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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.

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