how to sell your business plan

Sign up for our newsletter for product updates, new blog posts, and the chance to be featured in our Small Business Spotlight!

How to sell a business in six steps

Wondering how to sell your business so you can make the most of your labor of love? First off, congratulations! Selling the business that you worked so hard to create and build is a big choice, and one that comes with planning, goal setting, searching (for buyers, and maybe even some soul-searching, too), valuations, and a whole lot more. So before you start advertising your business in the local classifieds, start here: how to sell your business— the right way. To help guide you, we’ve made a list of six simple steps that you can follow all the way to the bank. 🏦 How to sell a business in six steps:

• Time your sale properly
• Organize and prepare your finances
• Determine the value of your business
• Decided whether or not to use a broker
• Find a buyer

Ready to move from for sale to sold? Well, getting there will take longer than reading a few bullet points, but you’ve got to start somewhere! Let’s begin.

Step 1: Deciding to sell your business

Deciding to sell your business isn’t always an easy choice to make. It’s typically not a quick one, either. When you’ve reached this point, it usually means you’re in the midst of change, and that’s totally okay. Here are just a few reasons why people make the decision to put the proverbial “for sale” sign on their business:

• A career or a life change. For example, a divorce, a death in the family, illness, or, in terms of your professional life, you’ve decided that you’re ready for your next move and a total career change. This could be anything making the switch from running a boutique graphic design agency to opening a bakery or moving from owning a catering company to becoming a full-time accountant. You do you—and sell your business to help you get there.
• Retirement. You’ve put in your time and have decided to call it quits and join the flock of snowbirds who travel south six months of the year. We wouldn’t blame you. ✈️
• Differences: Perhaps after five years in business together, you and your partner have decided that you want different things, and selling the business is the best way to achieve your respective goals. Don’t stress, this happens. And when it does, it’s best to have the agreements made up in advance of the sale.
• It’s just not working for you: You feel overworked, underpaid, or simply bored. When this happens, you’ve got a call to make: should you stay or sell?

Whatever the case, it’s important to know the reason behind your decision. Not only will it help you sleep better at night, but potential buyers will want to know. Knowing the owner’s motivation can be a big part in their own decision making, helping them understand the reasoning behind the sale and how that might play a part in the future success of the business. When selling, remember to be open and transparent. This creates trust and a smoother process from start to finish.

Step 2: Time your sale properly

Making the decision to sell your business usually doesn’t happen overnight. But even if you magically woke up with the idea and decided to move it from dream to reality, the plan to get you there can take months—sometimes even years. This is why planning well in advance is key to making the most out of your business decision. Allowing for ample space and time in the process gives you the opportunity to make improvements that will increase the business’s valuation. For instance, you might want to clean up your finances , look at ways for reducing operational costs, and create a few campaigns to build up your sales. Or, if applicable, focusing on customer retention by launching a loyalty program, or executing a few tactics that will strengthen your brand awareness. While these tips do take time to go from ideation to implementation, they can make your business much more attractive to buyers. 

Step 3: Organize and prepare your finances

We just mentioned cleaning up your finances, but before you can do that, you’ve got to bring them all together in one organized place. Start with financial statements like balance sheets, P&L statements , and your tax returns from the past three to four years. If you’ve got the time, take the extra step to review them all with an accountant or Wave Advisor to make sure everything is in good order. You’ll also want to go into list-making mode to put together the following information:

• Equipment: What’s being sold with the business? 
• Contacts: Who are your suppliers? What are their related transactions? Anything outstanding? 
• Lease: How long is your current lease? What utilities are included? Are there options to renew? ‍

All of this information can go into an information packet for your potential buyer. This packet will provide an overview of your business, how it’s managed, and the day-to-day operations. It’s helpful for the buyer to have, so they can take over operations as seamlessly as possible.

Step 4: Valuate your business

How much is your business worth? That’s the question you want to find out as you prep for sale so you have a realistic listing price in mind. Emphasis on realistic. Don’t price the business too high or too low. When you do that, you’ll be stuck with less money than you deserve, or you’ll find that buyers are passing on the opportunity because the cost is too much. To help you get the right answer, look at hiring an appraiser to complete the valuation. As a third party, they’re neutral to the situation and have nothing to gain from the sale. Plus, they can draw up the necessary documentation that you’ll need throughout the process. Now, let’s take a step back to step two: timing your sale properly. When valuing your business, you need to give yourself enough time to get all your ducks in a row, which includes the time to boost your valuation. This can be done through cost-cutting tactics and initiatives to increase revenue, brand awareness, and customer retention. You know, all the things that a buyer wants to see before they sign the dotted line. 🖊

Step 5: Consider using a broker

When you’re selling your business, there are two ways you can go: with a broker or without one. If you’re selling to a close friend or relative, a broker might not be needed. If you decide that’s the case, you can save yourself a few bucks. But speaking of dollars, you might want to explore hiring a broker if you want the biggest bang for your buck. Brokers work off commission, so they’ll do what they can to help maximize the sale and their take-home amount. To help with the sale, they can handle the logistics of selling your business, freeing up your time so you can keep the business in good order until it's sold. For example, they might be working quietly in the background with their network of buyers to get the highest price. But before you decide to hire your broker, be sure to set your expectations, including advertisements, communication, and commission. This makes for a successful and transparent relationship, and a smoother sale.

Step 6: Find a buyer

Last but not least, you’ve got to find yourself a buyer. And you guessed it: this (likely) doesn’t happen overnight. To get you to that ideal point of having two to three potential buyers, consider boosting your advertising. This is where brokers can come in handy. Not only do they have their networks, but they’ve also got a few marketing strategies up their sleeves to help promote the sale of your business to those who are looking. Once you’ve found the buyer(s), keep in touch with them. You’ll also want to make sure they’re pre-qualified for financing before you give out any specific info about your business. Next, you’ll want to bring in your lawyer. Lawyers are extra helpful if you plan to finance the sale and need to work out the details with the buyer. On that note, make sure any agreements are put into writing, and have potential buyers sign a nondisclosure or confidentiality agreement so your business remains yours—at least until it’s theirs. Now, when it comes to price, allow yourself some wiggle room. Set a firm price or price range that you find reasonable. This lets you allow for negotiation, but on your terms. ‍ Lastly, the signed agreement. Try to get this into escrow , which means that a portion of the purchase price would be held by a third party until agreed-upon obligations are filled. These could be the transfer of assets or a resolution for any outstanding assets, as an example. ‍ After all is sold and done, you might find yourself with a few more business encounters, like a bill of sale that transfers your business assets to the lucky buyer; an assignment of lease; or a security agreement which lets you keep a lien on the business. Another legality? Your buyer might present you with a non-compete. By signing this, you’re agreeing that you won’t start a competing business that could lure your loyal customers away.

Selling a business FAQs

How much does it cost to sell a business .

This depends on the route you take. If you go with a broker and you sell your business for less than $1 million, expect to pay a commission around 10% to 12%. You’ll also have to pay fees associated with marketing, lawyers, potential transfer fees, and any improvements you make to your business to boost its appeal. 

How do you sell your share of a business?

The common way to sell your share of a business starts with an agreement. Try to put this in place with your business partner(s) ahead of any sale. This will help remove emotions and keep things running smoothly.

How do you sell a small business without a broker?

You don’t always need a broker to help sell your business. This can be especially true if you’re selling to someone you know, like a family member or friend. That said, you should still consult with your small business network to get their expertise and advice; trusted sources on the internet ( 👋 ); and those who’ve have sold businesses before.

The bottom line on selling your business

Selling your business comes down to six simple steps: the timing of your sale, organizing your finances, valuation, the choice to use a broker or not, and then finding a buyer. And even once all that’s complete, sometimes you need some help. Be sure to talk to your network of business owners or reach out to Wave Advisors for help. This is a big move, so you want to make sure that it’s the right one for you, and done right. Which, in the case of selling businesses, doesn’t always mean quick. But trust us: seeing that deposit enter your bank account will make all the hard work worth it.

Send invoices, estimates, and other docs:

• via links or PDFs
• automatically, via Wave

*While subscribed to Wave’s Pro Plan, get 2.9% + $0 (Visa, Mastercard, Discover) and 3.4% + $0 (Amex) per transaction for the first 10 transactions of each month of your subscription, then 2.9% + $0.60 (Visa, Mastercard, Discover) and 3.4% + $0.60 (Amex) per transaction. Discover processing is only available to US customers. See full terms and conditions for the US and Canada . See Wave’s Terms of Service for more information.

Related Posts

The information and tips shared on this blog are meant to be used as learning and personal development tools as you launch, run and grow your business. While a good place to start, these articles should not take the place of personalized advice from professionals. As our lawyers would say: “All content on Wave’s blog is intended for informational purposes only. It should not be considered legal or financial advice.” Additionally, Wave is the legal copyright holder of all materials on the blog, and others cannot re-use or publish it without our written consent.

• Search Search Please fill out this field.
• Small Business

7 Steps to Selling Your Small Business

Selling a small business is a complex venture that involves several considerations. It can require that you enlist a broker , accountant, and/or an attorney as you proceed. Whether you profit will depend on the reason for the sale, the timing of the sale, the strength of the business's operation, and its structure.

The business sale will also require much of your time and, once the business is sold, you'll need to determine some smart ways to handle the profit. Reviewing these seven considerations can help you build a solid plan and make negotiations a success.

Key Takeaways

• Identify why you want to sell your business and make sure it's ready to be sold.
• Take the time you need to prepare your business for sale, determine the value of your business, and consider hiring a business appraiser.
• Decide whether you want to hire a broker or negotiate the deal yourself.
• Once you find a good buyer, there are a series of financial screenings and other steps that need to be taken to keep the process moving.
• Take the time to work with a financial professional and determine how you want to invest or otherwise use the money you make from the sale of your business.

1. Identifying the Reasons for the Sale

You've decided to sell your business. Why? That's one of the first questions a potential buyer will ask.

Owners commonly sell their businesses for any of the following reasons:

• Partnership disputes
• Illness or death
• Becoming overworked

Some owners consider selling the business when it is not profitable , but this can make it harder to attract buyers. Consider the business's ability to sell, its readiness, and your timing.

There are many attributes that can make your business appear more attractive, including:

• Increasing profits
• Consistent income figures
• A strong customer base
• A major contract that spans several years

2. Deciding the Timing of the Sale

Timing is everything. And that includes the time it takes to get everything ready to sell off your business.

Prepare for the sale as early as possible, preferably a year or two ahead of time. The preparation will help you to improve your financial records, business structure, and customer base to make the business more profitable.

These improvements will also ease the transition for the buyer and keep the business running smoothly. 

Selling a business involves negotiations, discussions, and a lot of leg work. If it's not possible for all this to occur in person, then certainly using services like Zoom or Skype to hold business meetings with potential buyers digitally is possible.

3. Getting a Business Valuation

Determine the value of your business to make sure you don't price it too high or too low. You can do this by finding and hiring a business appraiser to get a valuation .

Once you hire an appraiser, they will draw up a detailed explanation of the business's worth. The document will bring credibility to the asking price and can serve as a gauge for your listing price .

You can also determine the overall value of your business using some key metrics. Consider evaluating your company by determining the market capitalization , looking at earnings multipliers, book value, or other metrics.

4. Hiring a Broker

Selling the business yourself allows you to save money and avoid paying a broker's commission . It's also the best route when the sale is to a trusted family member or current employee.

In other circumstances, a broker can help free up time for you to keep the business up and running, or keep the sale quiet and get the highest price. That's because the broker will want to maximize their commission. Discuss expectations and advertisements with the broker and maintain constant communication.  

Even if you decide to sell your business to a close family member or employee, rushing through the sales process is not advised. However, if a relatively quick turnaround is needed, hire a business broker to speed up the proceedings.

5. Preparing Documents

Gather your financial statements and tax returns dating back three to four years and review them with an accountant. In addition, develop a list of equipment that's being sold with the business. Create a list of contacts related to sales transactions and supplies, and dig up any relevant paperwork such as your current lease. Make copies of these documents to distribute to financially qualified potential buyers.

Your information packet should also provide a summary describing how the business is conducted and/or an up-to-date operating manual. You'll also want to make sure the business is presentable. Any areas of the business or equipment that are broken or run down should be fixed or replaced prior to the sale. 

6. Finding a Buyer

A business sale may take anywhere from a few months to years. This includes the time you take to prepare all the way to the end of the sale, according to SCORE, a nonprofit association for entrepreneurs and partners of the Small Business Administration (SBA) .

Finding the right buyer can be a challenge. Try not to limit your advertising, and you'll attract more potential buyers. Once you have prospective buyers, here's how to keep the process moving along:

• Get two to three potential buyers just in case the initial deal falters.
• Stay in contact with potential buyers.
• Find out whether the potential buyer pre-qualifies for financing before giving out information about your business.
• If you plan to finance the sale, work out the details with an accountant or lawyer so you can reach an agreement with the buyer.
• Allow some room to negotiate, but stand firm on a price that is reasonable and considers the company's future worth.
• Put any agreements in writing. The potential buyers should sign a nondisclosure/ confidentiality agreement to protect your information.
• Try to get the signed purchase agreement into escrow .

You may encounter the following documents after the sale:

• The bill of sale , which transfers the business assets to the buyer
• An assignment of a lease
• A security agreement , which has a seller retain a lien on the business

A business broker often charges an average of 10% for businesses under $1 million; while that may seem steep, the broker may also be able to negotiate a deal that is better for you than the one you would have arranged by yourself.

7. Handling the Profits

Now that you've sold off your business, it's time to figure out what to do with the profit that you've made. The first instinct may be to go on a spending spree, but that probably isn't the most wise decision.

Here are a few things you may want to consider:

• Take some time—at least a few months—before spending the profits from the sale.
• Create a plan outlining your financial goals, and learn about any tax consequences associated with the sudden wealth.
• Speak with a financial professional to determine how you want to invest the money and focus on long-term benefits, such as getting out of debt and saving for retirement .

How Do You Sell a Franchise Business?

You'll need to work in conjunction with your franchiser, as they will need to determine if the new buyer is appropriate. Plus, that new buyer will need to sign a franchise agreement with the franchiser.

There are a variety of fees and rules associated with owning or selling a franchise that can be found in the FTC's compliance guide .  

How Do You Sell a Business Idea?

It's possible to approach a company with a business idea, but first, you need to do your research, prepare a presentation, and research and approach potential targets. While some business plans are best protected with a patent, others can be secured by getting a potential company you want to work with to agree to a non-disclosure agreement.

How Do You Sell a Small Business Without a Broker?

While many people would like to avoid the 10% a business broker may charge, the risks of selling on your own may outweigh the loss of money. But if you're going to go it alone, prioritize selling to a buyer you know, make use of the advice of experienced, retired owners and executives, and use all the internet resources available, such as the Small Business Administration, or the National Federation of Independent Business (NFIB) .

How Do You Sell Your Share of a Business?

Selling your share of a business to your partner(s) is a common ownership transfer method, particularly for small businesses. Having an agreement in place with your partners ahead of the sale will help smooth the transition, increasing the likelihood that both the staying and exiting partners benefit.

How Much Does It Cost to Sell a Business?

If you go through a business broker and your business is under $1 million, the broker's commission is likely 10% to 12%. Other fees that can crop up include attorney fees, marketing fees, and the costs of making any cosmetic or more substantial upgrades to your business so as to make it more sellable. There are also fees that may come up if you are transferring a lease to the new owner of your business.

The Bottom Line

Selling a business is time-consuming and for many people, it's an emotional venture. A good reason to sell or the existence of a hot market can ease the burden, as can the help of professionals.

It may also be possible to receive free counseling from organizations such as SCORE, and your local chamber of commerce may offer relevant seminars and workshops. When all is said and done, the large sum of money in your bank account and your newfound free time will make the grueling process seem worthwhile.

Small Business Chronicle. " How to Calculate the Selling Price For a Business ."

Inc. " What You Should Know About Working With Business Brokers ."

Score. " Selling Your Business ."

Federal Trade Commission. " Franchise Rule Compliance Guide ," Pages i, 24-119.

International Franchise Association. " Royalty Fee Requirement Definitions ," Page 1.

Small Business Chronicle. " How to Sell Ownership in a Partnership ."

• Terms of Service
• Editorial Policy
• Privacy Policy
• Your Privacy Choices

Selling a Business: A Step By Step Guide

Reviewed by

February 23, 2021

This article is Tax Professional approved

When considering selling a business, it’s time to get the compensation you deserve for all of the blood, sweat, and tears.

By understanding all the moving parts behind a business sale, you can worry less about the process and focus more on the outcome: getting a fair price for all your hard work.

I am the text that will be copied.

How to sell a business, step by step

While every entrepreneur’s journey is different, these are the steps you can typically expect to take when selling a business.

Step 1: Determine your commitments

While preparing to sell a business, it shouldn’t suffer. Selling a business takes time and energy. Getting too caught up in the process can get in the way of servicing your customer base.

Chart out an exit strategy to prepare for the sales process well in advance. For example, have a plan in place for any outstanding invoices and get the financial records up to date for prospective buyers.

You don’t need to know the exact amount of time needed to take care of every task, but it will help you come up with a timeframe for a successful sale. It will also help you plan what kind of professionals you need to hire.

Step 2: Hire professionals

Knowing how to sell a business is important, but equally important is knowing where to bring in help.

To jump to our overview of professionals to hire, click here . But as a quick rule of thumb, start with an accountant and attorney. Outside of that, it’s up to you to determine how much help you need from appraisers, brokers, or consultants.

Once you’ve found and contacted them, any of these professionals should be willing to sit down with you for a free consultation. Here are some useful questions to ask an appraiser , a broker , and a consultant .

Step 3: Make improvements to the business

Before selling a business, invest in improving its profitability and the efficiency of its day to day operations. This will help you get the biggest sale price possible by boosting the value of your business. The changes you make will depend on the type of business, but here are some ideas to get you started.

Put on a fresh coat of paint

If you have a brick and mortar location, simple updates—new fixtures and furniture, or even a (literal) fresh coat of paint—can help the business look more desirable to potential buyers.

Smooth out the operations

The business operating system (BOS) is the rulebook for how the company runs and how employees work together to achieve goals. A BOS that’s disorganized or poorly implemented doesn’t look good, and hurts the profitability of the business. Replace it with a new system, or revise the current one to make it more efficient.

Sell, sell, sell

Focusing on boosting sales before selling a business will make it look more attractive to buyers. This is especially the case with individual buyers—as opposed to organizations—who may be looking to benefit from the immediate cash flow that comes with buying a high-revenue business.

Diversify the client list

If more than 20% of your business consists of a single client, you could be at risk of giving buyers cold feet. After all, if that client decides they don’t like the new owner and decides to churn, it will put a huge dent in the profitability of the business. Leading up to a sale, try to take on new clients and diversify your portfolio, so this is less of a risk.

Step 4: Organize your financials

When it comes to financials, prospective buyers want as much transparency as possible. You’ll need at least three years of clean financial statements (balance sheet, income statements) to present to prospective buyers. Make sure that all income is accounted for.

You should also make sure you have a bookkeeping solution in place, so you can guarantee the new owner ongoing, up-to-date financial info.

Finally, if you have any assets on your business books that you’d like to keep for private use—such as vehicles or equipment—be sure to transfer them off the books. These assets need to be legally transferred into your possession, so they’re not falsely recorded as belonging to the business you’re selling.

Step 5: Set the sale price

Does your business rely on proprietary information or specialized knowledge? If so, you’ll get the most realistic business valuation from an appraiser or broker.

If you’re determining your own asking price, you should generally plan to set it at one to four times the seller’s discretionary earnings (SDE).

The SDE consists of:

• Your business’ annual net income before taxes
• Money your business makes from investments
• Depreciation and amortization of business assets
• Your personal compensation and benefits
• Non-recurring expenses.

The number by which you multiply the SDE—one to four—is determined by the current state of the market, your business’s competitiveness, and other factors. These are hard to pin down, but a qualified business consultant can help you figure out the SDE multiplier when selling a business.

Step 6: Get your paperwork in order

Besides financial records, you need certain legal documents to be prepared before you make a sale. The most important is the asset purchase agreement —a legal contract for selling your business’s physical and intellectual property.

This document typically runs 25–50 pages in length, and draws on your financial records. Often, the asset purchase agreement will also list your obligations as former owner. Most commonly this means staying on with the business for a set period, to consult with the new owner.

A non-compete may also be required. This would state that you do not intend to start a new business that would be competition to the old one you just sold.

Preparing one of these documents is a time-consuming task, which is why it’s important to hire an attorney who can handle it for you.

Step 7: Prepare a selling memo

The selling memo is an integral document when selling a business.

You provide the selling memo to prospective buyers, giving them all the information they need about the business so they can consider making a serious offer.

Your selling memo will include:

• An overall description of the business
• Information on the location
• The business’s strengths
• An overview of the competitors
• A description of the products/services
• Information on the day-to-day operations
• The marketing plan
• Key employees and managers
• Growth projections
• Potential buyer concerns
• Financial information
• The asking price and terms of sale

Check out ExitAdviser for a comprehensive rundown of the selling memo , and online tools to help you put one together.

If you hire a broker, they will prepare the selling memo for you.

Step 8: Put the business on the market

One major challenge you face when advertising a business for sale is maintaining confidentiality. If clients or employees find out you’re planning to sell, they may get skittish. And competitors could interpret the decision as a sign of weakness, and take advantage of it.

That’s why it’s usually wise to hire a broker. Not only will they have a large network to draw on, they’ll know how to discreetly approach potential qualified buyers.

However, in the event you do decide to sell a business without help from a broker, online services have made doing so easier than it once was.

BizBuySell.com tags itself as the biggest business for sale marketplace in the world, and will even help you find a broker if you change your mind about going it on your own.

Step 9: Negotiate the sale

When the right buyer is ready to purchase the business, they’ll submit a letter of intent to purchase . This document is non-binding; either you or the buyer can back out at any time.

It’s rare for a buyer to back out, though. By this point, they’ve already invested significant time in researching the business and putting together an offer.

Now, you may either accept the offer, or enter into negotiations with the potential buyer. Negotiating the sale of the business is its own special art form, and you may want to draw on advice from a business consultant during the process.

Step 10: Finalize the sale

Once you accept a letter of intent, you should expect to wait while the buyer performs due diligence. They’ll take a set period of time, from two to four months, to do this.

For the sake of due diligence, they’ll examine your business’ assets and liabilities, financial history, inventory, staff structure—just about anything that affects the day-to-day running of your business.

Due diligence is your buyer’s chance to get an in-depth look at your business, and make any necessary last minute moves—borrowing extra cash, or looking for additional staff—before officially taking over.

The sale of your business is completed when you and the buyer sign the asset purchase agreement prepared by your attorney, and any other supporting documentation that may be required depending on the specifics of your business.

The professionals you need to hire

A guide on how to sell a business can give you the steps you need to take, but professionals can ensure you’re getting the maximum value and cover you legally. That’s why it’s best to get a little help from your friends—“your friends,” in this case, being paid professionals.

At minimum, you’ll need to work with an attorney and an accountant.

An attorney can help you prepare the legal documentation for the transfer of assets, and make sure nothing you’re doing is likely to get you sued.

An accountant prepares the financial records you need to prove to prospective buyers your business is worth investing in.

Then, you should consider hiring an appraiser . For a fee— typically $3,000 to $7,500 for small businesses—an appraiser will tell you how much your business is worth so you’re getting the maximum value.

An appraiser will survey:

• How much money your business owes
• How much others owe your business
• Your business’s inventory, and other assets
• Past tax returns
• Your receivables and sales

Then, they’ll take into account the condition of the market, and your business’s place in it, to determine an asking price that will be attractive to buyers while also getting you the best price.

However, you won’t need to hire an appraiser if you hire a business broker . A broker will both appraise your business, and put it on the market for interested buyers. Typically, they’ll charge 5–10% of the commission price. Brokers find business buyers for you by preparing a prospectus for it, listing it on marketplaces, and tapping into a large professional network.

Finally, before putting up the “For Sale” sign, consider hiring a business consultant . Someone with experience in your industry can tell you ways to improve your business before making a sale so it will look more attractive to potential buyers.

Who to sell a business to

Equally important as how to sell a business is who you’re going to sell it to.

You can sell a business to a variety of individuals or entities. There are pros and cons to dealing with each.

Selling a business to an individual on the market

This is like selling your house on the market. You put it out there, and see which individual shows the most interest in becoming a small business owner (for the highest price).

Pros: Since the business is up for sale on the open market, you have the highest chance of finding someone willing to meet the conditions of the sale—for instance, an all-cash closing.

Cons: To sell on the open market, you will likely need to hire a broker who charges commission.

Selling a business to a family member

Roughly one-third of business sales are between family members. This can take the form of handing off the business to the next generation of owners.

Pros: As the business gradually changes hands and your family member takes over, you’ll still have some say in how the business is run. Also, a change of hands between family members means a smoother transition for staff and clients.

Cons: It’s unlikely you’ll be able to get the highest possible asking price for the business when selling to a family member.

Selling a business to partners

If the business operates as a partnership, you have the option of selling your shares to your partner. Most likely, when you formed a partnership, you signed a buy-sell agreement. This document outlines the price and procedure you need to follow to make the sale.

Pros: Following a predefined path for making the sale requires minimum effort on your part, and has a low impact on staff and clients.

Cons: Even as the buy-sell agreement makes for a quick change of hands, you may find yourself stuck with a price that seemed attractive when you signed the contract, but has become less appealing as the business has increased in value.

Selling a business to an employee

A trusted employee who’s great at their job and knows the business inside and out could make the perfect business owner—and the ideal buyer.

Pros: You can plan the sale well in advance. The first step is setting up a legally-binding partnership with an employee. Then, you’ve got plenty of time to arrange the hand-off, and extract yourself from daily operations, before the employee takes over completely.

Cons: As with selling to a family member, selling to an employee is unlikely to get you top dollar for the business.

Selling a business to multiple employees

You may be able to sell the business to qualified employees, if you have an Employee Stock Ownership Agreement (ESOP) in place.

Pros: Taking advantage of existing relationships with employees means you don’t need to put the business on the market. Existing employees are also more likely to run it successfully than a buyer you’ve never met before.

Cons: The ESOP needs to be put in place well before you make the sale. Setting it up demands extra paperwork and professional help .

Selling a business to another business

Large businesses and private equity groups buy companies as investments. In that case, they’re not looking to set it up with a new owner, but to use parts of the business—market share, competitiveness, profitability—to benefit a larger, similar business in their portfolio.

Pros: You’re more likely to secure a better selling price from another business than from individuals, and get an instant payout.

Cons: Depending on the sale terms, you may need to continue managing the business for a fixed period during the transition.

Further reading

• How to Find an Accountant
• Accounting Outsourcing: How to Hand off Your Financial Tasks (With Recommendations)
• How to Know If Your Small Business Is Financially Healthy
• How Long to Keep Business Tax Records and Receipts

Join over 140,000 fellow entrepreneurs who receive expert advice for their small business finances

Get a regular dose of educational guides and resources curated from the experts at Bench to help you confidently make the right decisions to grow your business. No spam. Unsubscribe at any time.

How To Sell Your Business and Make a Successful Exit

Published: August 24, 2022

You’ve done it: You took an idea, built it into a thriving business, and now you’re ready to sell. Congratulations — few entrepreneurs make it to this point. But now it’s time to ensure you make the right deal for your most prized possession.

Entrepreneurs choose to sell their businesses for many reasons, ranging from retirement and health problems to co-founder conflict and just plain boredom. In 2021, 8,647 businesses were sold, a 14% jump from the year before. 

Regardless of why you’re moving on, there are actionable steps you can take so that your business is sold at the right time, for the right price, and to the right buyer. 

Steps to selling a business

1) Educate yourself — Spend some time researching how to sell (you’re doing that now!) and figure out if you need to make any changes to get your business ready for the process. Common actions include adding business processes to make the business scalable, adding features that would open up a new market, or filing patents to lock down intellectual property.

2) Get organized — Do your due diligence by organizing your bookkeeping and financials and getting ahead of anything that could slow down the sale (such as signoff from other shareholders or active lawsuits or legal proceedings). Write a business memorandum: the company’s history, overview, and successes (highlight wins such as high talent retention or pivoting amid the pandemic). 

Also consider your business’s employee contracts, intellectual property issues, and federal and state tax requirements. To ensure you have time to fix all potential red flags, hire a third-party accounting firm to audit your financial statements a year or two before the sale. 

3) Get a preliminary business valuation — Turn to experts (e.g., business brokers, merger and acquisition advisers) to understand how much your company is worth, then consider if you’re willing to accept that price. 

4) Identify who should be your buyer — Find the why when thinking of your ideal fit. For example: Does the buyer have the cash to buy, or do they need financing? Have they bought companies before? Who would need to approve the deal on the buyer’s end (internally: founders, board members, management; externally: investors, banks)? Will they keep your team employed after the sale? 

5) Assemble your team — Putting together a team early can prevent a lot of stumbling down the road. Professionals who could help with the process include: 

• Corporate finance attorney 
• Business broker 
• M&A adviser
• Personal tax accountant 
• Company auditor 
• Sell-side bankers 

6) Go to market — For small businesses, owners can list their companies anonymously on business broker sites. For larger ventures, owners should identify potential suitors by looking at direct rivals and companies in related industries.  

7) Follow the deal to close — Deals can fall through days before closing; stay on top of it along the way by responding to requests within 24 hours, scheduling weekly calls with advisers, and pushing legal counsel to move documents forward quickly. 

A tip: Time is your enemy. Resist any efforts made to push the closing date. 

8) Prepare for life after sale — Your business is your baby: You should be hands-on when planning your company’s transition (this includes how the new owner will interact with your employees and customers). But entrepreneurs also need to give thought to life after their exit, from retirement planning and managing sale proceeds to future personal and professional goals.

When to sell your business 

Knowing exactly when to let go of your venture can be intimidating, but experts agree you should decide whether selling is in your future at the very beginning. 

“The best time for entrepreneurs to consider selling their business is when they start their company,” says business broker Katie Milton Jordan . “Consider what you want your company to do for you. Are you creating a company that you want to sell or a company that will create an independent stream of income just for you?”

When weighing the pros and cons of an exit, also think about the financial health of your company. “You want to be selling when your company is performing well, you’re cashed up, and you’re growing,” says David Raffa , a corporate finance expert. “The worst possible thing you can have is to sell in the slope part of your year.”

Along with financial considerations, the right time to exit your business is a deeply personal decision that only you can make. For Cindy Summers, founder of Sugar Fixé Pâtisserie, moving on felt right once her business no longer challenged her or fit her lifestyle.

“My passion is building businesses and creating great customer experiences. Once my business was established, I became more of an operator. This didn’t give me the mental gymnastics I needed to stay inspired,” she says.

Additionally, the nature of her business made it difficult for Summers to find work-life balance. “I was married but kid-free when I started the business. Three kids later, and there was an emotional conflict between my family, employees, and customers. Busiest times in a bakery are weekends and holidays. This meant missing out on a lot at home,” she says. 

Some other common life experiences that lead to exits include:

• Illness 
• Co-founder misalignment or conflict 
• Boredom 
• Retirement 
• Shifting life priorities 

Jordan advises owners to sell their companies before the “five D’s”: death, divorce, disease, disengagement, and downturn. Making an exit prior to those events can ensure you get a fair price for your creation.

“Most entrepreneurs tend to get out too late, when they have no gas left in the tank, and the growth rate of the business is a big piece of the value you get in the end,” says Raleigh Williams, who sold his escape-room business for $26m. “Ending on a high note is something that pro exit entrepreneurs do versus amateurs.”

How much to sell your business for 

Della Kirkman , a CPA and business investor, uses a simple calculation to get entrepreneurs started: “A quick and easy formula is to determine the five-year weighted average of EBITDA and multiply it by the range of multiples that are appropriate for your type of business.” Kirkman says she most often uses a multiple between three and five. 

Meeting with experts to get a professional valuation of your business is the most accurate way to find the right number. Therefore, get started with assembling a team of advisers early in the selling process, and find professionals who work closely with your industry whenever possible. The more niche their experience, the more they’ll be able to guide your sale appropriately. 

Third-party experts can also ensure the business is ready to be sold. “A lot of business owners don’t realize their company can’t be transacted and isn’t packaged properly to go to market,” Jordan says. “That’s why it’s important to ask questions and get educated as soon as possible.” 

A common roadblock Jordan sees is solopreneur businesses. For those who wear every hat at their firm, buyers feel they are essentially buying a job rather than a company. Another reason for a difficult transaction could be if a business is tied up in any sort of legal proceedings. 

To make a business more appealing to buyers, Jordan suggests depersonalizing your operations.

“Business owners create a business and a system in a way that’s easy for them to run, built around their strengths and personality, because they work so hard around the clock,” says Jordan. “When it comes time to sell, their quirks are not the quirks of the new owner.”

She suggests that owners create manuals, standard operating procedures (SOPs), and automations where possible. 

“Just like when someone buys a new car and you hand them the set of keys and the owner’s manual,” she says. “If you have a company you can hand off with an owner’s manual, you have something that can be transacted.”

Once you have the right deal, stay active in the process until the very end. 

“As a founder, so much of your net worth is tied up in this transaction,” Williams says. “Outsourcing that process and not being involved, or expecting a lawyer or broker to be as involved in the details to the same extent you need to be, is unwise.”

Where to sell your business 

If you’re wondering  where to sell your business , the right place depends on its size. For small solopreneur-owned ventures, owners can list their companies anonymously on business broker sites such as BizBuySell ).

There are many different business sites. Some target specific cities or states, as buyers often want to acquire local businesses. Experts recommend researching the best site to list using a simple Google search that includes your location. 

For larger companies, Raffa says that entrepreneurs can spearhead the selling process directly through a sell-side banker rather than list on a business broker website. 

“In that situation, you should do rounds of approaches,” he explains. “Make a list of 100 potential buyers, and start with the first 10-30 ideal ones, and work down that list.”

Raffa advises assembling your list by including companies 5-10x your size in your business space (often competitors), companies in a closely related space, companies in a similar industry who are struggling and need a new edge, and companies that want to enter your geographic market.

He notes that when reaching out to potential buyers, likely only half will engage with you, and they should sign NDAs before you disclose further financial information and insider business details. 

Alternatively, you can start with companies lower down the list to dip your toe in, understand the typical questions asked, and circle back to your ideal buyers when you feel more prepared.

When Williams began the process of finding a buyer, he approached direct competitors first, a tactic he says is helpful across industries. 

“People in the same industry or adjacent to the industry are the easiest people to do deals with because they understand what they’re looking at,” he says.

It’s also common for business owners to get inquiries from companies or investors interested in acquiring. Even if a sale isn’t in your immediate plans, don’t ignore the opportunities, which may lay the groundwork for a deal down the road. 

Life after exiting 

Selling doesn’t have to mark the end of your career — aspirations for the future can actually be baked into the terms of the sale. 

“The options are endless,” says Kirkman. “Whatever they can dream up and negotiate into the deal, they can have.”

Kirkman says this includes options such as:

• Annuity in perpetuity: a profit share for the life of the business
• Retaining ownership of a brick-and-mortar building to create a future rent stream
• Taking a revenue share for any new clients brought into the company 
• Selling your business on a partial installment basis to spread out the payments (which can help with tax deductions) 
• Staying on as an employee (often called an acqua-hire) 
• Stay with the business as a consultant 

Whatever you choose, be sure to put time into the decision-making process. If a clean break feels like the right move, it likely is. If you’re not quite ready to say goodbye, that’s OK, too. 

Plus, your exit might just be the first of many, and you can use the experience to inform your future ventures.

“Most entrepreneurs after they’ve exited something realize that the ends won’t justify the means nearly as much as they thought they would,” Williams says of running a business that’s purely profit-driven. 

“They tend to actually move into the thing that they wanted to do all along, but were scared there wasn’t enough money in,” says Williams. “And they tend to make way more money in the thing they actually enjoy doing than their first exit.” 

hbspt.cta._relativeUrls=true;hbspt.cta.load(53, 'ad22bdd9-fd50-4b35-a4f5-7586f5a61a1e', {"useNewLoader":"true","region":"na1"});

What did you think of this article .

Give Feedback

Don't forget to share this post!

Related articles.

Digital Scent: A $1.2B Market Primed for Innovation

Entrepreneurial Competency: What it Is & Why it Matters

3 Ways to Cash In on Golf's Takeover by Millennials and Gen Z

This YouTuber Makes $300k A Year Teaching People How to Sew

The $6.8B Sewing Boom Is Here to Stay — 3 Ways to Take Your Cut

Vagus Nerve Care: A $483 Million Health Trend You Need to Know About

A $40m Startup's Founder Shares Insights on Growth and Raising Capital

3 Ways to Build for The Rise (And Fall) of Businesses

8+ Opportunities to Capitalize on The Legal Tech Boom

Top Industries for Entrepreneurs in 2024 According to Our Trends Team

Outline your company's sales strategy in one simple, coherent plan.

Powerful and easy-to-use sales software that drives productivity, enables customer connection, and supports growing sales orgs

1-800-488-6040

• My Career or Business
• My Health & Vitality
• My Mental Health
• My Finances & Building Wealth
• My Relationship
• My Leadership Skills
• My Productivity
• Growth Solutions
• About Tony Robbins
• The Science of Tony Robbins
• Contribution
• Company Culture
• Get Involved
• Success Stories
• Case Studies
• Events Calendar
• Unleash the Power Within
• Business Mastery
• Date With Destiny
• Life Mastery Virtual
• Wealth Mastery Virtual
• Life & Wealth Mastery Fiji
• Leadership Academy
• Inner Circle Community
• Business Accelerator
• Platinum Partnership
• Unleash Her Power Within
• Business Coaching
• Results Coaching
• Business Results Training
• Life Coaching
• Health Coaching
• Meet Tony’s Coaches
• All Products
• Nutraceuticals
• Life Force Book
• Tony Robbins Books
• Training Systems
• Breakthrough App
• Netflix Documentary
• Free Tools & Quizzes

Home » Business Cycle » How to sell your business

Selling a business takes strategy and timing

Would you believe that 45% of business owners spend more than 41 hours a week on their business? Are you one of them? When you started your business, you probably had dreams of financial and personal freedom, tropical vacations and a cushy retirement. To make those dreams come true, you need to know how to sell a business and develop an exit strategy.

Understanding when and how to sell a business can be overwhelming without the right resources. Yet as Tony Robbins says, “The purpose of a business is to build a system that can make money when you’re not there, and if done right, a business you can sell for a multiple.” 

You’ve done just that: grown organically , scaled your company and perhaps even recovered from a financial loss . You’re ready to reap the rewards. You need an action plan for selling a company and a checklist of items to keep you on track. 

Once you’ve sold your business, you’ll have the financial freedom – and the time – for the next phase of your life. Sounds great, right? Then why is it that 53% of business owners say they’ve given little to no thought to their transition plan? It’s probably because selling a company can seem overwhelming – but it doesn’t have to be. 

Here’s how to sell a business and see massive results.

Ready to sell your business and obtain financial freedom?

8 steps to selling a company

Selling a business is much like a Hollywood marriage: Without a solid prenuptial agreement ( exit strategy ), a divorce (business sale) can result in disaster (financial loss). Don’t let your business’ final days sneak up on you – include an exit strategy in your business plan. With the right strategy in place, you’ll have a specific goal (a certain profit margin or substantial growth in sales) to reach that will signal when it’s time to sell your business.

According to Tony, “Without an exit strategy, all you have is a job.” This means you need to stop thinking of your business as a day-to-day job and start thinking of it as an investment.

Step 1: Know your reason for selling

If you’re asking yourself, “Is it time to sell my business?” you probably have a reason why. You may be ready for retirement or want to move on to a new endeavor that combines passion and profit . You may want to take care of your or a loved one’s health or just want to move on to a new environment. Knowing why you want to sell will help you answer more important questions down the line, such as how much revenue you need to generate to move on to the next phase of your life.

Step 2: Determine when to sell

Understanding when to sell your business is critical for getting the best price. Don’t wait until your business is in decline to sell – the best time to sell a company is when it’s at its peak performance . Do it when you’re at the top of your game, and you will reap the benefits. You may also want to take a look at economic considerations – selling your business during a downturn or a recession will most likely not generate the same profit as it would in a robust economy.

Step 3: Get your paperwork in order

Financial records are a must. You need to have financial records from at least the past two years that cast your company in a positive light. This means revenues and profits that are steadily increasing – you don’t need to see big jumps, just a good performance that provides a solid foundation for the future.

You’ll also want a realistic business map to show the buyer how your company will keep growing. Finally, the most important thing about your financial records is honesty. Any serious buyer will do their due diligence and investigate every aspect of your business. Don’t let a good deal go south because you don’t have your paperwork in order or were not honest about something.

Step 4: Find a broker

Learning how to sell a business is a skill you can master. We’re willing to bet the person who can best market your business is you – and if you’re selling to a family member or a current employee, representing yourself can be a good choice. However, there are many situations where using a broker is helpful. If you’re trying to keep the sale quiet, brokers use their own network to find sales leads without letting the word out to your employees or other stakeholders. Brokers can also be a great option to involve in the sales process if your business has complicated financials or an exceptionally high value.

When you use a broker to sell your business, communication is key . Ensure they know your expectations, and that you know theirs regarding fees. Confirm they’re a Certified Business Intermediary (CBI), ask them to provide a portfolio of specific marketing tactics they have used for other companies and always get referrals.

Step 5: Get a business valuation

When selling a company, an accurate valuation is essential to pricing it correctly and selling it quickly. You won’t know what to sell your business for if you’re not sure what it’s worth. Pricing a business too high or too low can result in losing out on money or not selling it at all. Find a business appraiser who can create a detailed documentation of its worth; your business broker will be able to refer you to an appraiser if they do not have one in-house.

Step 6: Choose your buyer

If you’ve chosen the right time and properly prepared to sell your business, you may have several buyers to choose from. When you’re choosing your best buyer, there are several things to look at beyond the offer price. First, make sure the buyer can back up their offer with financing. If they’re using third-party loans, always pre-qualify them. If they have private investors or other sources of funds, carefully review all documentation, including past legal judgments.

Also consider the type of transaction – certain structures may have transitional requirements, higher taxes or less cash at closing time. You’ll want to hire a lawyer to help with vetting buyers and setting up the transaction itself. 

Look at culture fit . Check out the buyer’s prior acquisitions and see where they ended up. If the buyer is another company, ensure your cultures are compatible. And trust your gut – it’s what helped start your business, and when you’ve thought everything out and have two final buyers in mind, it’s what can be tapped into to make the final decision.

Step 7: Decide what to do with the profits

After selling your business, you need to determine what to do with the profits. If you are selling a company to fund retirement, you’ll work with your fiduciary advisor to decide if and where the money is invested. If you intend to buy or start another business, you can use the profit as a down payment or to make other necessary arrangements.

Step 8: Relax and enjoy the next phase of your life

If you catch yourself wondering, “What do I do with myself after I sell my business?” remember that you built your business to pursue something new. Whether your next phase involves a new endeavor or much-needed peace and quiet with family, you’ve earned the right to enjoy it.

Frequently asked questions about selling a company

How do i value my business to sell.

Working with a professional appraiser is the best way to know how much your company is worth and what the recommended selling price is. Your broker can suggest the right appraiser for your situation.

How do I sell a struggling business?

Keep the business in operation to show prospective buyers it has potential and keep all your financial paperwork in order. A broker is an asset in this scenario, as they can keep the search confidential and help you decide on a price that will be attractive to buyers but still net you some profit.

Do I pay taxes when I sell a company?

Yes. The taxes you pay will depend on the assets your business owns. The best way to handle this is to work with an experienced business broker or attorney who can help you minimize your tax burden.

How long does it take to sell a business?

This is an answer heavily influenced by your industry, how your business is priced and how aggressively you’re marketing it. The length of time it takes to sell a business is often contingent on the economy. On average, it takes around 180 days to sell a business; yours may take more or less time, depending on the previously mentioned factors.

How do I sell my business quickly?

You can increase your chances for success by working with professionals who can help you price your business competitively and market it to the right people. Still, there is no magic potion for selling a company quickly.

Ready to achieve personal and financial freedom?

Learn to keys to successfully selling your business  with  Tony Robbins’  7 Forces of Business Mastery  free content series.

© 2024 Robbins Research International, Inc. All rights reserved.

• Credit cards
• View all credit cards
• Banking guide
• Loans guide
• Insurance guide
• Personal finance
• View all personal finance
• Small business
• Small business guide
• View all taxes

You’re our first priority. Every time.

We believe everyone should be able to make financial decisions with confidence. And while our site doesn’t feature every company or financial product available on the market, we’re proud that the guidance we offer, the information we provide and the tools we create are objective, independent, straightforward — and free.

So how do we make money? Our partners compensate us. This may influence which products we review and write about (and where those products appear on the site), but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research. Our partners cannot pay us to guarantee favorable reviews of their products or services. Here is a list of our partners .

How to Write a Business Plan, Step by Step

Many or all of the products featured here are from our partners who compensate us. This influences which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money .

What is a business plan?

1. write an executive summary, 2. describe your company, 3. state your business goals, 4. describe your products and services, 5. do your market research, 6. outline your marketing and sales plan, 7. perform a business financial analysis, 8. make financial projections, 9. summarize how your company operates, 10. add any additional information to an appendix, business plan tips and resources.

A business plan outlines your business’s financial goals and explains how you’ll achieve them over the next three to five years. Here’s a step-by-step guide to writing a business plan that will offer a strong, detailed road map for your business.

ZenBusiness

A business plan is a document that explains what your business does, how it makes money and who its customers are. Internally, writing a business plan should help you clarify your vision and organize your operations. Externally, you can share it with potential lenders and investors to show them you’re on the right track.

Business plans are living documents; it’s OK for them to change over time. Startups may update their business plans often as they figure out who their customers are and what products and services fit them best. Mature companies might only revisit their business plan every few years. Regardless of your business’s age, brush up this document before you apply for a business loan .

» Need help writing? Learn about the best business plan software .

This is your elevator pitch. It should include a mission statement, a brief description of the products or services your business offers and a broad summary of your financial growth plans.

Though the executive summary is the first thing your investors will read, it can be easier to write it last. That way, you can highlight information you’ve identified while writing other sections that go into more detail.

» MORE: How to write an executive summary in 6 steps

Next up is your company description. This should contain basic information like:

Your business’s registered name.

Address of your business location .

Names of key people in the business. Make sure to highlight unique skills or technical expertise among members of your team.

Your company description should also define your business structure — such as a sole proprietorship, partnership or corporation — and include the percent ownership that each owner has and the extent of each owner’s involvement in the company.

Lastly, write a little about the history of your company and the nature of your business now. This prepares the reader to learn about your goals in the next section.

» MORE: How to write a company overview for a business plan

The third part of a business plan is an objective statement. This section spells out what you’d like to accomplish, both in the near term and over the coming years.

If you’re looking for a business loan or outside investment, you can use this section to explain how the financing will help your business grow and how you plan to achieve those growth targets. The key is to provide a clear explanation of the opportunity your business presents to the lender.

For example, if your business is launching a second product line, you might explain how the loan will help your company launch that new product and how much you think sales will increase over the next three years as a result.

» MORE: How to write a successful business plan for a loan

In this section, go into detail about the products or services you offer or plan to offer.

You should include the following:

An explanation of how your product or service works.

The pricing model for your product or service.

The typical customers you serve.

Your supply chain and order fulfillment strategy.

You can also discuss current or pending trademarks and patents associated with your product or service.

Lenders and investors will want to know what sets your product apart from your competition. In your market analysis section , explain who your competitors are. Discuss what they do well, and point out what you can do better. If you’re serving a different or underserved market, explain that.

Here, you can address how you plan to persuade customers to buy your products or services, or how you will develop customer loyalty that will lead to repeat business.

Include details about your sales and distribution strategies, including the costs involved in selling each product .

» MORE: R e a d our complete guide to small business marketing

If you’re a startup, you may not have much information on your business financials yet. However, if you’re an existing business, you’ll want to include income or profit-and-loss statements, a balance sheet that lists your assets and debts, and a cash flow statement that shows how cash comes into and goes out of the company.

Accounting software may be able to generate these reports for you. It may also help you calculate metrics such as:

Net profit margin: the percentage of revenue you keep as net income.

Current ratio: the measurement of your liquidity and ability to repay debts.

Accounts receivable turnover ratio: a measurement of how frequently you collect on receivables per year.

This is a great place to include charts and graphs that make it easy for those reading your plan to understand the financial health of your business.

This is a critical part of your business plan if you’re seeking financing or investors. It outlines how your business will generate enough profit to repay the loan or how you will earn a decent return for investors.

Here, you’ll provide your business’s monthly or quarterly sales, expenses and profit estimates over at least a three-year period — with the future numbers assuming you’ve obtained a new loan.

Accuracy is key, so carefully analyze your past financial statements before giving projections. Your goals may be aggressive, but they should also be realistic.

NerdWallet’s picks for setting up your business finances:

The best business checking accounts .

The best business credit cards .

The best accounting software .

Before the end of your business plan, summarize how your business is structured and outline each team’s responsibilities. This will help your readers understand who performs each of the functions you’ve described above — making and selling your products or services — and how much each of those functions cost.

If any of your employees have exceptional skills, you may want to include their resumes to help explain the competitive advantage they give you.

Finally, attach any supporting information or additional materials that you couldn’t fit in elsewhere. That might include:

Licenses and permits.

Equipment leases.

Bank statements.

Details of your personal and business credit history, if you’re seeking financing.

If the appendix is long, you may want to consider adding a table of contents at the beginning of this section.

How much do you need?

with Fundera by NerdWallet

We’ll start with a brief questionnaire to better understand the unique needs of your business.

Once we uncover your personalized matches, our team will consult you on the process moving forward.

Here are some tips to write a detailed, convincing business plan:

Avoid over-optimism: If you’re applying for a business bank loan or professional investment, someone will be reading your business plan closely. Providing unreasonable sales estimates can hurt your chances of approval.

Proofread: Spelling, punctuation and grammatical errors can jump off the page and turn off lenders and prospective investors. If writing and editing aren't your strong suit, you may want to hire a professional business plan writer, copy editor or proofreader.

Use free resources: SCORE is a nonprofit association that offers a large network of volunteer business mentors and experts who can help you write or edit your business plan. The U.S. Small Business Administration’s Small Business Development Centers , which provide free business consulting and help with business plan development, can also be a resource.

On a similar note...

Find small-business financing

Compare multiple lenders that fit your business

• Starting a Business
• Growing a Business
• Small Business Guide
• Business News
• Science & Technology
• Money & Finance
• For Subscribers
• Write for Entrepreneur
• Entrepreneur Store
• United States
• Asia Pacific
• Middle East
• South Africa

Copyright © 2024 Entrepreneur Media, LLC All rights reserved. Entrepreneur® and its related marks are registered trademarks of Entrepreneur Media LLC

Your Company's Legacy is at Stake Without Succession Planning — Do These 8 Things to Secure Your Future. So much entrepreneurial effort goes into starting and growing a business, yet one of the most overlooked issues is keeping it going beyond the founder. This article delves into eight strategies you can leverage to plan succession for your company.

By Chad Willardson Edited by Micah Zimmerman May 15, 2024

Key Takeaways

• Effective business succession planning is not like writing your final chapter in the business book and closing the book, but more like preparing it for a sequel.
• By planning your exit as strategically as you led your entrance, you solidify your legacy and your business's future.

Opinions expressed by Entrepreneur contributors are their own.

So much entrepreneurial effort goes into starting and growing a business, yet one of the most overlooked issues is keeping it going beyond the founder . There are so many reasons it's not the top thing on a founder's priority list, and yet the saddest thing they'd never want to see is for all their years and decades of work to one day go down the drain.

Business succession planning is a process that ensures continuity beyond the founder's work life. This is part of a strategic plan for any forward-thinking leader who wants their clients, customers and team members to continue to thrive beyond their working life.

Business succession planning (BSP) differs from business to business depending on their size and their goals. Small businesses often have limited resources and are family-owned, which often entails changing the ownership and not just the leadership. With family-owned businesses, you face more than simple financial and business decisions because of the close relationships at home. For larger organizations with more complex structures and diversified workforces , the approach is usually very formal, involving a board of directors to identify the right fit for future leadership teams.

BSP may be a complex topic and endeavor, with a long list of considerations to ensure the vision and long-term goals of the business remain forward-driven. Regardless, here are eight tips you should consider.

Related: How Successful Entrepreneurs Use Doubt to Drive Growth

1. Align your succession plan with your goals

Knowing where you want to be 10 or 20 years from now is just as crucial as planning how to achieve it now. This is to ensure your business is headed in the right direction, with or without you in the picture. Think about whether you want to retire easily, knowing you've passed on the responsibilities to a trusted family member or a long-term executive. Or maybe you want to look into a merger with someone already succeeding in your industry. These decisions don't develop overnight, more so that they don't ripen in the next couple of years. Hence, gradual planning and assessments along the way are essential. Your goals may change, and so will your succession plan.

2. Define clear ownership roles

A common hurdle in succession planning is answering the question, "Who gets the keys?" Only this time, it's your business that's at stake. You have to identify key people who have the potential to take over or be a part of the leadership once you decide to exit or, worse, pass away. Create a clear roadmap of how you want to develop the skills of these people to hit the ground running and how decisions could be made in your absence. However, ensure that you keep everyone on the same page about ownership roles to avoid internal conflicts so the transition — before and after — is smooth. This is especially critical in a family-owned business; the clearer your ownership plan, the more likely there will be peace in your family once the transition begins.

Related: The 4 Roles of Accountability Within Your Company

3. Value your business, protect your assets

One of the most crucial aspects of BSP is getting a crystal clear picture of your business's value. This will guide you in strategizing the areas of estate planning or tax implications, as well as setting up potential buy-sell agreements. However, valuation is just the tip of the iceberg. You have to protect your assets and safeguard your intellectual property, which is the lifeblood of your business.

Additionally, make sure there's enough financial backing during the transition to support you and your successor. Your successor likely doesn't have the same level of financial resources as you do, and this is an issue to consider. Lastly, protecting your business relationships can greatly contribute to your success when future leaders take responsibility.

Related: 1 in 10 Leaders Say Succession Planning Is Not Worth the Time and Money It Costs — Here's Why They're Wrong.

4. Develop a comprehensive transition plan

Your company's game plan for a successful leadership transition lies in a detailed ownership and management handover. This should cover operational, legal, and financial changes and should have much of the plan in writing. This documentation should also include a comprehensive guide on how to overcome potential roadblocks, how to make decisions, who has votes, and what the transition process looks like. This will ensure that your business remains stable and your legacy intact.

5. Encourage open communication

Everyone involved should be in the loop. Create a space for open dialogue talking about their aspirations, concerns, and reservations. Share your vision and your goals for the future of your company. This initiative should establish a sense of ownership and buy-in for the plan.

This way, you can reduce resistance and cultivate a more collaborative environment that will make the transition easier and smoother. This strategy doesn't simply pass on information, but it helps create some engagement and helps them remain invested in your company's future.

Related: How to Communicate More Authentically and Effectively

6. Seek expert advice

Naturally, you may want to do everything alone in this succession planning journey. After all, you started the company, and nobody knows it better than you. But remember that you can only do so much on your own. It's tempting to do it all by yourself because you are more comfortable navigating and sharing confidential information. Still, you don't want to go rogue dangling on monkey bars without safety nets. Consult BSP pros or build your A-team experts. These advisors can help you navigate financial intricacies and legal frameworks more efficiently, with greater attention to identifying relevant regulations and potential hurdles.

7. Execute with a clear plan

A blueprint — your comprehensive transition plan — is not yet everything. Think of a "launch countdown" where milestones are clearly articulated within a specific timeline. Having a clear plan with timelines encourages accountability and progress toward your end goal. Assign ownership of specific steps and ensure you thoroughly review them regularly as a leadership team until you're confident that the transition will go smoothly.

8. Learn from successful examples

Many transitions and successions have succeeded in both small and large companies. Strive to learn by benchmarking your BSP with companies that have successfully executed theirs. For example, Microsoft transitioned from Gates to Ballmer . Ballmer has been with Microsoft for over two 20 years, which gives him an upper hand on the intricacies of the company's processes and day-to-day operations. He was an internal talent who the company supported and helped grow, which made the transition less risky and successful. Talk with other entrepreneurial peers and discuss what they're planning for their succession.

Effective business succession planning is not like writing your final chapter in the business book and closing the book, but more like preparing it for a sequel. While your approach will depend on the size and complexity of your business, proactive planning remains the core principle to ensure your vision doesn't fade with your exit. This may be 20 years away for you or only a couple of years in the future. Either way, keep your approach light and flexible while taking the process seriously, and don't hesitate to reach out to experts for additional guidance to ensure that your transition is smooth. By planning your exit as strategically as you led your entrance, you solidify your legacy and your business's future.

Entrepreneur Leadership Network® Contributor

Founder and President of Pacific Capital, and 4X Best-Selling Author

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick Red Arrow

• This Mother and Daughter Were 'Kind of Fringe Weirdos' When They Started an Uncommon Business in Their Garage. Now They're in Major Retailers — and Victoria Beckham Is a Fan.
• Lock A Leadership Shortage Is Coming. Here's What Needs to Happen to Prevent It.
• Lock The Author of 'Million Dollar Weekend' Says This Is the Only Difference Between You and the Many 'Very, Very Dumb People' Making a Lot of Money
• What the NLRB Appeal of the Expanded Joint Employer Rule Judgment Means for Your Business
• Lock 12 Books That Self-Made Millionaires Swear By
• The Sweet Side Hustle She Started in an Old CVS Made $800,000 in One Year. Now She's Repeating the Success With Her Daughter — and They've Already Exceeded 8 Figures.

Most Popular Red Arrow

From rejection to redirection — 4 ways to handle every 'no' you face with resilience and grit.

It may take a mindshift, but unwanted detours can be used as signposts on the road to success.

Is Selling Your Business the Only Way Out of Burnout? Here Are Five Alternatives to Consider Instead.

When you're burning out as an entrepreneur or business owner, it can feel like selling your business to an outside buyer is your only escape — but I'm here to tell you there are other options. Here are a few to consider if you're unsure about handing over the reins.

Lock in a Microsoft Office Lifetime License for $25

Build your team's network of tools with this limited-time price drop on word processing, spreadsheet creation, email, and more.

Drive for Success With the Top 15 Automotive Franchises in 2024

If you dream of running your own auto repair shop, car wash or specialty vehicle service center, buckle up and get ready to explore the top 15 automotive franchises, according to the 2024 Franchise 500 Ranking.

Anyone Can Try the Simple Strategy That One Billionaire Investor Used to Make His First Million Dollars Tax-Free

Peter Thiel did it, famously, and you can too.

'A Surprise Around Every Corner' How This Iconic Bookstore's Innovative Mix of New and Used Books Keeps Book Hunters Coming Back for More.

Here's how Powell's City of Books used its commitment to sustainability and environmental responsibility to create a landmark of literary passion.

Successfully copied link

Select your preferred language

• English - US
• Español - US

How to register as an Amazon seller

5 steps to register

• Business location : Select the country where your business is registered. If you’re operating as an individual or your business isn’t otherwise incorporated, select the country where you’re doing business from.
• Business type : Select the option that best describes your business, whether it’s public, private, or charitable. If you’re operating as an individual or your business isn’t otherwise incorporated, select None, I am an individual .
• Business name : Enter the exact name used to register your business with the relevant government office.
• Company registration number : Enter the number you were issued when you registered your business. This unique identifier isn’t the same as your Employer Identification Number (EIN).
• Registered business address : Enter the address that appears on your business license.
• Phone number : Enter your phone number, including your country code.

Frequently asked questions

• Full legal name (including middle name)
• Country of citizenship
• Country of birth
• Date of birth
• Residential address
• Product codes
• Business certifications
• Manufacturer or brand status
• Government-issued ID
• Proof of residential business address dated from the last 180 days, like a bank or credit card statement
• Take a photo of your face and government-issued ID.
• Join or schedule a video call with an Amazon associate. You should bring your government-issued ID and proof of residential address to the call.

Ready to sell with Amazon?

How to Write the Products and Services Section of Your Plan

1 min. read

Updated January 3, 2024

A complete business plan describes what you sell: either products, services, or both. This section needs to be more than a simple list of what you provide. It should detail the problem you’re solving, the value you provide, how it compares to the competition, and logistical information like pricing and distribution.

Learn how to go beyond simple product or service descriptions and create a compelling narrative around what you intend to offer.

What to include in the products and services section

What you add to this section fully depends on how much information you need to include in order to fully describe your products and services. While you may end up not including everything, it will benefit your business to work through these common topics.

A description of the problem and your solution

Successful businesses solve a problem for their customers. They make their lives easier or fill an unmet need and you need to identify and effectively describe a pain point that you are solving.

Optional information to strengthen your product and services section

While not required, there are additional pieces of information about your product and service offerings that you may want to include. These can be especially valuable for convincing investors that you have a business worth investing in.

Demonstrate business traction

Traction is an early indication that customers are eager to buy what you’re selling. Early sales, pre-orders, sign-ups, or contracts are just a few ways you can prove your idea has merit.

Understand the importance of intellectual property

Do you have patents, copyrights, or trademarks? It may be valuable to mention them here. They can be further proof that your idea has merit and the legal standing to be successful.

Why is the products and services section important?

The products and services section of your business plan provides the chance to describe why you’re in business. This will range from specific product or service details, such as pricing information, to more personally driven elements like your mission statement.

The point is that you need to paint a convincing picture, both technical and sentimental, of what you offer, how it works, and why it’s valuable. It needs to be a section that stands on its own and that is fully supported by the other sections of your plan.

See why 1.2 million entrepreneurs have written their business plans with LivePlan

Tim Berry is the founder and chairman of Palo Alto Software , a co-founder of Borland International, and a recognized expert in business planning. He has an MBA from Stanford and degrees with honors from the University of Oregon and the University of Notre Dame. Today, Tim dedicates most of his time to blogging, teaching and evangelizing for business planning.

Table of Contents

• What to include
• Optional information
• Why is this section important?

Related Articles

10 Min. Read

How to Write a Competitive Analysis for Your Business Plan

3 Min. Read

What to Include in Your Business Plan Appendix

How to Set and Use Milestones in Your Business Plan

24 Min. Read

The 10 AI Prompts You Need to Write a Business Plan

The Bplans Newsletter

The Bplans Weekly

Subscribe now for weekly advice and free downloadable resources to help start and grow your business.

We care about your privacy. See our privacy policy .

The quickest way to turn a business idea into a business plan

Fill-in-the-blanks and automatic financials make it easy.

No thanks, I prefer writing 40-page documents.

Discover the world’s #1 plan building software

Small Business Trends

How to open a convenience store.

Convenience stores are the quintessential solution for everyday needs, offering quick access to groceries, snacks, and household essentials. That accessibility makes them invaluable to the community while presenting a lucrative opportunity for aspiring convenience store business owners.

In fact, in 2022 alone, in-store sales for U.S. convenience stores amounted to approximately $1.85 million per store.

If you’re wondering how to open your own convenience store, you’re tapping into a market driven by demand for local, easy-to-reach outlets that cater to busy lifestyles and emergent needs.

The rise in consumer preference for local shopping experiences, especially post-pandemic, has amplified the profitability of convenience stores. Therefore, now is a great time to launch this in-demand small business.

How do you go about opening a convenience store? Keep reading as we explore how you can capitalize on the trend and build a thriving business.

How to Open a Convenience Store in 11 Easy Steps

The convenience store industry offers unique opportunities for entrepreneurs looking to enter the retail market.

Unlike larger grocery stores, convenience stores can capitalize on quick, impulse purchases due to their accessible locations and smaller, more navigable sizes. The industry not only provides essential goods but also serves as a community hub, making it an attractive business model for many.

How do you open a convenience store? Stay with us as we outline the critical steps you need to follow as you learn how to start a business in this competitive landscape.

Step 1: Conduct Market Research

Start by understanding the local market dynamics. Who are your convenience store customers? What do they need? Who else is meeting those needs? Analyzation of competition and potential customer bases is crucial to choose the ideal location for your convenience store.

Step 2: Create a Business Plan

Your business plan is your blueprint. It should detail financial projections, marketing strategies and operational plans. The document is vital for guiding your business development and securing financing. Creating a business plan requires tons of upfront research, from common business structures to industry profit margins. Lay out each element of your plan to create a business startup checklist that you can follow through each step of the way.

Step 3: Secure Financing

Explore various financing options, including business loans, investors and grants. Preparing a compelling pitch and maintaining an effective business plan will help you approach potential lenders or investors, ensuring you get the necessary funding to move forward.

Step 4: Find the Perfect Location

The right location can make or break your convenience store. Look for areas with high foot traffic, good accessibility and minimal direct competition. Whether you’re leasing or buying, negotiating the best terms for your location is essential for maximizing profit and visibility.

Step 5: Obtain Necessary Permits and Licenses

To operate legally, you’ll need specific permits and licenses, both which vary by location. These might include health permits, alcohol sales licenses and general business licenses. Familiarize yourself with federal, state and local regulations to ensure full compliance.

Step 6: Design Your Store Layout

Design a store layout that maximizes efficiency and enhances customer experience. Consider the flow of traffic, the placement of shelves, your checkout counter, and any other special features like a deli case . Effective layout design can significantly influence purchasing behavior.

Step 7: Source Your Inventory

Establish relationships with suppliers and wholesalers who can provide you with a reliable stream of products. Choose inventory that meets the needs of your community and manage it effectively to reduce operating costs and increase sales.

Step 8: Hire and Train Your Staff

Hire a team that reflects your store’s values and commitment to quality service. Look for employees who are not only skilled but also personable and customer-oriented. Comprehensive training is essential to ensure your staff can meet customer needs and handle daily operations smoothly. Learn more about how to hire a cashier and writing a cashier job description here.

Step 9: Set Up Your Store’s Technology

Invest in the right technology to streamline store operations. Tools might include point-of-sale (POS) systems, inventory management software and security systems. Technology can vary widely in price, so it’s important to find the right systems that fit your budget and business scale.

Step 10: Launch Your Marketing Campaign

Develop a marketing strategy that includes digital marketing, local media advertising and direct mail campaigns. A strong grand opening event can create buzz and establish your store’s presence in the community, setting the stage for sustained success.

Step 11: Plan Your Grand Opening

Make your grand opening memorable with special promotions, live music or other community events. The event is your opportunity to introduce your store to the community, attract a customer base and start building relationships with local shoppers.

Pros and Cons of Owning a Convenience Store

Owning a convenience store can be a fulfilling and profitable venture. Still – like any business – it comes with its own set of challenges.

Before diving into this bustling industry, it’s important to weigh the benefits and drawbacks carefully. Then, you can make an informed decision that aligns with your business goals and lifestyle.

Pros of Owning a Convenience Store:

• Stable Market Demand : Convenience stores benefit from consistent customer demand, particularly in high-traffic areas.
• Community Hub : Convenience stores serve as essential local hubs, providing quick access to goods and services.
• Revenue from Diverse Sources : Convenience stores enjoy diverse revenue streams, including groceries, alcohol and potentially fuel.
• Flexible Business Model : The flexible business models associated with convenience stores allows for scalability and adaptation to local customer preferences and market conditions.

In addition to the advantages of owning a convenience store, it is equally important to consider the potential obstacles.

Cons of Owning a Convenience Store:

• High Initial Investment : Setting up a store involves substantial startup costs for location, inventory and licensing.
• Competitive Market : Many areas face stiff competition both from other convenience stores and large supermarkets.
• Operational Challenges : Operational challenges include inventory management and staffing, as well as maintaining compliance with health and safety regulations.
• Thin Profit Margins : Due to the competitive pricing of convenience items and the cost of maintaining inventory, thin profit margins can prove to be a challenge.

Startup Costs and Financial Planning for Your Convenience Store Business

Launching a convenience store requires a significant upfront investment.

Key startup costs include leasing or purchasing property, buying initial inventory, securing the necessary equipment and covering licensing and permit fees. Proper financial planning is critical to manage these expenses effectively and ensure the store’s long-term viability.

A detailed business plan is essential as it outlines expected costs, potential revenue streams and financial projections. The plan acts not only as a roadmap for the business’s strategic direction but also as a crucial tool for securing financing from banks or investors.

Strategies to Attract Customers to Your New Convenience Store

Attracting customers to a new convenience store involves a combination of marketing savvy, community engagement and excellent service.

Lucky for you, we’ve put together some actionable strategies to build your customer base, including:

• Effective Local Marketing : Use local business advertising ideas , such as flyers, local radio spots and community bulletin boards, to announce your store opening and special promotions.
• Leverage Digital Platforms : Establish a digital presence with a well-designed website and active social media profiles that share promotions, new inventory updates and store events.
• Community Engagement : Participate in community events and sponsor local sports teams or school events to increase your store’s visibility and reputation within the community.
• Exceptional Customer Service : Train your staff to provide friendly and efficient service, ensuring customers leave with a positive impression and the intent to return.
• Loyalty Programs and Promotions : Implement loyalty programs that reward repeat customers and offer opening promotions to attract an initial customer base.

Is Owning a Convenience Store Profitable?

Owning a convenience store can indeed be profitable, particularly in areas with high foot traffic and limited nearby competition.

Profitability depends on various factors including location, store size and the ability to manage overhead costs effectively. The with average gross profit margins for convenience stores, however, reaches upwards of $450,000 per year.

Convenience stores typically operate on thin profit margins, so optimizing inventory turnover and diversifying product offerings—from high-margin items to essential daily goods—can substantially increase earnings.

What Makes the Most Money in a Convenience Store?

The most profitable items in a convenience store generally include high-margin goods such as tobacco products, alcoholic beverages and lottery tickets. These items not only draw in a regular customer base but also provide higher returns relative to their shelf space.

Likewise, prepared food and beverages like coffee have grown in profitability due to their popularity and convenience for on-the-go consumers. Strategic placement of these items can significantly boost overall store revenue.

How Do Convenience Store Owners Get Products to Sell?

A convenience store owner typically sources their products from a variety of suppliers including wholesalers, direct manufacturers and local distributors. This multi-supplier approach allows store owners to purchase goods at competitive prices and maintain a diverse inventory.

Essential to this process is establishing strong relationships with reliable wholesale food suppliers who can provide consistent, timely deliveries as well as offer favorable payment terms. Some owners also join cooperatives to increase their purchasing power and reduce costs further.

• How to start an ATM business
• Small town business ideas
• How to start a grocery store

Your email address will not be published. Required fields are marked *

© Copyright 2003 - 2024, Small Business Trends LLC. All rights reserved. "Small Business Trends" is a registered trademark.