Selling a florist business can be rewarding as long as you make correct preparations. The first thing you need to do is to have the business appraised, a job often done by accountants. You will need to prepare several documents for your appraiser, including an adjusted balance sheet and an income statement. If you are especially frugal, you can do your own appraisal on an Excel spreadsheet. You put in three years worth of data from you income tax returns, adding back your salary, depreciation, contributions, interest expense and income, and any other non-operational items. The result will be your discretionary income over the previous three years. You adjust your balance sheet by marking your assets to current market value and removing assets and liabilities that the buyer will not acquire from you, like cash and leased equipment.
You want to have everything ready to go before a prospective buyer knocks on your door. This shows the buyer you are serious and ready to move. Put yourself in the mind of the buyer, and ask yourself what he would want to know in order to close the deal. For instance, you can step him through the procedure you follow when customers order flowers. Constantly be available to answer questions, negotiate terms, and in general advance the process. If you like, you can work through a broker. This frees you up to continue operating your business during the perhaps months it will take to consummate the deal. Of course, the broker will get a commission, but it is often worth it in order to keep your business running and your cash flowing.
You should be reasonably up-front with a potential buyer, but remember not to divulge all your financials until an offer is made and accepted. Such an offer will usually come with a back-out clause in case the buyer doesn’t like your numbers. This is just to protect your proprietary information from poachers who masquerade as buyers but really just want to look at your information. Things like customer lists and wholesale vendor names are very valuable, and you do not want to release these unless you have an offer in writing. You do have to reveal any negatives before the deal is struck – it’s not nice to surprise a buyer with bad news after an offer has been made. You wouldn’t want that done to you, so don’t do it either. Don’t hide cash from the IRS – if the buyer finds out, he has leverage over you. Better to just pay your taxes upfront. Make sure you use an escrow company for the transaction to safeguard all monies involved. You will have to report the sale of your asset to the IRS. Good luck!