How to Sell a Home Based BusinessGet some valuable tip on how to sell your home based business
Sell a Home Based Business
A few things to consider before you sell your business:
- Keep good accounts. Stop thinking of your business as a hobby or a part-time business. Approach it on the basis that someday someone will come along and offer you a lot of money for your business. That is the mindset that you need.
- Form a good relationship with a legal advisor. There are many online lawyers these days who will quote reasonable fees and who deal with businesses just like yours. The best time to establish the proper trading entity is before you start trading. You have to be careful to separate the intellectual property from the trading entity so that your most valuable assets are protected in case things go wrong. There are many other things that are good legal advisor will help you with. You don’t need to see a lawyer every week but you would be well advised to get early advice and have a legal review whenever you start a new venture or make a substantial change to your business operation or structure.
- Form a good relationship with a business broker. A business broker can provide you with a valuation of your business as well as give you tips on how to increase its value. And at the crucial time of sale, the broker is by your side to help you through the process. The most successful transactions with been involved in were where we had a relationship with the business owner prior to the business going on the market.
- Protect your intellectual property. This means your trademark, trading name, any designs or patents that you have and of course your copyrighted material. Things that you have created are owned by you, however, in respect of trademarks designs or patents you need to take steps to protect them.
- As your business grows, so do your responsibilities. You may be restricted as to what you can do in a home office, once you start to grow the business. As you put on staff, you need to consider insurance, public liability and a host of other obligations that a business owner has. The local council may have a say as to what business you can run from home, and a neighbour is likely to get a little agitated as he/she sees more people visiting a business set in a quiet neighbourhood.
- Ask yourself whether your business is going to remain a home-based business in the long term. If not, there is going to be a good time for you to move into other premises. It may be easier to sell if it is operated from external premises. You may be entertaining buyers at home and this could be interfering with your private life. Is that what you want?
- Get a valuation of your business from a business broker or business valuer. Your accountant may know how to value the business, however, you need validation from someone who is involved in transactions on a regular basis and knows what people are paying for your type of business.
- Right from the start document all your processes. When you begin a home business, there is a lot of experimentation and a lot of things won’t work. However, when things start to work, create a document that will turn into a Operations and Procedures manual. This will also form part of your business plan which we will look at later.
- Create a business plan and use it as a selling tool. Also create a SWOT (strengths, weaknesses, opportunities, threats) analysis of your business. When you sell your business, you should use a professional (business broker) to prepare an information memorandum about your business. This is a key document that highlights the strengths of your business and acts as a good guide to a buyer as to how the business can operate successfully in the future under new management. When he goes sell your business the combination of your business plan, swot analysis and information memorandum form a great platform from which you can launch your business sale program.
- You might have started your business, but one of your first goals once you’re established it is to separate yourself from the day-to-day operation. You do this by introducing systems, introducing technology, and by hiring people to do things that you once did. Let go of operational tasks.
- Run your business to build its profit, but never lose sight of the fact that the main question for the buyer will be whether the profit is going to still be there once the owner has left the business. We say that a business will have value if it has all of these three things profitability, maintainability and transferability of income.
- As a home-based business owner, you need to stay in contact with like-minded and like-situated people. It can be lonely working from home. Join a networking group where there are plenty of home-based owners and learn from their experience. Alternatively, book a space at a serviced office where you can go on a casual basis to mix with other business owners.