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Some create a business just to sell it

SHARE Some create a business just to sell it

An increasing number of entrepreneurs are starting new enterprises with one thing in mind from the very beginning: Grow it and then sell it.

In fact, researchers are starting to categorize entrepreneurs by the number of businesses they start, grow and sell. Bill Gates is a oner. Repeaters include Apple's Steve Jobs.Many small business owners, however, don't think much about selling their businesses until they are ready to retire. The earlier one starts thinking about this special day the bigger and better the payoff will be.

For some, selling a business can be a very traumatic experience, but it's worth every bit of the trauma if done correctly. On the other hand, mistakes can be extremely costly. Here are 10 considerations for sellers to contemplate:

1. Get professional help during the process. Hire lawyers, financial advisers and accountants who have been involved in the selling and buying of other businesses. They will aid you greatly in getting the best price and best deal to meet your objectives.

2. Consider tax consequences. You may have a huge "tax bite" unless you and your advisers get creative with stock exchanges, family foundations or trusts.

3. Terms. How you get the money is often more important than price. In the negotiating world, it is said you can get your price or your terms, but not both. I believe cash and tax consequences are much more important than price alone. A million dollars in two years secured only by the business may not be as good as $500,000 cash today.

4. Naming the price first. Let the buyer make an offer. Then you can negotiate up. When you name the price, you can't very easily increase it.

5. Scope out the buyer. Before you reach the price stage, try and figure out the motivation of the buyer. What is it about your business that really appeals to him or her? What are his future plans? Is this a crucial part of expansion plans? The more you know about the buyer, the better negotiator you will be.

6. Selling for the wrong price. That means too low. A higher price is seldom wrong. Get a professional valuation of the worth of the business.

7. Don't be overly worried about employees. When selling a business you must think of yourself first. This is the harvest for your lifetime of risk, sleepless nights and missed family events. The employees will find other work. Unless your brother-in-law has been with you "forever," I wouldn't let the deal rise or fall depending on the buyer keeping him on the new company payroll.

8. Some think of potential buyers as local people only. I sold my Denver-based medical oxygen business to a Florida buyer I met only two weeks before we closed.

9. Don't hurry the sale. Keeping it moving is one thing, but rushing the buyer is another. Sometimes the process can take a number of months.

10.Don't get emotional. Make a list of all the things you will do with the new time and money that you will have. This will help you get past the event itself.

Finally, clean up the office and business as much as you can. Throw out the junk. Get the operation as profitable as possible. Many buyers decide on the purchase price based on a multiple of earnings. Given enough focused time, you can make the business look and be better by working on it, not just in it.

Selling your business may be the most important single deal you will make in a decade or more, perhaps in your entire life. You will never make or lose money faster than when you are negotiating, so get the business ready, get yourself ready and make the deal of a lifetime.