Not sure if you can actually sell your small business? Consider these questions before you talk to a buyer. If the business is not ready, creating a plan to get the business sale-ready is a wise idea.

Is your small business profitable?

Buyers rarely want to  take on a project to fix or turn around an unprofitable business. Most will see opportunities to  improve margins, increase revenue, and grow a customer base, but not a  wholesale overhaul.

If your business is not profitable, you may consider an asset sale as an exit strategy. changes to the business to improve profitability is viable if  you have a few quarters to implement strategies..

Is your business  growing?

Next on a prospective buyer’s list is the trendline of the business. Is it growing?

Having an off year is one thing, and most buyers will want to see three or more years of financials. This allows them to understand trends in the business and one-time events that may impact revenue.

Can your business run without you? 

Obviously, if you want to sell your business, it will need to continue without you! Before you say “yes, it can,” let’s examine what a prospective buyer will want to know:

• Are vital customers under contract or reliant on the relationship with the owner?
• Are suppliers/vendor agreements in place or reliant on relationships with the owner?
• How will key employees respond to a change in ownership?
• Is the reputation or brand of the business too closely tied to the current owner?
• Will you be able to step away from the business and resist the temptation to meddle?
• Are systems and processes documented for others to take over, or are things “in your head”?

A new owner wants a seamless transition and will invest time upfront in assessing if this is feasible. Frequently a buyer will seek a transition period. They may even require a contractual commitment from you to work alongside the new owner for a while. The purpose of this is a smooth transition so the new owner knows how to run the business.

Can you actually sell your business?

It is wise to put yourself in the mindset of a potential buyer and look at what will appeal to them and what could raise flags. The potential buyer is making a purchase and doesn’t have any emotional attachment to it.

Knowing what needs attention and what needs explanation before you start talking to people about selling is critical. Give yourself time to make these adjustments.