How to sell your business in 8 steps

Published Wednesday 4 June 2025

Table of contents

• Why selling your business strategically matters
• Factors to consider before you sell your business
• How to sell your business
• FAQs on how to sell your business
• Ready to sell? Make your next move with Xero

Key takeaways

• Think carefully about why you’re selling, your strategy, and market conditions before putting your business on the market.
• Value your business as accurately as possible to help you set the right price. Get expert advice from an accountant or a Mergers and Acquisitions (M&A) specialist.
• Have a sales strategy and carefully identify potential buyers.
• Make sure you have the right financial documents to give prospective buyers.
• Consider the business’s operational readiness (how easily a new owner can take over) – make changes as needed.

Why selling your business strategically matters

Your business has been your life. It deserves the right send off!

With the right planning as you’re preparing to sell your business, you’ll maximize the sale price, attract serious buyers, and minimize your tax bill. A good plan also creates a smooth transition for staff and customers.

You’ll need help from professionals who deal with business sales, like commercial real estate agents, business brokers, attorneys, and accountants. They can help value your business, structure the sale for the best tax outcome, and negotiate with buyers.

Factors to consider before you sell your business

You’ve decided to sell. Great! But before you put your business on the market, ask yourself a few things to help you decide when and how to do it.

Why you're selling

Are you selling for personal, financial, or operational reasons? The answer affects the timeline, the minimum price you’ll accept, and your ability to guide the new owner's transition.

The business's financial health

Is your business in good financial shape? Prospective buyers will want to see financial records about the business's assets, operating costs, and profitability, so you might need to improve the business’s bottom line before you sell.

The business’s value

There are many commonly accepted ways to value a business, and valuations therefore vary according to the state of the market and what’s included in the business’s value.

Your business’s operational readiness

Are the business’s operations streamlined? Are processes documented and sound enough for you to exit the business? Can the business survive without you? Or is there work to do first? The answer will guide your transition and business exit strategies.

Market conditions

Is it a good time to sell? Supply and demand affect the price you’ll get for your business. Consider the demand for businesses in your industry and judge the moment to put your business on the market.

How to sell your business

These are the fundamental steps to give you the best chance of getting the sales outcome you want.

1. Work out what your business is worth

Valuing your business can be challenging, but most small business owners use a mix of two methods: the value of your assets, and your earnings (often measured as EBITDA) multiplied by an industry-specific rate. Service-based businesses tend to focus more on earnings, while asset-heavy businesses may rely more on what they own.

Online calculators can give a rough idea, but they often miss important details like assets. For a more accurate view, talk to a valuation expert or check listings of similar businesses to get a sense of the market.

You also need to consider other factors that affect its value, like:

• Your businesses location
• Its operating state - how much work does the new owner need to put in?
• Its potential for expansion

Not sure if your business is worth anything? Thinking you should just shut down and skip the sale? Check out this Small Business Administration (SBA) guide on selling vs. closing your business first.

2. Get your financials ready for buyers

Potential buyers need to see what your business earns, how much it owns, and what you're paying in taxes. That means you need a profit and loss report, a balance sheet, and your old tax returns.

Ask your accountant or bookkeeper to help pull the numbers together. If you use Xero, you can generate the financial reports you need.

3. Prepare a sales strategy

A sales strategy is similar to writing a business plan. You outline your objectives and how you plan to reach them.

Although there are different ways to sell a business, the main difference is how involved you stay after the sale. Do you want a quick sale and to walk away? Or stay on for a while to make sure your business is in safe hands? In this case, you’d therefore want to structure the sale so you can stay on for a while – perhaps to train the new owner for a few weeks, or to stay on as management after selling to an equity firm.

Here’s a SCORE resource on selling your small business and next steps.

4. Identify potential buyers

If you decide which type of buyer you want and target them directly, you’re more likely to get the result you want.

So think about who would be most interested in your business and the best to buy it: competitors, private investors, equity firms, or even employees or family members. A business broker can help you narrow down the list, and can then help you figure out where to sell your business – the best channels to reach buyers you've identified.

Check out this SCORE resource on succession planning when selling a small business.

5. Decide your sales terms and conditions

Price is not the only thing to consider when preparing to sell your business. Also think about:

• Payment terms - do you need payment in full upfront, or will you accept payments? If so, do you want a set amount or profit-based payments?
• Other sales conditions – are you willing to sign a non-compete agreement? And what assistance are you willing to provide during the transition to the new owner?

6. Take part in the buyer’s due diligence

Due diligence is the buyer’s responsibility – but you have to play your part in good faith.

Buyers conduct due diligence to learn about your company, so you’ll probably need to give them financial reports, employee or vendor contracts, and other operational info. Xero accounting software helps you prepare financial reports that provide this information.

To protect your private information, think about asking the buyer to sign a non-disclosure agreement (NDA) before sharing your financial information. Your attorney can help with this.

As potential buyers learn more about your business, they may want to negotiate different terms and conditions, so be prepared for this.

7. Draft the sales agreement

Once the buyer completes their research and you finish negotiating the deal, it's time to draft and sign the sales agreement. The agreement should outline the sale price, payment structure, assets included in the sale, and the transition process.

Ask your attorney to draft this for you, and have your accountant check the numbers on the agreement.

8. Transition business ownership smoothly

You need a plan for a smooth transfer of ownership. A phased transition helps the business continue without much disruption and protects its reputation (and therefore its value). It can also protect the new owner by encouraging employees to stay.

Agree on some kind of transition during the sale. At the very least, you should:

• Introduce the new owner to your management team and staff, and give them vendor contact details and customer lists
• Outline operational processes to ensure they don't miss a beat when taking the reins
• Be available for questions from the new owner

If the new owners need more help, you could offer your services as a consultant. And if you're staying on after the sale, make sure that you have a clearly defined role that works for the new owner.

FAQs on how to sell your business

Understand how to effectively follow your business by checking out these FAQs:

When’s the best time to sell my business?

It depends. The best time to sell depends on market conditions, your business’s performance, industry trends, and the economic climate. Plan ahead and consider all these things so you can maximize your sale price and get the best possible terms.

What should I remember to do when selling my business?

Remember not to rush! That means taking care of the basics. Get your business valuation right so you can set the right price, and then complete the details. Prepare financial records, vet buyers, and take time with your negotiations.

How do I choose potential buyers before negotiating a deal?

Vet buyers carefully so that you don't waste time on people who can't afford your business or don't know how to run one. Look for buyers who have proof of funds (such as savings or proof of financing) and learn why they want to buy your business.

How can my attorney help me sell my business?

An attorney helps you draft your sales agreement, review contracts, and check the sale complies with state and federal regulations. So get an attorney involved early in the process – your business broker can help connect you with an experienced attorney.

Ready to sell? Make your next move with Xero

Planning ahead before you put your business up for sale leads to better outcomes for you and the next owner, both financially and personally. So do your prep first – it’ll raise the business's value and its long-term prospects.

Talk with an accountant or business advisor to see how you could improve your business before you sell. Xero's advisor database can help you find one.

Xero has all the accounting and financial management tools to help you manage your finances after your sale, and then to set up your accounting systems and process so your new business is ready to succeed from the get-go.