Should You Try To Sell The Business Yourself?
I would not recommend selling it by yourself at the negotiation stage. You may get your business ready and you may have some targeted potential purchases that you may wish to write to, to invite offers for your business. It’s a matter of really looking at things differently.
However, you must never ever get yourself caught up in the negotiation. It’s the worst place for you to be as the business owner. You do need to bring in a business broker. I would highly recommend that.
In fact, when you’re selling your business, you need a team of people to help you because you’re going to need legal help. This includes legal, accounting, and, as I mentioned, a business broker to do your negotiation. And I would really highly recommend someone who is a mentor to you, the business owner.
Now, that might be a person like me who’s the exit strategy person. But it could also be somebody in your own network, who has already been through the process and understands what it’s like. Because you need someone else to talk to. Those are the people that you need as a minimum.
You very likely will need a financial planner as well. And as I was talking before about the exit audit process, you need to figure out how much money you will really need. A good rule of thumb is the 4% rule.
Say you have a certain amount of capital. Say you need $150,000 or $200,000 a year to live on. That’s what you decide. Well, if you can earn that from a certain amount of capital on a conservative basis, we call that the 4% rule, as in a 4% return. Then you know that those are the numbers you’re looking for. A financial planner will take you through that or depending on where you are at, in terms of your age.
I’m not a financial planner. I’m not giving people financial advice. But if you had five million dollars in capital and you were to earn 4% per annum, that’s $200,000. Hey, I can live on that. I would be very comfortable with that. How can I make sure that I get that amount of capital so that I’m going to have enough money for the rest of my life? Obviously, the numbers change depending on the amount of money that you need.
If you do end up with a huge sum of money, that’s a completely different situation for you to be in. There have been some really interesting studies done on suddenly getting a large sum of money. We have heard the stories about people winning the lotteries and having it disappear in the course of three years.
Well, this is not a dissimilar situation. If you’re a business owner and you get a really huge payout, what should you do with it? You certainly don’t want to blow it.
Recent Comments