The size of your business matters. Why? Because it affects how quickly your business is sold. And in these uncertain economic times, how quickly your business sells matters now more than ever.
Each transaction matters when you’re selling a business, regardless of what tier it falls into (mom and pop, main street, large corporation, etc.) As a premium main street business, you can’t exactly advertise that your company is for sale. These sales must remain confidential so that you don’t upset the balance of the business’ economy. So let’s walk through the various sizes of companies and what you can expect when selling one.
Small companies face unique challenges in a sale because it is hard to place a value on a business that is so tightly wrapped around one to three people. These businesses also do not have the revenue that supports a higher than average business valuation. I suggest getting your earnings up to $500,000 annually before you consider selling your company. The opportunity cost generally isn’t worth it for anything below this number.
Small Businesses (Premium Main Street)
Small businesses with 5-50 employees, or premium main street businesses as we refer to them, will compile a confidential business review when selling. They will send this out to interested business buyers, highlighting their selling points.These companies take their business revenues to determine valuation and come up with the most probable selling price. They then have this information available to prospective buyers after they sign an NDA. When buying one of these companies, buyers can get funding up to $5 million through the SBA to fund the purchase.
Selling larger corporations are drastically different and significantly more complex than smaller companies. These corporations tend to have large, multi-person boards, public shareholders, and huge staff.
All businesses are valued on how a buyer sees risk. Don’t just assume your company is worth something because that’s what one person told you - seek out an expert, like myself and my team.
Want to know more about selling your business in this new economy? Reach out today and let’s chat.
Katie is coach, entrepreneur, and deal-maker that partners with business leaders in creative ways to maximize potential. She understand the complicated lives of entrepreneurs and believes the world would be a better place with even more successful small businesses. A fourth-generation entrepreneur, Katie purchased her first business in 2010 and has partnered with hundreds of business leaders to accomplish their goals, challenges, and visions for a bigger future. Katie is certified in Conversational Intelligence® — the neuroscience of leadership, and holds a B.A. in Business Management from Luther College in Decorah, Iowa.