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Oscar Dominguez: What you need to know before you sell your small business

Union Bank

Posted: April 29, 2009 3:40 p.m.
Updated: April 30, 2009 4:55 a.m.
 
Whether your small business is thriving or simply trying to survive these tough economic times, Santa Clarita Valley business owners may be asking whether it’s time to sell their businesses. There is no simple answer to this question, since each business owner’s situation is unique. But there are a few factors to consider when making this decision.

First, it’s important to determine why you might consider selling. The answer may crystallize your goals and help you determine whether selling is the best option for you. Personal reasons such as retirement, poor health or change in marital status are understandable. If your reasons reside outside the sphere of personal circumstance, consider these factors in your decision-making process:

n Business health: If your business is thriving in this challenging economy and your income statement has consistently shown strong profitability, your business may receive a higher sales price. Buyers look for steady profits and growth when considering the purchase of a business. If, however, your business is facing challenges like declining profits, legal issues or increased turnover, it may be wise to remedy these potential challenges before selling.

n Demand: Amid increased job losses throughout the marketplace, there may be more individuals looking to purchase an established business that has  weathered tough economic times.

n Finances: Consider how selling your business will affect your financial situation. Does your business currently provide enough income for you and your family? If you decide to sell, what are your options in terms of future income?

n Outlook: Take the time to review where your business and industry are headed. Is your business on the cutting edge of an industry or is it becoming outdated? Is it doing well relative to its competitors? Your answers may provide added insight when considering your business’ future.   

n Taxes: Consider consulting with an accredited tax professional about the potential benefits and tax implications of selling your business.   

Giving careful thought to factors such as your personal circumstances, your business’ health, your future goals and the outlook for your business can help you determine whether it is time to sell. Consider seeking the advice of a certified public accountant or a professional specializing in business sales when considering the sale of your business.

Oscar Dominguez is vice president and branch manager of the Stevenson Ranch branch of Union Bank, located at 25954 The Old Road, and the Valencia Bank & Trust branch, located at 23620 Lyons Avenue. His column represents his own views and not necessarily those of The Signal.

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