How to Sell Your Business — 6 Steps Every Owner Needs to Know

Webinar Wednesday, Episode 359

Selling a business is one of the most significant financial events of an owner’s life — yet most owners are completely unprepared when the time comes. In this episode of Webinar Wednesday, SBDC Director Kelly Bearden is joined by Michael Balstad, Certified Exit Planning Advisor and founder of Bizleavable, LLC, to walk through the six steps every small business owner needs to know before putting their business on the market.

Why most business owners leave money on the table

The majority of small business owners have 80–90% of their personal wealth tied up in their business — yet most have no exit plan. Whether you’re thinking about selling in 2 years or 20, understanding how buyers, lenders, and brokers evaluate your business will help you make smarter decisions today that dramatically increase your business’s value when you’re ready to sell.

The Six Steps

How to sell your business the right way

Step 1

Prepare your business for sale

Preparation is the most important — and most overlooked — step. This means getting your financial records in order (3 years of clean tax returns and P&Ls), resolving any legal or regulatory issues, documenting your processes, and reducing owner dependency. Buyers pay premiums for businesses that can run without the owner. Start preparing at least 1–2 years before your target sale date.

Step 2

Market your business

Getting your business in front of ready, willing, and able buyers requires a confidential marketing strategy. Business brokers use platforms like BizBuySell, BizBen, and Franchise Gator to list businesses. Listings typically show cash flow, gross sales, and a business description — but sensitive details are only shared after a buyer signs a Non-Disclosure Agreement (NDA). Lenders assess risk based on cash flow and documentation readiness, so having your financials tight is critical at this stage.

Step 3

Negotiate all deal points

Negotiation goes far beyond price. Deal points include financing terms (seller financing, down payment, SBA loan), the seller’s transition assistance period (which can range from one week to up to one year for SBA deals), asset inclusions and exclusions, non-compete agreements, and lease transferability. Understanding what levers you can pull before negotiation begins puts you in a much stronger position.

Step 4

Complete due diligence

Due diligence runs both ways. The buyer reviews your financials, tax returns, legal issues, lease transferability, assets, and regulatory risks. But sellers should also do their due diligence on buyers — assessing their track record, industry experience, management ability, credit, and motivations. A bad buyer can derail a deal at closing or damage your business’s legacy after you leave.

Step 5

Execute legal documents

Once all deal points are agreed upon, the accepted contract of sale and all supporting exhibits are assembled. The business enters escrow and documents are executed by all relevant parties. This is where your attorney earns their fee — do not attempt to navigate this step without qualified legal counsel familiar with business acquisitions.

Step 6

Transfer ownership

At closing, funds are wired from the buyer and/or lender to the seller, closing escrow. Key transition activities include transferring trade accounts, insurance policies, and leases, introducing the new owner to employees and customers, and determining the seller’s involvement timeline. For SBA deals, seller transition assistance can extend up to one year — plan accordingly.

Also Worth Knowing

Key concepts that determine your business’s value

Michael Balstad covered several valuation concepts that every business owner should understand — whether you’re selling soon or years away:

SDE vs. EBITDA

Seller’s Discretionary Earnings (SDE) is used for owner-operated businesses. EBITDA is used for managed businesses where the owner isn’t involved in daily operations. Both include “add backs” — owner-specific expenses that increase your business’s true value to a buyer.

The Five D’s of forced exit

Death, disability, divorce, distress, and disagreement can force an unplanned business exit at the worst possible time. Having an exit plan protects your business value no matter what life throws at you.

The Three Gaps

The Wealth Gap (insufficient assets outside the business), the Profit Gap (difference between current and best-in-class profit), and the Value Gap (difference between current and best-in-class value) tell you exactly where to focus to maximize your sale price.

Buying vs. starting from scratch

Buying an existing, well-run business is often lower risk than starting from scratch — especially if the product or service isn’t a new innovation. Existing businesses have proven track records, established customers, and an immediate paycheck.

Also covered in this episode

Before the main presentation, Kelly Bearden covered two additional topics highly relevant to anyone buying or selling a business right now:

The EIDL Advantage: If a business you’re considering buying has an existing SBA EIDL loan, that loan can potentially be assumed by the buyer — creating a unique no-money-down purchase opportunity in certain scenarios. This is a capital access strategy most buyers and sellers have never considered.

Fed Rate Cuts: With the Federal Reserve cutting interest rates, financing conditions for business acquisitions are improving — making this a favorable time for buyers to act and for sellers to attract more qualified buyers.

Michael Balstad — Certified Exit Planning Advisor, Bizleavable, LLC

Michael Balstad is a Certified Exit Planning Advisor and founder of Bizleavable, LLC, a firm dedicated to helping business owners prepare for a successful exit. With deep expertise in business valuation, deal structuring, and exit strategy, Michael works with owners throughout California to maximize business value and ensure a smooth transition when the time comes to sell.

Thinking about selling your business? Start with a free conversation.

The CSUB SBDC offers free one-on-one advising to small business owners throughout Kern, Inyo, and Mono Counties. Whether you’re planning to sell in 2 years or 10, our advisors can help you understand your business’s current value, identify gaps, and build a plan to maximize what you walk away with.

Watch the full webinar

This blog post covers the highlights, but the full 90-minute episode includes Michael Balstad’s complete presentation on exit planning, the Five Stages of Value Maturity, the Four Value-Driving Cs, and a live Q&A with Kelly Bearden and webinar attendees.

▶ Watch “How to Sell Your Business — Six Steps” on demand →

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Kelly Bearden — CSUB SBDC Director

Kelly Bearden leads the CSU Bakersfield Small Business Development Center, serving small business owners throughout Kern, Inyo, and Mono Counties. The SBDC provides free one-on-one advising and helped local businesses access nearly $9.9 million in capital investment in 2024.