Most business owners grossly over estimate the value of their company. They see revenue or net income and think they should easily get a multiple of earnings. Not the case! Most business owners also believe selling the company is their exit strategy. Again, not the case most of the time unless you plan accordingly. The following are some items to ponder before you put the “For Sale” sign up.

Consider Timing

Just like getting a loan, the best time to do it is when you don’t need it. So if you are trying to sell your company because you have had a few bad years or are losing customers, now is not the time to sell. The best time to sell your company is when you have many options. These options don’t all have to be acquisition offers, they can also be term sheets, letters of interest or the early stages of conversations.

Get Your Company in Order

Assess cash flow, company policies and your management team. Do you have a written policy manual? If not, how will the new ownership be able to run the company as effectively as you did? Do you have the right management team in place? If they are all “yes” people, you don’t have the right team to run the company. You need leadership! That means someone besides you. How does cash flow look? How does it look if you take yourself out of the equation? For example, business owners run many expenses through the business. If you took those out, how much more profitable would the company be? Remember to leave your salary or a competitive salary in place as someone will have to do your job.

Consult with Experts

Surround yourself with those that complement your weaknesses. Unless you have vast experience in buying and selling companies, leave this to the experts. It will be worth your time and money to get expert advice. The right consultant will be able to help navigate tricky tax issues, negotiate selling terms, prepare the right set of reports and save you a lot of headaches.

Sell Your Company, Not Yourself

What business owners don’t realize is that unless they have planned for a sale, they are the company. Owners are great at coming up with winning ideas and motivating a team to reach success. When you sell the company you have two options in terms of your future – being an employee or going onto the next venture. If you don’t delegate and build the right management team, you will more than likely have to be an employee of the company after it is sold. You will be much happier selling and walking away so make sure you are in a position to do so.