Sell a manufacturing company with one owner

Selling a sole proprietorship

Selling a sole proprietorship is a transaction in which the parties are usually industry investors or persons and entities associated with the industry. Anyone who places an ad; selling a sole proprietorship or other, expects a quick completion of the project. The buyer will be, among others, an investor who himself conducts a similar business activity in the same industry. Such a person is well-versed in the intricacies of the processes related to the operation of the enterprise or the company being sold. It is not difficult to guess that the main motivation of industry investors will be strategic rather than financial. Of course, there is no rule for such an action.

Entering a new market segment, acquiring suppliers and customers, taking over know-how, and concentrating capital are some of the goals that a new buyer sets for himself. Who could such a buyer be? It could be a large corporation, which would be the most likely scenario, but also a company of a similar size to the one for sale or a small company that wants to expand. The investor must then have sufficient capital (in the form of support from a larger entity or an investment loan) and can then take up the challenge and increase its market share. Furthermore, they can strengthen or expand their activities, which are certainly incentives for industry investors to take action. An industry buyer is interested in related markets and is not limited to a single industry. Buying a business can also serve as a way to expand the scope of activities.

Advantages of selling a sole proprietorship to a business investor

Selling a company to a business investor undoubtedly has many advantages. The advantages of selling to a business investor include a short period of time for the entire sales process and a relatively quick process of the entrepreneur's capital exit from the company. The sales price agreed upon during negotiations is “fixed”, which means that it is not dependent on the stock market situation, which can affect its amount. The advantage is the quick cash payment by the industry investor. Possibility of (legal) tax optimization. It is a private transaction, which means that there is no need to disclose financial information about the transaction. An entrepreneur responding to an advertisement: I am selling a sole proprietorship manufacturing company, and by purchasing it, he can also continue the management process on the principles that were previously adopted in the company.

The downside of such a transaction may be the additional activity of the entrepreneur, who wants to help the new buyer and offers him his time. A lot also depends on the goodwill of both parties in the company purchase and sale transaction.

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Record keeping methods and their impact on the sale of a one-man production company

The form of accounting record keeping can make the sale of a particular company more or less complicated. More work is required to prepare for the transaction of a one-man company keeping a tax revenue and expense ledger (KPiR). The sale of a business that uses full accounting is less complicated. There is also a third group of companies, the smallest ones, which run their business based on simplified accounting. For example, it is a tax card that is intended for a narrow group of entrepreneurs.

Revenue and expense ledgers are ledgers for smaller entities from the point of view of running a business. From the point of view of the sales process, such a business has disadvantages. These result from the limited presentation of the company's assets and the general approach to the picture of the company's income and expenses. This dependency increases the preparatory work needed to determine a reliable and realistic picture of the company's financial situation. It does not show the actual assets of the company. These include fixed assets, equipment, cash on hand and accounts receivable, as well as inventory. The scope also includes loans and credits because income and expenses are generally recognized.

This results in a lack of separation of the financial result, there is only one category of income. An example of this lack of transparency in the actual picture of the company can be the entrepreneur's salary. After all, it is not a company expense because it is included in the profit earned by the entity. It should also be remembered that the income tax shown in the books is taxed as the personal income of the entrepreneur. A lot of work and commitment is then needed to determine the correct data of such a company so that it can be sold.

The best time to sell a sole proprietorship

Probably each of us has wondered many times when would be the best moment to decide to sell a company. When placing a specific ad; I am selling a sole proprietorship, we must be really ready to do it. Regardless of whether you are the owner of a large or a very small company, the decision must be specific and to the point. This process can be divided into three stages. The first one is about being convinced that the decision is the right one. An entrepreneur who sells their company should be convinced that they want to do it and have no doubts about it. It often happens that a company is built up over many years and is like a “child” that the entrepreneur has taken care of.

Due to the planned sale, the former owner will have to have an alternative. This solution will be necessary not only for the sake of his interests but also for the good of his family, provided that they live off the profits of the company. He must consider whether early retirement is right for him. The second element to consider is the condition of the company. It must be demonstrated that the company is sufficiently prepared for the sales process. Remember that this depends, among other things, on the type of tax form used. The economic situation, macroeconomic dependencies, the condition of the capital market, and the industry situation of supply and demand will have a strong impact on the price, timing, and success of the sale.

Categories: sell shares, sell a company warsaw, companies for sale,

//M.K.

Illustrative photo

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