How to Prepare Your Business for Sale: A Step-by-Step Guide

Selling a business is one of the biggest financial decisions most owners will ever make. Whether it’s a retail shop, a manufacturing company, a family-run service business, or an online tech company, informed and intelligent preparation is what separates a smooth, profitable exit from a stressful, undervalued sale.

At SBRE, we’ve helped countless business owners navigate the entire process, from valuation to closing, and we know what it takes to maximize results. Here’s a step-by-step guide to help you prepare your business for sale the right way.

Step 1: Get a Professional Business Valuation

The first step is knowing what your business is truly worth. Owners often overestimate or underestimate value, leading to unrealistic expectations or leaving money on the table. Your price is what the market will reasonably pay for your business, and this value is based on financials, risk, comparables, perception, and clear opportunities.

Our valuations consider:

• Financial performance (revenue, cash flow, EBITDA)

• Assets and liabilities

• Industry multiples and comps (e.g., similar business sales in similar markets)

• Market demand and buyer pool

• Market perception

• Risk associated with your business & transferability

• Growth opportunities available to new owners

Pro Tips:

1. Business brokerage reports show that companies with clear, defendable valuations sell up to 20% faster than those without.

2. Business owners often wait until they want to sell to get a valuation. This is too late. If you start with a valuation before you are fully ready to sell, you can understand your numbers with enough time to make adjustments to your business to earn a higher multiple. Savvy business owners will request their initial valuation at least 3 years before they want to sell and then check their progress each year until they are ready. While 3 years may seem too far out, if you can start with at least 1 year ahead of selling, you are already in better shape than most. Curious how this works? Request a valuation with the link below and we'll walk you through it.

Request a Valuation of Your Business

Step 2: Clean Up Financials

Buyers want transparency. Ensure that financial statements are accurate, tax filings are up to date, and discretionary expenses (like personal vehicle or travel costs) are documented clearly. And remember... what your tax return says, is how the market will determine value. So, if you are a cash business and/or have been creative with your taxes, that creativity is not rewarded when selling. For this reason, it is smart to take a few years to adjust your structure for optimal selling multiples.

In local markets, many buyers are local professionals or regional investors, so clean financials increase trust and make it easier to secure financing.

Pro Tip Checklist:

• Prepare 3–5 years of profit & loss statements, balance sheets, and tax returns

• Normalize owner’s salary and discretionary spending

• Pay down or restructure high-interest debt if possible

• A CPA can help you with the financial pieces but please do not make the mistake of thinking the financials are sufficient for a valuation... we've seen too many business owners make this mistake and then be disappointed with the misalignment of a CPA's analysis with the market's. CPAs are excellent, but there is a big difference between their work and business valuations.

Step 3: Streamline Operations

A business that runs smoothly without heavy owner involvement is more attractive. If everything depends on you, buyers will discount the price.

Pro Tip Steps:

• Document standard operating procedures (SOPs) - if anything has more than 3 steps and is done more than 3 times a year, build a process for it and document it

• Strengthen middle management or key employees

• Build redundancy into vendor and customer relationships

• Create automations where possible to improve margins

Example: Many service-based businesses in suburban corridors (like laundromats or auto repair shops) increase value by showing they can run with minimal daily owner involvement. They institute strategic automations to help run the backend, lead generation, and basic operations which increases margins while also giving them ample room to grow.

Step 4: Evaluate and Optimize Real Estate

If your business owns its real estate, like a retail storefront downtown or a light-industrial facility, you have two options:

1. Sell the real estate with the business (ideal for buyers who want full control).

2. Separate the business and real estate (keeping the property as a long-term investment and leasing it back to the buyer).

In smaller markets, like Erie, PA, industrial properties can average 5% cap rates and retail lease rates range can $15–$40/SF per year depending on location and building quality. Showing these benchmarks for your market helps buyers see the property as a sound investment on top of the business value. Make sure you're working with a broker who understands this so you don't leave money and opportunity on the table.

Step 5: Address Legal & Compliance Issues

Buyers will review everything. If something is off, savvy owners will work with brokers to address the gaps or discrepancies head on in listings. Buyers reward transparency and honesty.

When you're preparing, consider how to avoid red flags by:

• Ensuring zoning aligns with business operations (C-1 through C-4, WC, or M-1/M-2 zoning in Erie can affect use)

• Resolving outstanding liens or lawsuits

• Confirming licenses, permits, and contracts are transferable

• Solidifying key relationships (with customers, suppliers, partners, etc.)

Pro Tip: In waterfront or industrial areas, confirm environmental compliance early to avoid costly surprises during due diligence.

Step 6: Prepare Your Team & Customers

Transition planning is often overlooked. Buyers want assurance that key employees and customers will stay after the sale. This starts by talking with your employees and partners and being transparent about your goals of selling. The more sellers try to hide, the longer it takes to sell, and the less buyers are interested.

Pro tips to consider:

• Secure retention agreements for top staff

• Communicate carefully with employees because timing is critical

• Create transition plans for vendor and client relationships

Step 7: Market Confidentially & Strategically

Selling a business isn’t like selling a house. Too much exposure can hurt morale or alert competitors. So, while transparency is critical, so is the nuance of when to share information.

At SBRE, we use a confidential marketing process that helps you balance all your goals:

• Pre-qualify buyers before sharing sensitive details

• Showcase strategically crafted teasers on listing platforms

• Leverage our networks to reach serious, qualified buyers

Pro Tip: Some confidentiality can drive interest and intrigue so allowing us to strategically craft listings with the most attention-grabbing information can directly impact the speed at which we can bring viable offers to you. Ask us about the nuances of selling a business for your particular industry. Each industry requires a different approach.

Step 8: Negotiate & Close with Expert Support

Finally, deals succeed or fail in the negotiation and closing stages. Common hurdles include financing, lease terms, and working capital adjustments.

With SBRE’s team managing the process, you’ll have expert support on:

• Purchase agreements

• Financing contingencies

• Lease or property terms (if real estate is involved)

• Post-sale transition planning

Conclusion

Preparing your business for sale isn’t just about timing, it’s about strategy.

By valuing your business correctly, cleaning up financials, optimizing operations, addressing compliance, and marketing confidentially, you’ll position yourself for a smoother transaction and stronger sale price.

At SBRE, we specialize in business sales and commercial real estate transactions across western PA and NY. If you have a business in another state, we also have an extensive network of brokers across the US, so let us know how we can assist you!

Whether you’re planning to sell next quarter or five years from now, the best time to start preparing is today.

Let's Talk

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Disclaimer: The information provided in this article is for general informational purposes only and is subject to change without notice. While SBRE - Sherry Bauer Real Estate strives to ensure accuracy and reliability, no warranty is made regarding the completeness or timeliness of the content. Market data, legal references, and third-party sources are cited where applicable. Readers are encouraged to verify information independently and consult appropriate professionals before making real estate, business, or investment decisions.