interest? These are the questions to keep in mind.
If you aren’t already working with one, have an attorney review your sale contract. Make sure everything is airtight and straightforward and that all of the terms are included.
Step 5: Don’t Forget About Taxes
It would be wonderful if getting paid for your sale was the last step in the process. Unfortunately, there’s one more thing you need to do before you’re in the clear: Pay taxes.
Texas has no capital gains tax, which means you’ll be mostly concerned about federal tax. The federal capital gains tax rate is generally zero, 15, or 20 percent, with a few exceptions. The amount of taxes you’ll pay in total depends on a few factors, including how much your sale was, and how your accountant or tax professional recorded the sale.
Your taxes may also look different depending on how you structured the sale. For instance, there are different tax percentages for selling stocks versus assets.
Wrapping Things Up
Selling your business can be bittersweet, but if you set yourself up for success, it should be mostly sweet. Get your business ready for sale by conducting a business valuation, gathering your financials, and consulting some experts.
Once you find your buyer, make sure your contract has everything it needs and that you’re in compliance with state and federal laws. Lastly, don’t forget to pay your taxes. If you follow these steps, selling your business can be relatively stress-free.
