It takes years upon years to build up a successful business, yet people are often surprised to find out that selling a business takes years as well. You put blood, sweat, and tears into establishing yourself as a credible financial advisor, and making your exit requires legwork as well. A well-planned business sale is a complex process. If you are a financial advisor looking to retire, do not underestimate how much time and effort it will take to hand off your business.
What To Consider Before Selling Your Business
A business that is not profitable will not attract high-end buyers. A thriving business is an appealing acquisition. Buyers do not want fixer-upper projects that do not have proof of a solid client base and consistent revenue flow.
But before you get too worried that your business is not in tip-top shape, take a deep breath and check out these five tips for preparing to part ways with your business.
#1 – Start the prep work now.
Use the years leading up to your retirement to create an attractive business investment. Make the most of those final years by taking on quality clients to increase your profits and produce a trail of consistent income. In other words, you want to be able to present a concrete track record that indicates your business is valuable.
As part of a sale, qualified buyers will want to see relevant business documents such as financial records and tax returns. Those documents will either make or break your case. You won’t be able to hide the facts and figures, so seize the opportunity to improve your business in those final years before you plan to sell.
#2 – Explore your options.
Selling a business is not a one-size-fits-all business transaction. There are numerous ways to carry out and complete a sale, which can make it difficult to discover the right route for you and your business. When trying to determine your path to retirement, ask yourself the following questions:
- Internal Sale vs External Sale – Are you a one-man band and an external buyer is the only sales option? Or do you have a junior partner that is interested in taking over the business?Oftentimes, an internal sale requires significant advanced planning as you train your partner to take over all business operations. Comparatively, an external sale forces you to network outside of your inner circle and advertise the idea of selling your business to prospective buyers.
- Clean Break vs Gradual Transition – Do you want to completely retire from financial advising when you sell your business? Or would you prefer a gradual transition where you work part-time to help your successor during the transition period?
- Set Price vs Negotiable Price – Will you hire a business appraiser to provide a professional business valuation and then use that price point during negotiations? Or do you feel like you can gather enough information on your own to set a price and then convince a buyer of that valuation?
- Lump-Sum Payment vs Payment Plan – What type of payment options will you consider? Will you only accept a single payment amount that is paid off in full? Or would you entertain the idea of receiving a down payment with a prearranged payment plan to pay off the remaining balance?
- Self vs Business Broker – Will you use a business broker to oversee and manage the process? Or will you go about the sale alone to avoid extra fees and the need to pay a broker’s commission?
#3 – Time the sale.
Timing is everything. Selling a business is no small endeavor. It’s one of those business transactions that cannot happen overnight. You should not try to rush through the complexities of the sales process.
Furthermore, you need to think about your clients as you prepare to retire. Informing your clients of the upcoming transfer of ownership is the responsible and respectful approach to selling your business.
As You Plan Your Retirement
Retiring is a big deal. Selling a business in order to retire is an even bigger deal. It’s a monumental moment that leads to a profound life shift.
At the end of the day, you do not want to leave your career as a financial advisor with regrets. Retirement should be a stage of life that you look forward to and enjoy.
If you are feeling confused and concerned about the direction of your financial advising business, do not hold back from seeking the guidance and help of a financial advisor business coach. In fact, independent financial advisor coaching could be your ticket to a more profitable business sale.