Are Your Ready to Sell Your Business?

When you finally decide that the time is right to sell your business, you need to do a thorough self-examination to determine if you truly are ready.  Selling a business is an important decision both financially and personally.  Too many times, people make the decision based on their financial situation but do not reflect enough on the personal side.  Alternatively, some business owners don't pay enough attention to the personal impact or the practical and financial impact.

This article examines some of the more common questions that arise about the post-sale period from small business owners looking to sell their businesses. 

What will you do next?
Selling your business is a laborious, time consuming process.  Many times the small business owner is so eager to sell their business that all of their focus is consumed on the company sale transaction.  Attention must also be paid to 'the day after'.  It often comes as a shock to the small business owner that has just sold their business that they have no company to return to the next day.  Plan your next step to ensure that there is no void left for you personally after the sale.  Work hard to sell your business and get a good price for it but also plan for the immediate days and weeks that will follow.

What will you do with the money?
If you sell your business and 'cash out' your equity – are you ready for the infusion of money that is to follow?  Sometimes business owners don't know what to do with a large injection of funds and let them sit in a bank until they determine the best move.  Consult with a reputable financial advisor if you need professional help.

There is still company bookwork to be done 
When you sell your business you still need to stay on top of the work that remains.  Sometimes business owners feel a sense of euphoria when they finally sell their company that they neglect to realize all of the work that is left.  For instance - the province of Ontario still requires retail sales tax information to be filed for the latest period your owned the business and Canada Customs & Revenue Agency will likewise want GST filing for the latest period.   There is still much employee, benefit, taxation and other reporting work left as well.  The point is that if you do your own books it is still business as usual for a period of time after the company is sold, until you get your filings finalized.

Will your train the new business owners?
When you sell your business you may have agreed in the negotiation to train the new owners for a period after the sale.  This is sometimes an uncomfortable period for some business owners.  The business is no longer theirs and many people have a hard time giving up 'their' desk or keys to the new owner.  It's best to remain as detached as possible during the sale transition and do your best until the training is complete.  Check emotions at the door.

Will you still collect your outstanding receivables?
Sometimes in a business transaction the two parties agree that the vendor will normally collect their accounts receivable until it is totally collected.  There are agreements put in place before the close of the transaction to put a process in place.  If you are to collect your receivables after the sale please use your discretion when speaking with customers.  Try to follow the wishes of the new owner with respect to the message that is being given to customers about the transition.

Talk to your accountant
It is always advisable to talk to your accountant.  When you sell your business there are many tax and company related issues that are triggered.  If your sale was structured as an asset sale or a share sale there are difference with respect to taxation policy that can have a material effect on you.