This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Keep Organized When Selling Your Business

NEW YORK ( TheStreet) -- You negotiated a well-deserved price for your successful business and have signed on the dotted line. The time has come to hand the business off to its new owners. But how exactly do you do that?

The market for small businesses sales is slowly improving this year, particularly as financing becomes more available to would-be buyers.

The market for small businesses sales is slowly improving this year, but owners have to be organized and prepared to take advantage if a buyer appears.

As of March 31, there were 1,172 business-for-sale transactions completed, up 2% from that time last year, according to BizBuySell.com, an online marketplace for buying and selling small businesses.

In general, businesses seem to be in better shape, allowing owners to sell their businesses at better prices.

The median revenue for small companies sales rose 8.1%, to $346,000, and the median cash flow amount rose 5.2%, to $84,175, according to the report, released April 5. It is the first quarter since 2009 in which median revenue and median cash flow for sold small businesses were up versus the prior year, BizBuySell said. Median sale price rose 3.3%, to $155,000 -- still below the peak of $180,000 seen in 2009.

Kevin Reeth, CEO of Outright, a program that streamlines small-business' taxes and financial transactions into a central database, talked with TheStreet about the importance of keeping organized during a business transition.

For business owners, what are some of the most important issues to be aware of during the selling process?

Reeth: The biggest thing is that you're going to have to be pretty well organized. Anyone that is looking to buy your business is going to want to understand it; being organized can provide the buyer with all the essential information he or she needs.

In addition to the typical financial questions , what kind of contracts and relationships do you have with customers? That's going to be one of the most important things. And then it gets into some of the more details around that. If you're a service-based business, do you have contracts currently in progress? Commitments for future work? And what are the terms? What are you contractually obligated to receive?

Also, if you have employees, make sure all your paperwork is done. A buyer doesn't want to come into a business and find out down the road that you weren't compliant and that they might be liable.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
AAPL $123.25 0.00%
FB $83.30 0.00%
GOOG $548.34 0.00%
TSLA $185.00 0.00%
YHOO $45.10 0.00%

Markets

DOW 17,712.66 +34.43 0.19%
S&P 500 2,061.02 +4.87 0.24%
NASDAQ 4,891.2190 +27.8570 0.57%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs