8 Questions To Ask When Selling A Business

Recent data indicates that about 12 million businesses will be sold in the U.S., with over $10 trillion in business assets moving hands in the next 20 years (at the time of this publication). Plenty of investors are looking for new ways to get their piece of the profits. That could translate into a higher price tag for sellers who enter the sales process strategically.

Our experts are here to help you get the most out of your sales experience. We’ve put together a list of eight questions you should ask yourself before selling your business. With preparation, you’ll be in a mindset to find a strategy that offers new opportunities for profitability and success.

Read on to learn more. Below, we have eight of the major questions to ask when selling a business.

1. Why Am I Selling My Business? 

While it may seem cliché, this question is the first step to success for many as they prepare to sell their businesses. Defining your “why” allows you to visualize how this sale can shape your legacy and can help you clarify your motivation for the sale. 

For example: Those who are selling for personal reasons may have the luxury to take the process slow and thoroughly vet each potential buyer, choosing investors that are willing to keep the legacy alive (if that’s a priority). Those selling for business or financial reasons may not have the luxury of such time and may be looking to sell quickly (whether or not the investor aims to keep the legacy intact). 

Another factor that plays into your “why” is your long-term goals. Are you looking to finance an upcoming retirement? Or maybe you’re selling your business to move to a new venture or market sector and establish yourself there? 

Thinking about these questions to ask yourself when selling a business is a critical step to an effective sales strategy: They can directly impact your price and negotiation strategies. 

2. What Is My Business Worth? 

The answer to this question is both subjective and objective. 

As such, there are four primary evaluation methods that can come into play: 

• Income-based valuation: This type of business valuation typically reviews your earnings and cash flow. 

• Asset-based valuation: Asset-based valuations are just as they sound and are rooted in the value of your tangible assets. 

• Market comparison valuation: This valuation type compares your business’s pricing strategy with how other competing businesses in the sector are priced. 
• Personal valuation: Albeit an informal valuation form, your personal valuation of your business inevitably can influence your pricing strategy. Therefore, it’s worth mentioning here. 

As you prepare for a sale, it’s important to remain as unbiased as possible. To avoid the trap of assumed value, many sellers choose to hire a professional broker to help them determine the unbiased, true valuation of their business. For example: The team at IBEX does this for many who are trying to sell a business in Austin or the surrounding areas. When other questions to ask when selling a business arise, we come prepared with the answers.

3. Should I Sell My Business on My Own or Hire a Broker? 

While the IBEX team does help those looking to sell a business in Houston and the surrounding Texas suburbs, many clients might opt for a self-sale. While there are considerations for both options, most sellers opt for broker support in the end. Brokers offer invaluable shared decades of expertise that positively impact the sales process. They also bring direct access to interested buyers—shaving time off your sale, in most cases. 

Despite these benefits, some might appreciate the lack of commission fees and autonomy associated with self-sales. The choice between broker sales support and an independent approach is ultimately yours. 

Self-sales aren’t without their cons, however. Going solo can demand a major up-front time commitment from the seller and shroud the process in difficult-to-decipher legal complexity. 

4. Who is My Ideal Buyer? 

There are typically three types of buyer categories on the market: Strategic buyers (such as industry mavens), individual purchasers (such as professional entrepreneurs or legacy business owners), and private equity or investment firms. 

Across these buyer types, all are looking for profitability, growth, and industry position potential — so you can use this knowledge to polish your paperwork and prepare to sell a business in Dallas as efficiently as possible. 

5. How Do I Prepare My Business for Sale? 

This, out of all of the questions to ask when selling a business, is among the most critical to answer. Why? Because it drives the logistical flow of your business sales process. 

There are three primary areas of preparation to consider when you are in the sales planning process: 

• Financial Preparation: In this stage, you’ll arrange all financial and tax documents you need to sell successfully. You’ll also identify and resolve whatever debts or liabilities that you can, creating a strategy to address the rest.

• Operational Preparation: Review all contracts and agreements, as well as process documents to ensure everything is tied up for the buyer. 

• Legal Preparation: If you’re looking to sell a manufacturing business in Austin (or something else), sellers should clear any disputes or other legal issues before selling. Seek professional counsel to complete this step. 

6. Which Advisors Should I Involve In The Sale Process? 

Involve financial and legal advisors in the sales process. These parties work overtime to help ensure that your sale is legitimate and as risk-averse as possible. Your broker may have recommendations and referrals for you to consider, or you can source your own. 

7. What Are The Tax Implications of Selling My Business? 

Before you sell, it’s important to understand the potential tax implications of the sale. Research capital gains tax, as well as alternative tax strategies to help you actively reduce tax burden (such as seller financing or installment sales). Speaking with a tax professional can give you a full understanding of how much you’ll owe, along with ways you can mitigate excessive tax fees. 

8. What Will Life Look Like After The Sale?

The last of the questions to ask when selling a business is: what does my future hold? What will life look like? There is often an underrepresented emotional impact that comes after you sell something that you’ve built or nurtured. 

To fully answer this question, we recommend you consider: 

• Your future financial plans. You’ll ultimately be receiving a large slice of the proceeds from the sale. How do you plan to use them? Are you going to save? Go on vacation? Invest in a new venture? The opportunities are endless. 

• Your emotional state. How do you currently feel about the sale? Your reaction may be mixed or swing from one feeling to another. In either case, we recommend you reach out to others in the seller community to openly discuss how you feel and process the sale over time. 

• Your future steps. You are the driver of your destiny. Feel empowered to be excited about what’s just around the corner—whether it’s retirement, consulting, or an entirely new venture. 

Have More Questions? We Have Answers

Your list of questions to ask when selling a business is likely much longer than these eight queries. That’s where the experts at IBEX come in. 

Our specialists have shared decades of experience and are ready to ride alongside you as you take the reins of your upcoming business sale. Whether you’re a seasoned seller or you’re new to the game, we’ll show you the next steps to take to increase profitability potential and efficiency. 

For more information and to get started today, please connect with us online or via (512) 310-2966. It’s our pleasure to serve you.