How to Value & Sell Your Retail Business
Selling your retail business is a complex and time-consuming process that requires putting a course of action in place to help you attract the best opportunities. Our roadmap will help you determine the value of your business, hire the right help, develop an exit plan, market your retail business to buyers, and help you navigate negotiation to help close the deal successfully.
1. Understand the Value of Your Retail Business
The first step you need to take to prepare your retail business for sale is to understand its value. There are several methods to valuing your business, but many business owners and potential buyers apply pricing multiples to assess the market value range. Using this market-based approach will help you remain objective, which is vital when valuing a business for sale—allowing you to establish a realistic and competitive asking price.
2. Assemble a Team of Experts
As the business owner, you know the strengths and weaknesses of your retail business best. However, you'll want to enlist the right experts to maximize the value you receive for the business you've built. These may include your accountant, attorney, business appraiser, and business broker, such as Mark Herrmann with TrustMark.
3. Plan Your Exit
Whether you're selling your retail business to a trusted business partner, passing down to a family member, or listing on the open market, you'll want to establish an exit strategy. Ideally, you'll want to start planning your exit three years before you list your retail business for sale. This timeframe allows you to understand the value of your business, shore up expenses, get your books in order, and put a management team in place. These steps help solidify the earning potential of the business for potential buyers.
4. Find Buyers
Finding the right buyer for your retail business starts with a targeted and efficient marketing campaign. Retail business owners first need to establish if the sale will be held confidentially. For businesses listed for sale, it's standard practice to use discretion to help keep the business operating as smoothly as possible. The major benefit is that it helps maintain value, not to mention prospective buyers prefer sensitive information kept confidential. Of course, there are exceptions. For example, if your business is well known and respected, widespread knowledge that it's for sale is potentially beneficial.