Practical answers for tough business questions.
Question: My husband is getting ready to retire from his corporate job in two or three years, and we want to travel together. To do that, I would need to sell or close my store. How do I begin this process and make a plan to let go and hopefully sell at a profit?
Answer: The best place to begin is with your accountant or financial advisor. Believe it or not, it is sometimes better for your tax planning to close, rather than sell, a business, and only someone familiar with your whole financial picture could advise you in this regard.
If you do decide to sell, your accountant also can offer sound advice for preparing at least two or three years in advance and can help you create an exit plan. If you have a sole proprietorship or a Sub S Corporation, your accountant usually helps you minimize your tax liability, which may mean showing less profit. But, for a sale, you will want to maximize your profits and therefore increase your tax liability, so getting good counsel early is critical to a successful sale.
You also need to consult with a knowledgeable professional about the legal aspects of selling your business. Do you sell stock in your company or just the company assets? A buyer may want to purchase only the business assets to avoid any unexpected liabilities such as unpaid sales tax or delinquent payroll taxes. How do the different types of sale affect you as the seller? How do they affect the purchaser? An attorney or seasoned business broker should be able to answer these questions, but make sure whoever you rely on represents you, not the buyer or both parties.
As far as letting go, that can be the toughest part. Anyone who starts a business or owns one for any length of time has invested a lot of sweat and tears. You have heard, “It’s my baby,” or “It’s an extension of me,” and you may feel the same way. But, looking forward to adventure, travel, and time with your husband hopefully will ease any reservations you have about letting go. Good luck!
First published in Vol. 27 No. 6 of Retailing Insight. © 2013 Continuity Publishing Inc. All rights reserved.