Financial Advice for Small Business Owners Preparing to Sell

You’ve spent a lifetime perfecting your business, cultivating a strong reputation, and doing the work that nobody else wanted to do. Your days are consumed by the daily tasks that make a company successful. As you begin to think about your next chapter, you deserve to feel confident about the life’s work that you have tirelessly built. 

A small business is the culmination of years of hard work, long days, and dedication. It’s also likely one of your most valuable personal assets. In fact, for many owners, their business represents around 70% of their total net worth. This single asset is the key to funding your retirement, securing your family’s future, and enjoying life on your own terms. We believe in providing personalized wealth management for business owners to help them with this critical transition. 

The decisions you make during a business sale will shape your life for decades to come. We believe it is important to work with a team of wealth advisors for business owners preparing to sell long before a single offer rolls in. Proper financial planning for business owners selling a business can provide clarity and confidence at a pivotal moment in your life. 

Shifting from Managing a Business to Managing a Legacy 

Your entrepreneurial spirit has given you a unique perspective, but as you approach a sale, a different kind of vision is required. The focus shifts from managing daily operations to managing a legacy. This is a transition that moves from the business itself to what the proceeds can provide for you, your family, and the causes you care about. 

Most successful business owners are accustomed to being in control. They know their market, their product, and their customers. However, the process of selling a business and what comes after can feel like unfamiliar territory. A financial advisor can help bring familiarity to this process, working with you to see the big picture and create a personalized plan that honors the value you’ve created. 

Why Early Preparation Matters 

We often see business owners make the mistake of waiting for an offer to arrive before they begin to plan. This reactive approach can lead to rushed decisions that may not align with their long-term goals. A lack of preparation can result in unnecessary tax burdens, a frantic search for investment opportunities, and a general sense of unease. 

We believe that the most successful outcomes begin with a long-term plan, ideally years in advance. This proactive approach can reduce stress and help you make more informed decisions. Early conversations with a small business financial advisor can provide tips that help position you to get the most from the sale of your business and feel confident about what lies ahead. 

Your Pre-Sale Plan 

A strong financial plan for your business exit begins long before you have a buyer. We’ve found that a thoughtful and methodical approach can help you feel in control of the process. Below are some key areas we believe are important to consider as you begin to think about your next chapter. 

Know Your Why 

Before you jump into the details of the sale, it’s important to understand your motivations and goals. Why are you looking to sell? Are you looking to retire, pursue a new passion, or transfer the business to a family member? Are you hoping to gain passive income or fund a specific purchase with the profits? Having a clear understanding of your personal goals helps your advisory team build a more informed plan of action. 

Plan for Taxes 

The sale of a business often results in a significant financial event, which can have major tax implications. A financial advisor with experience in mergers and acquisitions can help you understand the tax liabilities that come with the sale and develop a tax-efficient strategy. Early preparation in this area can lead to a more favorable financial outcome in the long run. 

Get the Right Number 

Valuation is a critical step in the sale process. While there are some rule-of-thumb methods for valuing a business, a professional valuation gives you a realistic idea of how much your business is worth. It brings credibility to your asking price and helps your advisory team develop a more specific plan for the sale. 

Think Beyond the Sale 

A successful sale is measured by how well it positions you for your long-term financial goals. If the proceeds from the sale don’t support your desired future, then we believe that the deal doesn’t justify the effort. When you receive a large sum of money from the sale, you need a plan for how to invest it strategically. We work with you to understand your goals and risk tolerance so that your wealth planning can seeks to continue to grow and provide for your family’s future. 

The Power of a Fiduciary Advisor 

The process of selling a business can feel complex, but you don’t have to face it alone. As your fiduciary advisor, our role is to act in your best interests. We understand that selling a business is one of the biggest decisions you’ll make in your lifetime, and we aim to guide and guard your wealth throughout your entire financial journey by providing clarity and a steady hand.  

As a fiduciary advisor, our commitment to due diligence for seeking positive outcomes is a key part of our service. Our financial advisors have experience guiding clients through the process of small business sales. For example, one of our long-time clients was approached with an offer to sell their business. They were offered what they believed to be an above-market price, but our due diligence uncovered that the offer for the real estate was significantly lower than what the asset was worth. We worked with them to adjust the deal to their benefit, helping them negotiate and maximize the value of the transaction. This personal and professional experience with a wide variety of private markets allows us to add an additional layer of diligence to client transactions. 

Please note that the case study provided is for illustrative purposes only and is not representative of the experience of every client. Individual results will vary, and there is no guarantee of similar outcomes.

It’s Never Too Early to Prepare 

Selling a business is a major milestone that opens the door to a new phase of life. A core tenet of our philosophy for providing financial advice to small business owners is that the most successful outcomes are often a direct result of early, thoughtful financial planning for business owners selling a business. We believe that with the right advice, you can feel confident and in control of your financial well-being. 

If you’re beginning to think about your next chapter, we are here to help. Let’s talk about how to prepare.