You’ve decided to sell your business. But do you know exactly why you’ve made that decision? Taking the time to examine your choice and the factors that led to it will help you throughout the sale process. Understanding your motivations will then determine the best timing and approach for exiting your business. Use these step-by-step actions to help you through the process:

Step 1. Define your motivation and sale urgency

Some motivations force quick action. Others allow for a more flexible timeline.

The following chart lists the motivations behind most exit plans.

  1. Use the left column to check the factors that are influencing your desire to sell your business.
  2. Then use the right column to check the urgency of your situation.

Exit Plan Motivation (for those that apply)

Timing ( to indicate your urgency)

You're bored by your business

Immediate

Flexible

You feel burned out

Immediate

Flexible

You want or need to move to a different geographic area and your business is reliant on its current location

Immediate

Flexible

You're facing health challenges

Immediate

Flexible

A pending or recent divorce or family or personal change prompts your need to sell

Immediate

Flexible

You need to make more money than your business can provide

Immediate

Flexible

Your business would benefit from increased investment and energy you don't feel able to provide

Immediate

Flexible

You're fed up with your partners

Immediate

Flexible

All your net worth is tied up in your business and you want to sell in order to diversify

Immediate

Flexible

You're overwhelmed by financial problems

Immediate

Flexible

You want to retire

Immediate

Flexible

Other

Immediate

Flexible

As you consider these questions, realize that your perceived need for an immediate exit often correlates with a lower sale price for several reasons:

  1. If your business sale timing is immediate, you eliminate the opportunity to strengthen the attractiveness of your offering prior to a sale listing
  2. If pressing financial needs force an immediate sale and payoff, you preclude your ability to offer seller financing, which typically supports a higher selling price.
  3. If you want or need to make a very prompt departure from your business, you shorten or eliminate the possibility of a transition period, which likely forces a lower offer from buyers.

Step 2. Define what you want to do after a sale.

Many small business owners want to leave their businesses once and for all. Others want to stay involved, either as a part owner, a contract employee, or a consultant to the new owner.

And even those who want to walk away often agree to remain involved for a short period of time, usually 3-12 months, to facilitate the transition to the new owner.

Defining your after-sale interests helps you design a sale approach that fits your motivations. Consider these questions:

Your personal after-sale priorities

    Do you want to sell your business and walk away?

    Are you willing to remain involved during a 3-12 month post-sale transition period?

    Do you want to remain at the managerial helm of your business after its sale?

    Do you want to remain involved full-time with your business, either as a partner or an employee, after its sale?

    Do you want to remain as a part-time consultant or employee with your business after its sale?

    Is it important (or necessary) to you to receive a full or significant payment at the time of sale closing?

Yes or No answers will help you determine how to offer your business for sale, while Maybe answers indicate areas you need to consider more carefully in order to develop a sale offering that matches your desired outcome.

Step 3. Decide what you want for your business after a sale.

Your business after-sale priorities

    After a sale, is it important to you that your business remains in its current location in order to minimize disruption to your clients and to your staff?

    Is there a key employee of family member or members to whom you prefer to sell your business?

    Is there a key competitor, supplier, or other business you'd prefer (or prefer not) to sell your business?

    Do you want to remain involved full-time with your business, either as a partner or an employee, after its sale?

    Do you want to remain as a part-time consultant or employee with your business after its sale?

    Is it important (or necessary) to you to receive a full or significant payment at the time of sale closing?

Yes answers limit the buyer pool for your business, while No answers leave you open to the greatest range of prospective buyers. Maybe answers require additional consideration to enable you to proceed confidently with your marketing effort.

In next week’s installment of “Selling Your Small Business” we’ll explore how to prioritize all these wants, needs and motivations that influence the sales process.

Editor’s Note: This article is the second piece in a series taken from BizBuySell.com’s Guide to Selling Your Small Business. The guide is a comprehensive manual to help small business owners maximize their success when the day to sell arrives. Each Wednesday, Inc.com will publish a new section of the guide outlining BizBuySell.com’s best practices, from the initial planning stages of a sale all the way through negotiations and post-sale transition.