sell your business plan

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1. Identifying the Reasons for the Sale

2. deciding the timing of the sale, 3. getting a business valuation.

• 4. Should You Use a Broker?

5. Preparing Documents

6. finding a buyer, 7. handling the profits, how do you sell a franchise business, how do you sell a business idea, how do you sell a small business without a broker, how do you sell your share of a business, how much does it cost to sell a business, the bottom line.

• Small Business

7 Steps to Selling Your Small Business

Selling a small business is a complex venture that involves several considerations. It can require that you enlist a broker , accountant, and/or an attorney as you proceed. Whether you profit will depend on the reason for the sale, the timing of the sale, the strength of the business's operation, and its structure.

The business sale will also require much of your time and, once the business is sold, you'll need to determine some smart ways to handle the profit. Reviewing these seven considerations can help you build a solid plan and make negotiations a success.

Key Takeaways

• Identify why you want to sell your business and make sure it's ready to be sold.
• Take the time you need to prepare your business for sale, determine the value of your business, and consider hiring a business appraiser.
• Decide whether you want to hire a broker or negotiate the deal yourself.
• Once you find a good buyer, there are a series of financial screenings and other steps that need to be taken to keep the process moving.
• Take the time to work with a financial professional and determine how you want to invest or otherwise use the money you make from the sale of your business.

You've decided to sell your business. Why? That's one of the first questions a potential buyer will ask.

Owners commonly sell their businesses for any of the following reasons:

• Partnership disputes
• Illness or death
• Becoming overworked

Some owners consider selling the business when it is not profitable , but this can make it harder to attract buyers. Consider the business's ability to sell, its readiness, and your timing.

There are many attributes that can make your business appear more attractive, including:

• Increasing profits
• Consistent income figures
• A strong customer base
• A major contract that spans several years

Timing is everything. And that includes the time it takes to get everything ready to sell off your business.

Prepare for the sale as early as possible, preferably a year or two ahead of time. The preparation will help you to improve your financial records, business structure, and customer base to make the business more profitable.

These improvements will also ease the transition for the buyer and keep the business running smoothly. 

Selling a business involves negotiations, discussions, and a lot of leg work. If it's not possible for all this to occur in person, then certainly using services like Zoom or Skype to hold business meetings with potential buyers digitally is possible.

Determine the value of your business to make sure you don't price it too high or too low. You can do this by finding and hiring a business appraiser to get a valuation .

Once you hire an appraiser, they will draw up a detailed explanation of the business's worth. The document will bring credibility to the asking price and can serve as a gauge for your listing price .

You can also determine the overall value of your business using some key metrics. Consider evaluating your company by determining the market capitalization , looking at earnings multipliers, book value, or other metrics.

4. Hiring a Broker

Selling the business yourself allows you to save money and avoid paying a broker's commission . It's also the best route when the sale is to a trusted family member or current employee.

In other circumstances, a broker can help free up time for you to keep the business up and running, or keep the sale quiet and get the highest price. That's because the broker will want to maximize their commission. Discuss expectations and advertisements with the broker and maintain constant communication.  

Even if you decide to sell your business to a close family member or employee, rushing through the sales process is not advised. However, if a relatively quick turnaround is needed, hire a business broker to speed up the proceedings.

Gather your financial statements and tax returns dating back three to four years and review them with an accountant. In addition, develop a list of equipment that's being sold with the business. Create a list of contacts related to sales transactions and supplies, and dig up any relevant paperwork such as your current lease. Make copies of these documents to distribute to financially qualified potential buyers.

Your information packet should also provide a summary describing how the business is conducted and/or an up-to-date operating manual. You'll also want to make sure the business is presentable. Any areas of the business or equipment that are broken or run down should be fixed or replaced prior to the sale. 

A business sale may take anywhere from a few months to years. This includes the time you take to prepare all the way to the end of the sale, according to SCORE, a nonprofit association for entrepreneurs and partners of the Small Business Administration (SBA) .

Finding the right buyer can be a challenge. Try not to limit your advertising, and you'll attract more potential buyers. Once you have prospective buyers, here's how to keep the process moving along:

• Get two to three potential buyers just in case the initial deal falters.
• Stay in contact with potential buyers.
• Find out whether the potential buyer pre-qualifies for financing before giving out information about your business.
• If you plan to finance the sale, work out the details with an accountant or lawyer so you can reach an agreement with the buyer.
• Allow some room to negotiate, but stand firm on a price that is reasonable and considers the company's future worth.
• Put any agreements in writing. The potential buyers should sign a nondisclosure/ confidentiality agreement to protect your information.
• Try to get the signed purchase agreement into escrow .

You may encounter the following documents after the sale:

• The bill of sale , which transfers the business assets to the buyer
• An assignment of a lease
• A security agreement , which has a seller retain a lien on the business

In addition, the buyer may have you sign a non-compete agreement, in which you would agree to not start a new, competing business and woo away customers.

A business broker often charges an average of 10% for businesses under $1 million; while that may seem steep, the broker may also be able to negotiate a deal that is better for you than the one you would have arranged by yourself.

Now that you've sold off your business, it's time to figure out what to do with the profit that you've made. The first instinct may be to go on a spending spree, but that probably isn't the most wise decision.

Here are a few things you may want to consider:

• Take some time—at least a few months—before spending the profits from the sale.
• Create a plan outlining your financial goals, and learn about any tax consequences associated with the sudden wealth.
• Speak with a financial professional to determine how you want to invest the money and focus on long-term benefits, such as getting out of debt and saving for retirement .

You'll need to work in conjunction with your franchiser, as they will need to determine if the new buyer is appropriate. Plus, that new buyer will need to sign a franchise agreement with the franchiser.

There are a variety of fees and rules associated with owning or selling a franchise that can be found in the FTC's compliance guide .  

It's possible to approach a company with a business idea, but first, you need to do your research, prepare a presentation, and research and approach potential targets. While some business plans are best protected with a patent, others can be secured by getting a potential company you want to work with to agree to a non-disclosure agreement.

While many people would like to avoid the 10% a business broker may charge, the risks of selling on your own may outweigh the loss of money. But if you're going to go it alone, prioritize selling to a buyer you know, make use of the advice of experienced, retired owners and executives, and use all the internet resources available, such as the Small Business Administration, or the National Federation of Independent Business (NFIB) .

Selling your share of a business to your partner(s) is a common ownership transfer method, particularly for small businesses. Having an agreement in place with your partners ahead of the sale will help smooth the transition, increasing the likelihood that both the staying and exiting partners benefit.

If you go through a business broker and your business is under $1 million, the broker's commission is likely 10% to 12%. Other fees that can crop up include attorney fees, marketing fees, and the costs of making any cosmetic or more substantial upgrades to your business so as to make it more sellable. There are also fees that may come up if you are transferring a lease to the new owner of your business.

Selling a business is time-consuming and for many people, it's an emotional venture. A good reason to sell or the existence of a hot market can ease the burden, as can the help of professionals.

It may also be possible to receive free counseling from organizations such as SCORE, and your local chamber of commerce may offer relevant seminars and workshops. When all is said and done, the large sum of money in your bank account and your newfound free time will make the grueling process seem worthwhile.

Small Business Chronicle. " How to Calculate the Selling Price For a Business ."

Inc. " What You Should Know About Working With Business Brokers ."

Score. " Selling Your Business ."

U.S. Small Business Administration. " Close or Sell Your Business ."

Federal Trade Commission. " Franchise Rule Compliance Guide ," Pages i, 24-119.

International Franchise Association. " Royalty Fee Requirement Definitions ," Page 1.

Small Business Chronicle. " How to Sell Ownership in a Partnership ."

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How To Sell Your Business and Make a Successful Exit

Published: August 24, 2022

You’ve done it: You took an idea, built it into a thriving business, and now you’re ready to sell. Congratulations — few entrepreneurs make it to this point. But now it’s time to ensure you make the right deal for your most prized possession.

Entrepreneurs choose to sell their businesses for many reasons, ranging from retirement and health problems to co-founder conflict and just plain boredom. In 2021, 8,647 businesses were sold, a 14% jump from the year before. 

Regardless of why you’re moving on, there are actionable steps you can take so that your business is sold at the right time, for the right price, and to the right buyer. 

Steps to selling a business

1) Educate yourself — Spend some time researching how to sell (you’re doing that now!) and figure out if you need to make any changes to get your business ready for the process. Common actions include adding business processes to make the business scalable, adding features that would open up a new market, or filing patents to lock down intellectual property.

2) Get organized — Do your due diligence by organizing your bookkeeping and financials and getting ahead of anything that could slow down the sale (such as signoff from other shareholders or active lawsuits or legal proceedings). Write a business memorandum: the company’s history, overview, and successes (highlight wins such as high talent retention or pivoting amid the pandemic). 

Also consider your business’s employee contracts, intellectual property issues, and federal and state tax requirements. To ensure you have time to fix all potential red flags, hire a third-party accounting firm to audit your financial statements a year or two before the sale. 

3) Get a preliminary business valuation — Turn to experts (e.g., business brokers, merger and acquisition advisers) to understand how much your company is worth, then consider if you’re willing to accept that price. 

4) Identify who should be your buyer — Find the why when thinking of your ideal fit. For example: Does the buyer have the cash to buy, or do they need financing? Have they bought companies before? Who would need to approve the deal on the buyer’s end (internally: founders, board members, management; externally: investors, banks)? Will they keep your team employed after the sale? 

5) Assemble your team — Putting together a team early can prevent a lot of stumbling down the road. Professionals who could help with the process include: 

• Corporate finance attorney 
• Business broker 
• M&A adviser
• Personal tax accountant 
• Company auditor 
• Sell-side bankers 

6) Go to market — For small businesses, owners can list their companies anonymously on business broker sites. For larger ventures, owners should identify potential suitors by looking at direct rivals and companies in related industries.  

7) Follow the deal to close — Deals can fall through days before closing; stay on top of it along the way by responding to requests within 24 hours, scheduling weekly calls with advisers, and pushing legal counsel to move documents forward quickly. 

A tip: Time is your enemy. Resist any efforts made to push the closing date. 

8) Prepare for life after sale — Your business is your baby: You should be hands-on when planning your company’s transition (this includes how the new owner will interact with your employees and customers). But entrepreneurs also need to give thought to life after their exit, from retirement planning and managing sale proceeds to future personal and professional goals.

When to sell your business 

Knowing exactly when to let go of your venture can be intimidating, but experts agree you should decide whether selling is in your future at the very beginning. 

“The best time for entrepreneurs to consider selling their business is when they start their company,” says business broker Katie Milton Jordan . “Consider what you want your company to do for you. Are you creating a company that you want to sell or a company that will create an independent stream of income just for you?”

When weighing the pros and cons of an exit, also think about the financial health of your company. “You want to be selling when your company is performing well, you’re cashed up, and you’re growing,” says David Raffa , a corporate finance expert. “The worst possible thing you can have is to sell in the slope part of your year.”

Along with financial considerations, the right time to exit your business is a deeply personal decision that only you can make. For Cindy Summers, founder of Sugar Fixé Pâtisserie, moving on felt right once her business no longer challenged her or fit her lifestyle.

“My passion is building businesses and creating great customer experiences. Once my business was established, I became more of an operator. This didn’t give me the mental gymnastics I needed to stay inspired,” she says.

Additionally, the nature of her business made it difficult for Summers to find work-life balance. “I was married but kid-free when I started the business. Three kids later, and there was an emotional conflict between my family, employees, and customers. Busiest times in a bakery are weekends and holidays. This meant missing out on a lot at home,” she says. 

Some other common life experiences that lead to exits include:

• Illness 
• Co-founder misalignment or conflict 
• Boredom 
• Retirement 
• Shifting life priorities 

Jordan advises owners to sell their companies before the “five D’s”: death, divorce, disease, disengagement, and downturn. Making an exit prior to those events can ensure you get a fair price for your creation.

“Most entrepreneurs tend to get out too late, when they have no gas left in the tank, and the growth rate of the business is a big piece of the value you get in the end,” says Raleigh Williams, who sold his escape-room business for $26m. “Ending on a high note is something that pro exit entrepreneurs do versus amateurs.”

How much to sell your business for 

Della Kirkman , a CPA and business investor, uses a simple calculation to get entrepreneurs started: “A quick and easy formula is to determine the five-year weighted average of EBITDA and multiply it by the range of multiples that are appropriate for your type of business.” Kirkman says she most often uses a multiple between three and five. 

Meeting with experts to get a professional valuation of your business is the most accurate way to find the right number. Therefore, get started with assembling a team of advisers early in the selling process, and find professionals who work closely with your industry whenever possible. The more niche their experience, the more they’ll be able to guide your sale appropriately. 

Third-party experts can also ensure the business is ready to be sold. “A lot of business owners don’t realize their company can’t be transacted and isn’t packaged properly to go to market,” Jordan says. “That’s why it’s important to ask questions and get educated as soon as possible.” 

A common roadblock Jordan sees is solopreneur businesses. For those who wear every hat at their firm, buyers feel they are essentially buying a job rather than a company. Another reason for a difficult transaction could be if a business is tied up in any sort of legal proceedings. 

To make a business more appealing to buyers, Jordan suggests depersonalizing your operations.

“Business owners create a business and a system in a way that’s easy for them to run, built around their strengths and personality, because they work so hard around the clock,” says Jordan. “When it comes time to sell, their quirks are not the quirks of the new owner.”

She suggests that owners create manuals, standard operating procedures (SOPs), and automations where possible. 

“Just like when someone buys a new car and you hand them the set of keys and the owner’s manual,” she says. “If you have a company you can hand off with an owner’s manual, you have something that can be transacted.”

Once you have the right deal, stay active in the process until the very end. 

“As a founder, so much of your net worth is tied up in this transaction,” Williams says. “Outsourcing that process and not being involved, or expecting a lawyer or broker to be as involved in the details to the same extent you need to be, is unwise.”

Where to sell your business 

If you’re wondering  where to sell your business , the right place depends on its size. For small solopreneur-owned ventures, owners can list their companies anonymously on business broker sites such as BizBuySell ).

There are many different business sites. Some target specific cities or states, as buyers often want to acquire local businesses. Experts recommend researching the best site to list using a simple Google search that includes your location. 

For larger companies, Raffa says that entrepreneurs can spearhead the selling process directly through a sell-side banker rather than list on a business broker website. 

“In that situation, you should do rounds of approaches,” he explains. “Make a list of 100 potential buyers, and start with the first 10-30 ideal ones, and work down that list.”

Raffa advises assembling your list by including companies 5-10x your size in your business space (often competitors), companies in a closely related space, companies in a similar industry who are struggling and need a new edge, and companies that want to enter your geographic market.

He notes that when reaching out to potential buyers, likely only half will engage with you, and they should sign NDAs before you disclose further financial information and insider business details. 

Alternatively, you can start with companies lower down the list to dip your toe in, understand the typical questions asked, and circle back to your ideal buyers when you feel more prepared.

When Williams began the process of finding a buyer, he approached direct competitors first, a tactic he says is helpful across industries. 

“People in the same industry or adjacent to the industry are the easiest people to do deals with because they understand what they’re looking at,” he says.

It’s also common for business owners to get inquiries from companies or investors interested in acquiring. Even if a sale isn’t in your immediate plans, don’t ignore the opportunities, which may lay the groundwork for a deal down the road. 

Life after exiting 

Selling doesn’t have to mark the end of your career — aspirations for the future can actually be baked into the terms of the sale. 

“The options are endless,” says Kirkman. “Whatever they can dream up and negotiate into the deal, they can have.”

Kirkman says this includes options such as:

• Annuity in perpetuity: a profit share for the life of the business
• Retaining ownership of a brick-and-mortar building to create a future rent stream
• Taking a revenue share for any new clients brought into the company 
• Selling your business on a partial installment basis to spread out the payments (which can help with tax deductions) 
• Staying on as an employee (often called an acqua-hire) 
• Stay with the business as a consultant 

Whatever you choose, be sure to put time into the decision-making process. If a clean break feels like the right move, it likely is. If you’re not quite ready to say goodbye, that’s OK, too. 

Plus, your exit might just be the first of many, and you can use the experience to inform your future ventures.

“Most entrepreneurs after they’ve exited something realize that the ends won’t justify the means nearly as much as they thought they would,” Williams says of running a business that’s purely profit-driven. 

“They tend to actually move into the thing that they wanted to do all along, but were scared there wasn’t enough money in,” says Williams. “And they tend to make way more money in the thing they actually enjoy doing than their first exit.” 

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How to sell a business in six steps

Wondering how to sell your business so you can make the most of your labor of love? First off, congratulations! Selling the business that you worked so hard to create and build is a big choice, and one that comes with planning, goal setting, searching (for buyers, and maybe even some soul-searching, too), valuations, and a whole lot more. So before you start advertising your business in the local classifieds, start here: how to sell your business— the right way. To help guide you, we’ve made a list of six simple steps that you can follow all the way to the bank. 🏦 How to sell a business in six steps:

• Time your sale properly
• Organize and prepare your finances
• Determine the value of your business
• Decided whether or not to use a broker
• Find a buyer

Ready to move from for sale to sold? Well, getting there will take longer than reading a few bullet points, but you’ve got to start somewhere! Let’s begin.

Step 1: Deciding to sell your business

Deciding to sell your business isn’t always an easy choice to make. It’s typically not a quick one, either. When you’ve reached this point, it usually means you’re in the midst of change, and that’s totally okay. Here are just a few reasons why people make the decision to put the proverbial “for sale” sign on their business:

• A career or a life change. For example, a divorce, a death in the family, illness, or, in terms of your professional life, you’ve decided that you’re ready for your next move and a total career change. This could be anything making the switch from running a boutique graphic design agency to opening a bakery or moving from owning a catering company to becoming a full-time accountant. You do you—and sell your business to help you get there.
• Retirement. You’ve put in your time and have decided to call it quits and join the flock of snowbirds who travel south six months of the year. We wouldn’t blame you. ✈️
• Differences: Perhaps after five years in business together, you and your partner have decided that you want different things, and selling the business is the best way to achieve your respective goals. Don’t stress, this happens. And when it does, it’s best to have the agreements made up in advance of the sale.
• It’s just not working for you: You feel overworked, underpaid, or simply bored. When this happens, you’ve got a call to make: should you stay or sell?

Whatever the case, it’s important to know the reason behind your decision. Not only will it help you sleep better at night, but potential buyers will want to know. Knowing the owner’s motivation can be a big part in their own decision making, helping them understand the reasoning behind the sale and how that might play a part in the future success of the business. When selling, remember to be open and transparent. This creates trust and a smoother process from start to finish.

Step 2: Time your sale properly

Making the decision to sell your business usually doesn’t happen overnight. But even if you magically woke up with the idea and decided to move it from dream to reality, the plan to get you there can take months—sometimes even years. This is why planning well in advance is key to making the most out of your business decision. Allowing for ample space and time in the process gives you the opportunity to make improvements that will increase the business’s valuation. For instance, you might want to clean up your finances , look at ways for reducing operational costs, and create a few campaigns to build up your sales. Or, if applicable, focusing on customer retention by launching a loyalty program, or executing a few tactics that will strengthen your brand awareness. While these tips do take time to go from ideation to implementation, they can make your business much more attractive to buyers. 

Step 3: Organize and prepare your finances

We just mentioned cleaning up your finances, but before you can do that, you’ve got to bring them all together in one organized place. Start with financial statements like balance sheets, P&L statements , and your tax returns from the past three to four years. If you’ve got the time, take the extra step to review them all with an accountant or Wave Advisor to make sure everything is in good order. You’ll also want to go into list-making mode to put together the following information:

• Equipment: What’s being sold with the business? 
• Contacts: Who are your suppliers? What are their related transactions? Anything outstanding? 
• Lease: How long is your current lease? What utilities are included? Are there options to renew? ‍

All of this information can go into an information packet for your potential buyer. This packet will provide an overview of your business, how it’s managed, and the day-to-day operations. It’s helpful for the buyer to have, so they can take over operations as seamlessly as possible.

Step 4: Valuate your business

How much is your business worth? That’s the question you want to find out as you prep for sale so you have a realistic listing price in mind. Emphasis on realistic. Don’t price the business too high or too low. When you do that, you’ll be stuck with less money than you deserve, or you’ll find that buyers are passing on the opportunity because the cost is too much. To help you get the right answer, look at hiring an appraiser to complete the valuation. As a third party, they’re neutral to the situation and have nothing to gain from the sale. Plus, they can draw up the necessary documentation that you’ll need throughout the process. Now, let’s take a step back to step two: timing your sale properly. When valuing your business, you need to give yourself enough time to get all your ducks in a row, which includes the time to boost your valuation. This can be done through cost-cutting tactics and initiatives to increase revenue, brand awareness, and customer retention. You know, all the things that a buyer wants to see before they sign the dotted line. 🖊

Step 5: Consider using a broker

When you’re selling your business, there are two ways you can go: with a broker or without one. If you’re selling to a close friend or relative, a broker might not be needed. If you decide that’s the case, you can save yourself a few bucks. But speaking of dollars, you might want to explore hiring a broker if you want the biggest bang for your buck. Brokers work off commission, so they’ll do what they can to help maximize the sale and their take-home amount. To help with the sale, they can handle the logistics of selling your business, freeing up your time so you can keep the business in good order until it's sold. For example, they might be working quietly in the background with their network of buyers to get the highest price. But before you decide to hire your broker, be sure to set your expectations, including advertisements, communication, and commission. This makes for a successful and transparent relationship, and a smoother sale.

Step 6: Find a buyer

Last but not least, you’ve got to find yourself a buyer. And you guessed it: this (likely) doesn’t happen overnight. To get you to that ideal point of having two to three potential buyers, consider boosting your advertising. This is where brokers can come in handy. Not only do they have their networks, but they’ve also got a few marketing strategies up their sleeves to help promote the sale of your business to those who are looking. Once you’ve found the buyer(s), keep in touch with them. You’ll also want to make sure they’re pre-qualified for financing before you give out any specific info about your business. Next, you’ll want to bring in your lawyer. Lawyers are extra helpful if you plan to finance the sale and need to work out the details with the buyer. On that note, make sure any agreements are put into writing, and have potential buyers sign a nondisclosure or confidentiality agreement so your business remains yours—at least until it’s theirs. Now, when it comes to price, allow yourself some wiggle room. Set a firm price or price range that you find reasonable. This lets you allow for negotiation, but on your terms. ‍ Lastly, the signed agreement. Try to get this into escrow , which means that a portion of the purchase price would be held by a third party until agreed-upon obligations are filled. These could be the transfer of assets or a resolution for any outstanding assets, as an example. ‍ After all is sold and done, you might find yourself with a few more business encounters, like a bill of sale that transfers your business assets to the lucky buyer; an assignment of lease; or a security agreement which lets you keep a lien on the business. Another legality? Your buyer might present you with a non-compete. By signing this, you’re agreeing that you won’t start a competing business that could lure your loyal customers away.

Selling a business FAQs

How much does it cost to sell a business .

This depends on the route you take. If you go with a broker and you sell your business for less than $1 million, expect to pay a commission around 10% to 12%. You’ll also have to pay fees associated with marketing, lawyers, potential transfer fees, and any improvements you make to your business to boost its appeal. 

How do you sell your share of a business?

The common way to sell your share of a business starts with an agreement. Try to put this in place with your business partner(s) ahead of any sale. This will help remove emotions and keep things running smoothly.

How do you sell a small business without a broker?

You don’t always need a broker to help sell your business. This can be especially true if you’re selling to someone you know, like a family member or friend. That said, you should still consult with your small business network to get their expertise and advice; trusted sources on the internet ( 👋 ); and those who’ve have sold businesses before.

The bottom line on selling your business

Selling your business comes down to six simple steps: the timing of your sale, organizing your finances, valuation, the choice to use a broker or not, and then finding a buyer. And even once all that’s complete, sometimes you need some help. Be sure to talk to your network of business owners or reach out to Wave Advisors for help. This is a big move, so you want to make sure that it’s the right one for you, and done right. Which, in the case of selling businesses, doesn’t always mean quick. But trust us: seeing that deposit enter your bank account will make all the hard work worth it.

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The information and tips shared on this blog are meant to be used as learning and personal development tools as you launch, run and grow your business. While a good place to start, these articles should not take the place of personalized advice from professionals. As our lawyers would say: “All content on Wave’s blog is intended for informational purposes only. It should not be considered legal or financial advice.” Additionally, Wave is the legal copyright holder of all materials on the blog, and others cannot re-use or publish it without our written consent.

Selling a business in the US

Learn the steps to selling a business, with tips on how to get a good price and a smooth handover.

How to sell a business

Whether you’re retiring, going back to the workforce, or starting something new – you’ll probably want to sell your business someday. It helps to know what the process looks like and how to position yourself for the smoothest (and most profitable) transition.

• Making a plan
• Preparing your documentation

Getting your business valued

• Finding a buyer
• Managing offers
• Due diligence
• Changing ownership

1. Making a plan to sell your business

Selling a small business in the US takes time. To get the right buyer at the right price can involve months of work and a bit of luck too.

It’s better to start the process early. That way you don’t feel rushed when the time comes. What’s more, being sale-ready means you can act fast if someone makes an offer out of the blue (it happens!). And finally, the steps to preparing for a sale will help you find and fix things that could be better in the business, which is always a good thing.

Keep your financial advisors close. Bookkeepers, accountants and tax professionals know how to sell a business. They’ll help get your documentation in order, while also helping to make the sale tax-efficient. Don’t have an accountant or bookkeeper? Find one in our advisor directory .

2. Preparing your documentation

Your first goal when selling a business is to nail down all your paperwork. This is a big job so give yourself ample time. There are three main areas where you’ll need things in writing.

Financial statements

Buyers will want to see three years worth of financial records. That means you’ll need income statements to show the business makes money; balance sheets to show the value of business equipment, property and inventory against the debts it owes; and maybe cash flow statements to confirm your business makes money from operations (and not just selling assets or taking loans).

Supplier agreements and customer contracts

Where you can, renew agreements with customers and suppliers – especially if they’re critical to business performance. If there’s a big client that represents half of your revenue, a prospective buyer is going to want to see they’re locked in to using you. Similarly, if you have a great deal on supplies, get it in writing.

Internal processes

Formalize your ways of working. Write down how the business operates, who’s responsible for what, what order things get done in, and what systems you use. Think of this as a manual for running the business that will help a new owner hit the ground running. Don’t write this all at once or you’ll burn out. Document a different aspect of operations each week. If you have employees, have them write the parts that are relevant to their jobs.

OK, here’s the million-dollar question (well, hopefully it’s a million-dollar question) – how much is the business worth? Figuring this out takes special skills so you’ll need professional support.

Some accountants can do an evaluation so, if you’re selling your business to a known buyer, such as an employee or family member, then you might want to go that route. If you need to find a buyer, however, then you might want to hire a broker to help with the valuation as you’ll need them to market the business anyway.

Three methods of business valuation

When selling your business, an expert can take three approaches to estimate its value:

• Asset-based methods: where valuers use the balance sheet to calculate all the assets belonging to the business then subtract any liabilities. This is often used when a business is liquidated.
• Earnings-based methods: where the business is valued in line with its track record for generating profit and cash. You’ll need solid financial records to pull this one off.
• Market-based methods: where valuers take a figure such as sales revenue and multiply it by a certain number. This method may be used in certain industries, with each industry having its own accepted multiplier.

A valuation is only a guideline for negotiations. The final transaction price is often influenced by a range of factors, such as your eagerness to sell, the buyer’s strategic interests, and how easily buyers can secure financing.

4. Finding a buyer

Not all buyers are equal. Ideally, you want one that offers the right price and is a good partner in the transition. That second point is especially important if you’ve agreed to stay involved in the business for a period of time, or if the final price is dependent on the business maintaining performance.

Businesses are often sold to family members or employees, with the advantage being that you already have a good relationship with those people. If that’s not an option, you could approach your suppliers, customers or competitors. They all know the business, at least.

Your accountant may also be able to help find buyers. They generally have lots of entrepreneurs in their network. Bankers, lawyers and other business consultants may have suggestions too.

If there aren’t any leads in your network, then brokering services can help you connect with buyers. They may choose to list your business with certain publications or databases.

5. Managing the offer

Once you‘ve met some legitimate prospects and given them the lowdown on the business, you might start fielding offers. If there are several prospects circling, try to give a fair timeline for everyone to submit an offer.

When selling a business, the offers you get will (or should):

• lay out the price
• identify conditions to be met before closing the deal and set a date for closing
• note any conditions to be met after closing
• specify how and when the money will be paid
• explain any training or support they need from you, and for how long

The offer may also suggest a time frame for due diligence, during which the buyer will run their own checks on the business to make sure they’re getting what they expect.

Be aware that some prospects may only make an offer if you promise to negotiate solely with them for a period of time. Others may make the final offer contingent on the business performing well after handover. This is to protect against sales tanking once the owner has left. Business brokers can be a big help in deciding which offers to entertain and what conditions to accept.

6. Due diligence

Due diligence is the buyer’s chance to check under the hood of the business and make sure it lives up to your sales pitch. This step often comes after a conditional offer. Your typical buyer will run a legal, financial, and commercial due diligence.

Legal due diligence

They’ll see if there is any pending or ongoing legal action against the business. They’ll also check up on things like copyright, trademarks, patents or service agreements.

Financial due diligence

They’ll dive into the business books to check that the financial statements are accurate. They may ask for additional reports and forecasts, or run some themselves. They’ll also check the business credit rating and possibly the tax history of the business.

Commercial due diligence

Your buyer will also take a wider look at the business and the market it operates in to confirm there’s still opportunity for growth. They’ll review existing strategies and competitors and the overall business model to ensure the business will remain profitable.

How to speed up due diligence

Selling a business can seem long and drawn out even before you get to due diligence. If you want to speed up this step, provide a complete set of well-maintained financials, a file of agreements, and a written business plan ( here’s a template ). Running your books on accounting software also allows you (or them) to generate more reports as needed.

7. Changing ownership

You don’t get to just dust your hands and walk away after the deal is closed. You may need to do things like:

• issue your final business tax returns
• declare proceeds from the sale to the tax office
• Companies and Corporations will need to amend Articles of Organization to reflect new ownership

Again, a business broker, accountant or bookkeeper will help make sure you tick all the boxes. An accountant can also provide tax planning around the sale to help keep control of the taxes you have to pay.

Selling a business is a process, not an event

Ideally, you want to start selling your business long before you’re ready to actually exit. For most small businesses, it takes a long time to tidy up financial records, nail down all your agreements, document internal processes, and refresh your business plan. And trying to do them all at once, in a race against the clock, can be overwhelming.

Give yourself the longest runway you can and break the job into bite-sized chunks. Get employees and consultants to help where you can. Speak to other people you know who’ve done it and ask for their tips on how to sell a business. You may be surprised just what you can get for your business if you take the time to set it up properly for sale. Learn more about a small business exit strategy .

Xero does not provide accounting, tax, business or legal advice. This guide has been provided for information purposes only. You should consult your own professional advisors for advice directly relating to your business or before taking action in relation to any of the content provided.

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How to Sell Your Business

If you want to jump right into selling your business,  Business Exits  is a great place to start.

You’ve decided to sell your business—now what?

The process of selling a business can feel overwhelming, especially if you’ve never been through it before. Between the timing of the sale, the logistics, and a whole lot more, there are many factors to consider before you proceed.

First, you need to understand that it’s perfectly okay to sell your business. Many small business owners struggle with this concept, especially if it’s a company they’ve built from scratch.

Whether you’re ready for retirement, feeling overworked, or just ready to move on to the next chapter of your life, selling your business can be extremely rewarding.

If you take the right approach, the profits can fund your next venture or give you the financial freedom you’ve always dreamed about.

We know what it takes to sell your business the right way. We’ve taken a complicated process and simplified it to just five easy steps.

Step #1: Determine Your Business Valuation

Most entrepreneurs think they have an idea about what their business is worth. But in many cases, the number in their minds is way off from its actual value.

Before you list your sale price too high or too low, bring in a valuation expert.

A third-party valuation will provide you with a realistic estimate of the company’s worth. For a fixed amount (usually a few thousand dollars), a qualified appraiser can determine the business’s true value with a detailed report and documentation.

The report can add credibility to your asking price if prospective buyers question the amount. At the very least, the valuation will give you a rough estimate of what you can expect.

If you don’t want to hire an appraiser, you could always try to figure out the value on your own. Generally speaking, there are three main ways to value a business —cost approach, market approach, or the intrinsic value approach.

The third method, also known as the discounted cash flow approach, is the easiest to do. Most companies are usually worth anywhere from three to six times the current cash flow.

With that said, there are lots of other factors to take into consideration here. Industry trends, business debt, assets, and similar companies for sale are just a few examples to consider.

Whether you estimate the value on your own or bring in a third-party appraiser, the valuation may not end up being the final sale price.

At the end of the day, the business is only worth what someone is willing to pay for it. If you’re unhappy with the valuation, it might not be time to sell your business quite yet.

Think of it like selling a home. Your real estate agent could tell you what the house is worth, but the property could sit on the market for months at that list price. You might have to put some money into the house to get the maximum value. The same analogy can be applied to selling your business.

Step #2: Get Your Financials in Order

Once you’ve determined the company’s value, it’s time to organize your financials. For some of you, this will be much easier than for others.

Selling a business draws many sets of eyes to your financial records. Prospective buyers, lawyers, accountants, third-party valuation firms, brokers, specialists, and other people will be combing through your statements. To ensure everything goes smoothly, your bookkeeping must be immaculate.

In most cases, you’ll need to provide at least the last three years of tax returns, as well as accurate financial statements (balance sheet, income statement, cash flow statement).

Any mistakes or disorganization in these records could be a red flag for potential buyers. Inconsistencies in your books could raise other questions, even if it was just an honest mistake.

Am I being misled? Are these numbers trying to cover something up? Can I believe everything else I’ve been told about the business? These are the types of thoughts that will go through the mind of a buyer if errors are found in your financials.

The vast majority of small businesses don’t have an accountant or a bookkeeper .

If you fall into that category, westrongly recommend hiring an accounting expert to clean up your books before you list the business for sale. This will make your life much easier down the road.

Step #3: Hire a Business Broker

There are basically two options to consider when selling a business—sell it on your own or use a broker.

You could potentially sell the company on your own if you’re handing the business off to a family member or someone trustworthy in your life. This will help you save some money on brokerage fees.

But, for the vast majority of circumstances, using a broker will be your best bet.

Will there be some extra fees associated with this method? Absolutely. But a broker can help you get the best possible price and sell your business faster than you could do on your own.

Remember, brokers work on commission. So it’s in their best interest as well to sell the company for maximum value.

The broker will typically form their own valuation of the business. Compare this to estimate you got back in step #1. While the two numbers probably likely won’t match exactly, they should be relatively close.

If there’s a drastic difference between the broker’s estimate and the valuation given by the appraiser, you might want to get a third opinion to see which one is more accurate.

Your broker has lots of experience selling businesses, which is extremely valuable. Other common duties of a broker include:

• Finding the best buyers
• Marketing the sale
• Provide confidentiality
• Getting the deal financed
• Assist with negotiations
• Manage due diligence

Business Broker Options

Here are recommendations on the best business brokers to sell your business:

• Business Exits – best for maximizing business value and sale price
• Digitalexits.com – best for selling online properties and web stores
• Woodbridge International – best for generating lots of demand and bids

So how much will this cost you? Pricing for a business broker usually depends on how much money your business makes.

The general rule of thumb is this; the higher your revenue, the lower the broker’s commission fee.

A business with up to $1 million in revenue will typically pay between 10% and 12% on brokerage fees, whereas businesses with $25+ million typically pay in the 2.5-4.5% commission range. For companies in the middle, it’s common for brokers to use the Double Lehman commission model, as opposed to a flat percentage.

It’s important to understand the broker’s commission model from the beginning. So ask questions if you’re unsure. Some brokers might even charge you a retainer, but you can probably avoid that by offering a minimum commission amount.

Step #4: Find Pre-Qualified Buyers

There are two key words to this step; pre-qualified and buyers (plural).

You’ll definitely want to field multiple offers for several reasons. For starters, not every offer will be legitimate. Selling your business requires you to disclose sensitive information about your organization. This could be worth a fortune to your competitors.

It’s possible that a competitor, or someone acting on behalf of a competitor, could make an offer just to review your financials. So don’t hand over that information to just anyone.

Most business transactions are backed by a third-party loan from the SBA. In some cases, banks require sellers to provide some of the financing as well. So don’t get too excited over the first offer that comes in and assume the company will be sold.

On average, it takes six to eight months to sell a business.

In addition to the broker, you could always bring in a sales expert to help speed up this process and pre-qualify buyers.

Buyers can typically be segmented into three main categories:

• Individual buyers
• Strategic buyers
• Private equity groups

The type of buyer making an offer plays a role in how long it takes to process the transaction. For example, an individual buyer will likely need an SBA-backed loan, which can take up to 90 days for approval, whereas a private equity group could finance the purchase on its own.

Don’t rush to accept an offer right away, either. You can always use one offer to leverage another, which will give you the maximum value for your business.

Step #5: Finalize Legal Documents and Contracts

Once you’ve found a qualified buyer and accepted an offer, it’s time to finalize the deal.

This is where things can get a little bit messy and confusing. So you’ll definitely want to have your lawyer handle the vast majority of this stage.

Some of the standard legal documents and contracts associated with a business sale include:

• Purchase agreement
• Asset listings
• Noncompete agreements
• Guidelines for website use and domain name
• Bill of sale
• Security agreement

You could potentially draft a purchase agreement and contract on your own, but we would strongly advise against that. There’s a good chance that you’ll miss vital information, and you could be left vulnerable to unforeseen circumstances. These contracts can be upwards of 25-50+ pages long.

If your current lawyer is not an expert with contract law, they should be able to refer a colleague.

Once everything is in order, it’s just a matter of crossing the T’s, dotting the I’s, followed by lots of signatures and initials.

Tips and Best Practices For Selling Your Business

While the process of selling your business can be simplified to just the five steps listed above, there are certain things you need to do along the way.

Follow these tips and best practices to make sure the sale goes smoothly. This will also ensure you get the maximum value for your business.

Boost Your Sales

As we said before, selling your business takes time. You can’t expect to list it today and get an offer tomorrow.

We’ve seen so many business owners focus so much effort on selling their company, that they neglect the business itself while they’re still in charge. You must continue coming to work every day and put all of your efforts into increasing sales.

Strong sales will ultimately increase the valuation of your business and make it more appealing to buyers. On the flip side, a drop or plateau in sales could be a huge red flag for prospective owners.

That’s why it’s important for you to surround yourself with people who can help you through this process. Let your broker, lawyer, and accountant handle their respective responsibilities. This will give you more time to prioritize sales.

Develop an Exit Strategy

Every business owner needs to have an exit strategy. The best exit strategies are developed long before the decision to sell your business occurs.

So hopefully, this is something you’ve been planning for a while; a proper exit strategy takes time to develop. For those of you who don’t currently have an exit strategy, it’s not too late to create one. But with that said, this might not be the best time to sell your business.

The last thing you want is to be in a position where you feel forced to sell your company. In those circumstances, it’s unlikely that you’ll be able to sell for maximum value.

Things come up. So have a contingency plan in place for a wide range of possible exit strategies .

What will you do if a big box store opens nearby? How will you proceed if age or illness becomes a factor in your life? What if your children don’t want to take over the company? These are just a few examples of situations that could arise.

When the day comes that you decide to sell, you’ll already be prepared with an exit strategy.

Be Rational

Selling a business can be very emotional. This is especially true for family businesses, small businesses, or something that you’ve built on your own from scratch.

Most business owners have a great sense of pride for what they’ve accomplished. Blood, sweat, tears, and sleepless nights are all things that entrepreneurs have in common.

With that said, it’s crucial that you keep your emotions out of the deal. Getting emotional can cloud your thoughts and decisions.

Prospective buyers don’t care how many hours you’ve worked per week for the last decade. All they care about is the bottom line. If you think an offer is too low or unfair, you can always decline.

In some cases, a competitor might make a legitimate and fair offer, with the full intention of buying. Don’t let an old rivalry prevent the deal from going through.

Get Paid Up Front

Make sure the terms of your deal require an upfront payment. Some buyers might make you an enticing offer, but don’t have the funding to pay you now.

Getting paid overtime might not sound like a big deal, but this arrangement could pose some challenges for you down the road. You could end up in a situation where you’re not getting paid to the terms that you agreed. If that happens, any legal recourse would just be an added expense to your side.

Furthermore, the new owner could run out of money to keep the business alive. If that happens, there may not be any money left for you if the company goes under.

Let’s say you have two serious offers on the table. One is for a higher amount but involves a ten-year financing period. The second offer is less but pays you upfront. We strongly recommend the latter.

Ready to sell your business? Don’t overcomplicate things; the entire process can be broken down into just five simple steps.

With that said, selling a business takes time. Have realistic expectations in terms of the price and time frame.

In some cases, you might ultimately decide to postpone the sale until you can increase revenues and get your financials organized. If your company is doing well and generating high profits, it’s much more appealing to potential buyers.

Use this guide as a reference to walk you through the process. Make sure to follow the tips and best practices that we outlined above to get the maximum purchase value for your company.

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Selling a Business: A Step By Step Guide

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February 23, 2021

This article is Tax Professional approved

When considering selling a business, it’s time to get the compensation you deserve for all of the blood, sweat, and tears.

By understanding all the moving parts behind a business sale, you can worry less about the process and focus more on the outcome: getting a fair price for all your hard work.

I am the text that will be copied.

How to sell a business, step by step

While every entrepreneur’s journey is different, these are the steps you can typically expect to take when selling a business.

Step 1: Determine your commitments

While preparing to sell a business, it shouldn’t suffer. Selling a business takes time and energy. Getting too caught up in the process can get in the way of servicing your customer base.

Chart out an exit strategy to prepare for the sales process well in advance. For example, have a plan in place for any outstanding invoices and get the financial records up to date for prospective buyers.

You don’t need to know the exact amount of time needed to take care of every task, but it will help you come up with a timeframe for a successful sale. It will also help you plan what kind of professionals you need to hire.

Step 2: Hire professionals

Knowing how to sell a business is important, but equally important is knowing where to bring in help.

To jump to our overview of professionals to hire, click here . But as a quick rule of thumb, start with an accountant and attorney. Outside of that, it’s up to you to determine how much help you need from appraisers, brokers, or consultants.

Once you’ve found and contacted them, any of these professionals should be willing to sit down with you for a free consultation. Here are some useful questions to ask an appraiser , a broker , and a consultant .

Step 3: Make improvements to the business

Before selling a business, invest in improving its profitability and the efficiency of its day to day operations. This will help you get the biggest sale price possible by boosting the value of your business. The changes you make will depend on the type of business, but here are some ideas to get you started.

Put on a fresh coat of paint

If you have a brick and mortar location, simple updates—new fixtures and furniture, or even a (literal) fresh coat of paint—can help the business look more desirable to potential buyers.

Smooth out the operations

The business operating system (BOS) is the rulebook for how the company runs and how employees work together to achieve goals. A BOS that’s disorganized or poorly implemented doesn’t look good, and hurts the profitability of the business. Replace it with a new system, or revise the current one to make it more efficient.

Sell, sell, sell

Focusing on boosting sales before selling a business will make it look more attractive to buyers. This is especially the case with individual buyers—as opposed to organizations—who may be looking to benefit from the immediate cash flow that comes with buying a high-revenue business.

Diversify the client list

If more than 20% of your business consists of a single client, you could be at risk of giving buyers cold feet. After all, if that client decides they don’t like the new owner and decides to churn, it will put a huge dent in the profitability of the business. Leading up to a sale, try to take on new clients and diversify your portfolio, so this is less of a risk.

Step 4: Organize your financials

When it comes to financials, prospective buyers want as much transparency as possible. You’ll need at least three years of clean financial statements (balance sheet, income statements) to present to prospective buyers. Make sure that all income is accounted for.

You should also make sure you have a bookkeeping solution in place, so you can guarantee the new owner ongoing, up-to-date financial info.

Finally, if you have any assets on your business books that you’d like to keep for private use—such as vehicles or equipment—be sure to transfer them off the books. These assets need to be legally transferred into your possession, so they’re not falsely recorded as belonging to the business you’re selling.

Step 5: Set the sale price

Does your business rely on proprietary information or specialized knowledge? If so, you’ll get the most realistic business valuation from an appraiser or broker.

If you’re determining your own asking price, you should generally plan to set it at one to four times the seller’s discretionary earnings (SDE).

The SDE consists of:

• Your business’ annual net income before taxes
• Money your business makes from investments
• Depreciation and amortization of business assets
• Your personal compensation and benefits
• Non-recurring expenses.

The number by which you multiply the SDE—one to four—is determined by the current state of the market, your business’s competitiveness, and other factors. These are hard to pin down, but a qualified business consultant can help you figure out the SDE multiplier when selling a business.

Step 6: Get your paperwork in order

Besides financial records, you need certain legal documents to be prepared before you make a sale. The most important is the asset purchase agreement —a legal contract for selling your business’s physical and intellectual property.

This document typically runs 25–50 pages in length, and draws on your financial records. Often, the asset purchase agreement will also list your obligations as former owner. Most commonly this means staying on with the business for a set period, to consult with the new owner.

A non-compete may also be required. This would state that you do not intend to start a new business that would be competition to the old one you just sold.

Preparing one of these documents is a time-consuming task, which is why it’s important to hire an attorney who can handle it for you.

Step 7: Prepare a selling memo

The selling memo is an integral document when selling a business.

You provide the selling memo to prospective buyers, giving them all the information they need about the business so they can consider making a serious offer.

Your selling memo will include:

• An overall description of the business
• Information on the location
• The business’s strengths
• An overview of the competitors
• A description of the products/services
• Information on the day-to-day operations
• The marketing plan
• Key employees and managers
• Growth projections
• Potential buyer concerns
• Financial information
• The asking price and terms of sale

Check out ExitAdviser for a comprehensive rundown of the selling memo , and online tools to help you put one together.

If you hire a broker, they will prepare the selling memo for you.

Step 8: Put the business on the market

One major challenge you face when advertising a business for sale is maintaining confidentiality. If clients or employees find out you’re planning to sell, they may get skittish. And competitors could interpret the decision as a sign of weakness, and take advantage of it.

That’s why it’s usually wise to hire a broker. Not only will they have a large network to draw on, they’ll know how to discreetly approach potential qualified buyers.

However, in the event you do decide to sell a business without help from a broker, online services have made doing so easier than it once was.

BizBuySell.com tags itself as the biggest business for sale marketplace in the world, and will even help you find a broker if you change your mind about going it on your own.

Step 9: Negotiate the sale

When the right buyer is ready to purchase the business, they’ll submit a letter of intent to purchase . This document is non-binding; either you or the buyer can back out at any time.

It’s rare for a buyer to back out, though. By this point, they’ve already invested significant time in researching the business and putting together an offer.

Now, you may either accept the offer, or enter into negotiations with the potential buyer. Negotiating the sale of the business is its own special art form, and you may want to draw on advice from a business consultant during the process.

Step 10: Finalize the sale

Once you accept a letter of intent, you should expect to wait while the buyer performs due diligence. They’ll take a set period of time, from two to four months, to do this.

For the sake of due diligence, they’ll examine your business’ assets and liabilities, financial history, inventory, staff structure—just about anything that affects the day-to-day running of your business.

Due diligence is your buyer’s chance to get an in-depth look at your business, and make any necessary last minute moves—borrowing extra cash, or looking for additional staff—before officially taking over.

The sale of your business is completed when you and the buyer sign the asset purchase agreement prepared by your attorney, and any other supporting documentation that may be required depending on the specifics of your business.

The professionals you need to hire

A guide on how to sell a business can give you the steps you need to take, but professionals can ensure you’re getting the maximum value and cover you legally. That’s why it’s best to get a little help from your friends—“your friends,” in this case, being paid professionals.

At minimum, you’ll need to work with an attorney and an accountant.

An attorney can help you prepare the legal documentation for the transfer of assets, and make sure nothing you’re doing is likely to get you sued.

An accountant prepares the financial records you need to prove to prospective buyers your business is worth investing in.

Then, you should consider hiring an appraiser . For a fee— typically $3,000 to $7,500 for small businesses—an appraiser will tell you how much your business is worth so you’re getting the maximum value.

An appraiser will survey:

• How much money your business owes
• How much others owe your business
• Your business’s inventory, and other assets
• Past tax returns
• Your receivables and sales

Then, they’ll take into account the condition of the market, and your business’s place in it, to determine an asking price that will be attractive to buyers while also getting you the best price.

However, you won’t need to hire an appraiser if you hire a business broker . A broker will both appraise your business, and put it on the market for interested buyers. Typically, they’ll charge 5–10% of the commission price. Brokers find business buyers for you by preparing a prospectus for it, listing it on marketplaces, and tapping into a large professional network.

Finally, before putting up the “For Sale” sign, consider hiring a business consultant . Someone with experience in your industry can tell you ways to improve your business before making a sale so it will look more attractive to potential buyers.

Who to sell a business to

Equally important as how to sell a business is who you’re going to sell it to.

You can sell a business to a variety of individuals or entities. There are pros and cons to dealing with each.

Selling a business to an individual on the market

This is like selling your house on the market. You put it out there, and see which individual shows the most interest in becoming a small business owner (for the highest price).

Pros: Since the business is up for sale on the open market, you have the highest chance of finding someone willing to meet the conditions of the sale—for instance, an all-cash closing.

Cons: To sell on the open market, you will likely need to hire a broker who charges commission.

Selling a business to a family member

Roughly one-third of business sales are between family members. This can take the form of handing off the business to the next generation of owners.

Pros: As the business gradually changes hands and your family member takes over, you’ll still have some say in how the business is run. Also, a change of hands between family members means a smoother transition for staff and clients.

Cons: It’s unlikely you’ll be able to get the highest possible asking price for the business when selling to a family member.

Selling a business to partners

If the business operates as a partnership, you have the option of selling your shares to your partner. Most likely, when you formed a partnership, you signed a buy-sell agreement. This document outlines the price and procedure you need to follow to make the sale.

Pros: Following a predefined path for making the sale requires minimum effort on your part, and has a low impact on staff and clients.

Cons: Even as the buy-sell agreement makes for a quick change of hands, you may find yourself stuck with a price that seemed attractive when you signed the contract, but has become less appealing as the business has increased in value.

Selling a business to an employee

A trusted employee who’s great at their job and knows the business inside and out could make the perfect business owner—and the ideal buyer.

Pros: You can plan the sale well in advance. The first step is setting up a legally-binding partnership with an employee. Then, you’ve got plenty of time to arrange the hand-off, and extract yourself from daily operations, before the employee takes over completely.

Cons: As with selling to a family member, selling to an employee is unlikely to get you top dollar for the business.

Selling a business to multiple employees

You may be able to sell the business to qualified employees, if you have an Employee Stock Ownership Agreement (ESOP) in place.

Pros: Taking advantage of existing relationships with employees means you don’t need to put the business on the market. Existing employees are also more likely to run it successfully than a buyer you’ve never met before.

Cons: The ESOP needs to be put in place well before you make the sale. Setting it up demands extra paperwork and professional help .

Selling a business to another business

Large businesses and private equity groups buy companies as investments. In that case, they’re not looking to set it up with a new owner, but to use parts of the business—market share, competitiveness, profitability—to benefit a larger, similar business in their portfolio.

Pros: You’re more likely to secure a better selling price from another business than from individuals, and get an instant payout.

Cons: Depending on the sale terms, you may need to continue managing the business for a fixed period during the transition.

Further reading

• How to Find an Accountant
• Accounting Outsourcing: How to Hand off Your Financial Tasks (With Recommendations)
• How to Know If Your Small Business Is Financially Healthy
• How Long to Keep Business Tax Records and Receipts

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Home » Business Cycle » How to sell your business

Selling a business takes strategy and timing

Would you believe that 45% of business owners spend more than 41 hours a week on their business? Are you one of them? When you started your business, you probably had dreams of financial and personal freedom, tropical vacations and a cushy retirement. To make those dreams come true, you need to know how to sell a business and develop an exit strategy.

Understanding when and how to sell a business can be overwhelming without the right resources. Yet as Tony Robbins says, “The purpose of a business is to build a system that can make money when you’re not there, and if done right, a business you can sell for a multiple.” 

You’ve done just that: grown organically , scaled your company and perhaps even recovered from a financial loss . You’re ready to reap the rewards. You need an action plan for selling a company and a checklist of items to keep you on track. 

Once you’ve sold your business, you’ll have the financial freedom – and the time – for the next phase of your life. Sounds great, right? Then why is it that 53% of business owners say they’ve given little to no thought to their transition plan? It’s probably because selling a company can seem overwhelming – but it doesn’t have to be. 

Here’s how to sell a business and see massive results.

Ready to sell your business and obtain financial freedom?

8 steps to selling a company

Selling a business is much like a Hollywood marriage: Without a solid prenuptial agreement ( exit strategy ), a divorce (business sale) can result in disaster (financial loss). Don’t let your business’ final days sneak up on you – include an exit strategy in your business plan. With the right strategy in place, you’ll have a specific goal (a certain profit margin or substantial growth in sales) to reach that will signal when it’s time to sell your business.

According to Tony, “Without an exit strategy, all you have is a job.” This means you need to stop thinking of your business as a day-to-day job and start thinking of it as an investment.

Step 1: Know your reason for selling

If you’re asking yourself, “Is it time to sell my business?” you probably have a reason why. You may be ready for retirement or want to move on to a new endeavor that combines passion and profit . You may want to take care of your or a loved one’s health or just want to move on to a new environment. Knowing why you want to sell will help you answer more important questions down the line, such as how much revenue you need to generate to move on to the next phase of your life.

Step 2: Determine when to sell

Understanding when to sell your business is critical for getting the best price. Don’t wait until your business is in decline to sell – the best time to sell a company is when it’s at its peak performance . Do it when you’re at the top of your game, and you will reap the benefits. You may also want to take a look at economic considerations – selling your business during a downturn or a recession will most likely not generate the same profit as it would in a robust economy.

Step 3: Get your paperwork in order

Financial records are a must. You need to have financial records from at least the past two years that cast your company in a positive light. This means revenues and profits that are steadily increasing – you don’t need to see big jumps, just a good performance that provides a solid foundation for the future.

You’ll also want a realistic business map to show the buyer how your company will keep growing. Finally, the most important thing about your financial records is honesty. Any serious buyer will do their due diligence and investigate every aspect of your business. Don’t let a good deal go south because you don’t have your paperwork in order or were not honest about something.

Step 4: Find a broker

Learning how to sell a business is a skill you can master. We’re willing to bet the person who can best market your business is you – and if you’re selling to a family member or a current employee, representing yourself can be a good choice. However, there are many situations where using a broker is helpful. If you’re trying to keep the sale quiet, brokers use their own network to find sales leads without letting the word out to your employees or other stakeholders. Brokers can also be a great option to involve in the sales process if your business has complicated financials or an exceptionally high value.

When you use a broker to sell your business, communication is key . Ensure they know your expectations, and that you know theirs regarding fees. Confirm they’re a Certified Business Intermediary (CBI), ask them to provide a portfolio of specific marketing tactics they have used for other companies and always get referrals.

Step 5: Get a business valuation

When selling a company, an accurate valuation is essential to pricing it correctly and selling it quickly. You won’t know what to sell your business for if you’re not sure what it’s worth. Pricing a business too high or too low can result in losing out on money or not selling it at all. Find a business appraiser who can create a detailed documentation of its worth; your business broker will be able to refer you to an appraiser if they do not have one in-house.

Step 6: Choose your buyer

If you’ve chosen the right time and properly prepared to sell your business, you may have several buyers to choose from. When you’re choosing your best buyer, there are several things to look at beyond the offer price. First, make sure the buyer can back up their offer with financing. If they’re using third-party loans, always pre-qualify them. If they have private investors or other sources of funds, carefully review all documentation, including past legal judgments.

Also consider the type of transaction – certain structures may have transitional requirements, higher taxes or less cash at closing time. You’ll want to hire a lawyer to help with vetting buyers and setting up the transaction itself. 

Look at culture fit . Check out the buyer’s prior acquisitions and see where they ended up. If the buyer is another company, ensure your cultures are compatible. And trust your gut – it’s what helped start your business, and when you’ve thought everything out and have two final buyers in mind, it’s what can be tapped into to make the final decision.

Step 7: Decide what to do with the profits

After selling your business, you need to determine what to do with the profits. If you are selling a company to fund retirement, you’ll work with your fiduciary advisor to decide if and where the money is invested. If you intend to buy or start another business, you can use the profit as a down payment or to make other necessary arrangements.

Step 8: Relax and enjoy the next phase of your life

If you catch yourself wondering, “What do I do with myself after I sell my business?” remember that you built your business to pursue something new. Whether your next phase involves a new endeavor or much-needed peace and quiet with family, you’ve earned the right to enjoy it.

Frequently asked questions about selling a company

How do i value my business to sell.

Working with a professional appraiser is the best way to know how much your company is worth and what the recommended selling price is. Your broker can suggest the right appraiser for your situation.

How do I sell a struggling business?

Keep the business in operation to show prospective buyers it has potential and keep all your financial paperwork in order. A broker is an asset in this scenario, as they can keep the search confidential and help you decide on a price that will be attractive to buyers but still net you some profit.

Do I pay taxes when I sell a company?

Yes. The taxes you pay will depend on the assets your business owns. The best way to handle this is to work with an experienced business broker or attorney who can help you minimize your tax burden.

How long does it take to sell a business?

This is an answer heavily influenced by your industry, how your business is priced and how aggressively you’re marketing it. The length of time it takes to sell a business is often contingent on the economy. On average, it takes around 180 days to sell a business; yours may take more or less time, depending on the previously mentioned factors.

How do I sell my business quickly?

You can increase your chances for success by working with professionals who can help you price your business competitively and market it to the right people. Still, there is no magic potion for selling a company quickly.

Ready to achieve personal and financial freedom?

Learn to keys to successfully selling your business  with  Tony Robbins’  7 Forces of Business Mastery  free content series.

© 2024 Robbins Research International, Inc. All rights reserved.

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Can You Sell A Business Plan?

A business plan outlines managerial objectives and promotes businesses at any given time. When you draft a business plan, you must clarify each step and position the business in all directions, thereby preparing for growth and possible expansion.

There is, however, an argument that has arisen on whether it is possible to sell a business plan. While many think it's unnecessary to sell off a plan that could be considered intellectual property, we must view this topic from the entrepreneur's angle.

Business plans differ, so it's necessary to know the different types of plans because not all business plans can be relevant when sold. Types of business plans include:

Startup business plan

Startup business plans are written for new startups. They include detailed and structured operations for the smooth running of the business. They also describe products and services, financial implications, management team and market evaluation.

Startup business plans are the target of every investor, and whenever they find one of interest, they may offer a fortune for it because ideas rule the world.

These business plans are the most sold because most investors would rather put their money into getting assets than funding liabilities. They always want the ideas fresh, and a start-up plan should suit this purpose.

Strategic business plan

Strategic business plans describe in detail the enterprise's mission and vision statements, the company's short- and long-term goals, objectives, and strategies to be used to achieve them, and the overall success of the venture.

Certain investors do not have the time or energy to run analysis and research on new strategies. They may be willing to pay for such services; this has made it possible to sell strategic business plans. You can package good business strategies on a manuscript and get paid for your hard work.

Internal business plan

An internal business plan provides information for departments. It describes their functions to achieve a certain goal. Though it may not be of high demand because circumstances existing between two businesses are not the same, it can still boost administration.

Effective communication is a skill that some business administrators may not possess, but with plans like these, they understand how to pass information to their workers. Every business challenge has a peculiar solution, so there is little potential or guarantee for a particular company's internal plan to work for another company.

Operations business plan

Operations business plans outline employees' responsibility for the long run and calculate the company's deadlines on assignments.

Entrepreneurs may not quickly sell these plans because they specifically solve internal issues in the organization. Still, on a closer look, managerial skills in organizations are always the same, so investors are willing to exchange money to learn proper operations and office management.

If you understand office operations, you can sell an idea to a particular organization, and if the managers carry out these functions, it'll indeed affect their business model.

Feasibility business plan

Feasibility business plans describe the need for the product or service, the price they may be willing to pay, and the enterprise's profitability. They can also contain recommendations and solutions to any challenge that may arise from the product or service.

Feasibility plans are in high demand by potential investors who may have experienced hitches in different aspects of their business and crave a way out. Entrepreneurs who are business savvy can generate income by drafting possible feasibility studies after researching the organization and selling the outcome.

Growth business plan

Growth business plans are also known as the pension plan. It gives a detailed description of financial implications, investment plans and a complete description of the new company. Investors who would like to pay for such plans would be more satisfied when their company's description is well detailed.

Since growth is universal, it becomes imperative for a single formula to work for various organizations. Investors may choose to apply specific purchased plans to grow their organization, too. This is another plan that entrepreneurs can sell to potential investors in real time.

Final thoughts

Since there are different types of business plans addressing various aspects of a business, it can be conventional for prospective entrepreneurs to trade a business plan for money and thereby venture into another business of their choice. It poses as a trade of its own, where the current proposed business is capital intensive.

To answer the big question, entrepreneurs can sell business plans depending on the type of plan, the current state of the prospective entrepreneur, and their future desires for their business.

© Copyright IBTimes 2024. All rights reserved.

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How to Write a Business Plan: Step-by-Step Guide + Examples

Noah Parsons

24 min. read

Updated April 10, 2024

Writing a business plan doesn’t have to be complicated. 

In this step-by-step guide, you’ll learn how to write a business plan that’s detailed enough to impress bankers and potential investors, while giving you the tools to start, run, and grow a successful business.

• The basics of business planning

If you’re reading this guide, then you already know why you need a business plan . 

You understand that planning helps you: 

• Raise money
• Grow strategically
• Keep your business on the right track 

As you start to write your plan, it’s useful to zoom out and remember what a business plan is .

At its core, a business plan is an overview of the products and services you sell, and the customers that you sell to. It explains your business strategy: how you’re going to build and grow your business, what your marketing strategy is, and who your competitors are.

Most business plans also include financial forecasts for the future. These set sales goals, budget for expenses, and predict profits and cash flow. 

A good business plan is much more than just a document that you write once and forget about. It’s also a guide that helps you outline and achieve your goals. 

After completing your plan, you can use it as a management tool to track your progress toward your goals. Updating and adjusting your forecasts and budgets as you go is one of the most important steps you can take to run a healthier, smarter business. 

We’ll dive into how to use your plan later in this article.

There are many different types of plans , but we’ll go over the most common type here, which includes everything you need for an investor-ready plan. However, if you’re just starting out and are looking for something simpler—I recommend starting with a one-page business plan . It’s faster and easier to create. 

It’s also the perfect place to start if you’re just figuring out your idea, or need a simple strategic plan to use inside your business.

Dig deeper : How to write a one-page business plan

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• What to include in your business plan

Executive summary

The executive summary is an overview of your business and your plans. It comes first in your plan and is ideally just one to two pages. Most people write it last because it’s a summary of the complete business plan.

Ideally, the executive summary can act as a stand-alone document that covers the highlights of your detailed plan. 

In fact, it’s common for investors to ask only for the executive summary when evaluating your business. If they like what they see in the executive summary, they’ll often follow up with a request for a complete plan, a pitch presentation , or more in-depth financial forecasts .

Your executive summary should include:

• A summary of the problem you are solving
• A description of your product or service
• An overview of your target market
• A brief description of your team
• A summary of your financials
• Your funding requirements (if you are raising money)

Dig Deeper: How to write an effective executive summary

Products and services description

This is where you describe exactly what you’re selling, and how it solves a problem for your target market. The best way to organize this part of your plan is to start by describing the problem that exists for your customers. After that, you can describe how you plan to solve that problem with your product or service. 

This is usually called a problem and solution statement .

To truly showcase the value of your products and services, you need to craft a compelling narrative around your offerings. How will your product or service transform your customers’ lives or jobs? A strong narrative will draw in your readers.

This is also the part of the business plan to discuss any competitive advantages you may have, like specific intellectual property or patents that protect your product. If you have any initial sales, contracts, or other evidence that your product or service is likely to sell, include that information as well. It will show that your idea has traction , which can help convince readers that your plan has a high chance of success.

Market analysis

Your target market is a description of the type of people that you plan to sell to. You might even have multiple target markets, depending on your business. 

A market analysis is the part of your plan where you bring together all of the information you know about your target market. Basically, it’s a thorough description of who your customers are and why they need what you’re selling. You’ll also include information about the growth of your market and your industry .

Try to be as specific as possible when you describe your market. 

Include information such as age, income level, and location—these are what’s called “demographics.” If you can, also describe your market’s interests and habits as they relate to your business—these are “psychographics.” 

Related: Target market examples

Essentially, you want to include any knowledge you have about your customers that is relevant to how your product or service is right for them. With a solid target market, it will be easier to create a sales and marketing plan that will reach your customers. That’s because you know who they are, what they like to do, and the best ways to reach them.

Next, provide any additional information you have about your market. 

What is the size of your market ? Is the market growing or shrinking? Ideally, you’ll want to demonstrate that your market is growing over time, and also explain how your business is positioned to take advantage of any expected changes in your industry.

Dig Deeper: Learn how to write a market analysis

Competitive analysis

Part of defining your business opportunity is determining what your competitive advantage is. To do this effectively, you need to know as much about your competitors as your target customers. 

Every business has some form of competition. If you don’t think you have competitors, then explore what alternatives there are in the market for your product or service. 

For example: In the early years of cars, their main competition was horses. For social media, the early competition was reading books, watching TV, and talking on the phone.

A good competitive analysis fully lays out the competitive landscape and then explains how your business is different. Maybe your products are better made, or cheaper, or your customer service is superior. Maybe your competitive advantage is your location – a wide variety of factors can ultimately give you an advantage.

Dig Deeper: How to write a competitive analysis for your business plan

Marketing and sales plan

The marketing and sales plan covers how you will position your product or service in the market, the marketing channels and messaging you will use, and your sales tactics. 

The best place to start with a marketing plan is with a positioning statement . 

This explains how your business fits into the overall market, and how you will explain the advantages of your product or service to customers. You’ll use the information from your competitive analysis to help you with your positioning. 

For example: You might position your company as the premium, most expensive but the highest quality option in the market. Or your positioning might focus on being locally owned and that shoppers support the local economy by buying your products.

Once you understand your positioning, you’ll bring this together with the information about your target market to create your marketing strategy . 

This is how you plan to communicate your message to potential customers. Depending on who your customers are and how they purchase products like yours, you might use many different strategies, from social media advertising to creating a podcast. Your marketing plan is all about how your customers discover who you are and why they should consider your products and services. 

While your marketing plan is about reaching your customers—your sales plan will describe the actual sales process once a customer has decided that they’re interested in what you have to offer. 

If your business requires salespeople and a long sales process, describe that in this section. If your customers can “self-serve” and just make purchases quickly on your website, describe that process. 

A good sales plan picks up where your marketing plan leaves off. The marketing plan brings customers in the door and the sales plan is how you close the deal.

Together, these specific plans paint a picture of how you will connect with your target audience, and how you will turn them into paying customers.

Dig deeper: What to include in your sales and marketing plan

Business operations

The operations section describes the necessary requirements for your business to run smoothly. It’s where you talk about how your business works and what day-to-day operations look like. 

Depending on how your business is structured, your operations plan may include elements of the business like:

• Supply chain management
• Manufacturing processes
• Equipment and technology
• Distribution

Some businesses distribute their products and reach their customers through large retailers like Amazon.com, Walmart, Target, and grocery store chains. 

These businesses should review how this part of their business works. The plan should discuss the logistics and costs of getting products onto store shelves and any potential hurdles the business may have to overcome.

If your business is much simpler than this, that’s OK. This section of your business plan can be either extremely short or more detailed, depending on the type of business you are building.

For businesses selling services, such as physical therapy or online software, you can use this section to describe the technology you’ll leverage, what goes into your service, and who you will partner with to deliver your services.

Dig Deeper: Learn how to write the operations chapter of your plan

Key milestones and metrics

Although it’s not required to complete your business plan, mapping out key business milestones and the metrics can be incredibly useful for measuring your success.

Good milestones clearly lay out the parameters of the task and set expectations for their execution. You’ll want to include:

• A description of each task
• The proposed due date
• Who is responsible for each task

If you have a budget, you can include projected costs to hit each milestone. You don’t need extensive project planning in this section—just list key milestones you want to hit and when you plan to hit them. This is your overall business roadmap. 

Possible milestones might be:

• Website launch date
• Store or office opening date
• First significant sales
• Break even date
• Business licenses and approvals

You should also discuss the key numbers you will track to determine your success. Some common metrics worth tracking include:

• Conversion rates
• Customer acquisition costs
• Profit per customer
• Repeat purchases

It’s perfectly fine to start with just a few metrics and grow the number you are tracking over time. You also may find that some metrics simply aren’t relevant to your business and can narrow down what you’re tracking.

Dig Deeper: How to use milestones in your business plan

Organization and management team

Investors don’t just look for great ideas—they want to find great teams. Use this chapter to describe your current team and who you need to hire . You should also provide a quick overview of your location and history if you’re already up and running.

Briefly highlight the relevant experiences of each key team member in the company. It’s important to make the case for why yours is the right team to turn an idea into a reality. 

Do they have the right industry experience and background? Have members of the team had entrepreneurial successes before? 

If you still need to hire key team members, that’s OK. Just note those gaps in this section.

Your company overview should also include a summary of your company’s current business structure . The most common business structures include:

• Sole proprietor
• Partnership

Be sure to provide an overview of how the business is owned as well. Does each business partner own an equal portion of the business? How is ownership divided? 

Potential lenders and investors will want to know the structure of the business before they will consider a loan or investment.

Dig Deeper: How to write about your company structure and team

Financial plan

Last, but certainly not least, is your financial plan chapter. 

Entrepreneurs often find this section the most daunting. But, business financials for most startups are less complicated than you think, and a business degree is certainly not required to build a solid financial forecast. 

A typical financial forecast in a business plan includes the following:

• Sales forecast : An estimate of the sales expected over a given period. You’ll break down your forecast into the key revenue streams that you expect to have.
• Expense budget : Your planned spending such as personnel costs , marketing expenses, and taxes.
• Profit & Loss : Brings together your sales and expenses and helps you calculate planned profits.
• Cash Flow : Shows how cash moves into and out of your business. It can predict how much cash you’ll have on hand at any given point in the future.
• Balance Sheet : A list of the assets, liabilities, and equity in your company. In short, it provides an overview of the financial health of your business. 

A strong business plan will include a description of assumptions about the future, and potential risks that could impact the financial plan. Including those will be especially important if you’re writing a business plan to pursue a loan or other investment.

Dig Deeper: How to create financial forecasts and budgets

This is the place for additional data, charts, or other information that supports your plan.

Including an appendix can significantly enhance the credibility of your plan by showing readers that you’ve thoroughly considered the details of your business idea, and are backing your ideas up with solid data.

Just remember that the information in the appendix is meant to be supplementary. Your business plan should stand on its own, even if the reader skips this section.

Dig Deeper : What to include in your business plan appendix

Optional: Business plan cover page

Adding a business plan cover page can make your plan, and by extension your business, seem more professional in the eyes of potential investors, lenders, and partners. It serves as the introduction to your document and provides necessary contact information for stakeholders to reference.

Your cover page should be simple and include:

• Company logo
• Business name
• Value proposition (optional)
• Business plan title
• Completion and/or update date
• Address and contact information
• Confidentiality statement

Just remember, the cover page is optional. If you decide to include it, keep it very simple and only spend a short amount of time putting it together.

Dig Deeper: How to create a business plan cover page

How to use AI to help write your business plan

Generative AI tools such as ChatGPT can speed up the business plan writing process and help you think through concepts like market segmentation and competition. These tools are especially useful for taking ideas that you provide and converting them into polished text for your business plan.

The best way to use AI for your business plan is to leverage it as a collaborator , not a replacement for human creative thinking and ingenuity. 

AI can come up with lots of ideas and act as a brainstorming partner. It’s up to you to filter through those ideas and figure out which ones are realistic enough to resonate with your customers. 

There are pros and cons of using AI to help with your business plan . So, spend some time understanding how it can be most helpful before just outsourcing the job to AI.

Learn more: 10 AI prompts you need to write a business plan

• Writing tips and strategies

To help streamline the business plan writing process, here are a few tips and key questions to answer to make sure you get the most out of your plan and avoid common mistakes .  

Determine why you are writing a business plan

Knowing why you are writing a business plan will determine your approach to your planning project. 

For example: If you are writing a business plan for yourself, or just to use inside your own business , you can probably skip the section about your team and organizational structure. 

If you’re raising money, you’ll want to spend more time explaining why you’re looking to raise the funds and exactly how you will use them.

Regardless of how you intend to use your business plan , think about why you are writing and what you’re trying to get out of the process before you begin.

Keep things concise

Probably the most important tip is to keep your business plan short and simple. There are no prizes for long business plans . The longer your plan is, the less likely people are to read it. 

So focus on trimming things down to the essentials your readers need to know. Skip the extended, wordy descriptions and instead focus on creating a plan that is easy to read —using bullets and short sentences whenever possible.

Have someone review your business plan

Writing a business plan in a vacuum is never a good idea. Sometimes it’s helpful to zoom out and check if your plan makes sense to someone else. You also want to make sure that it’s easy to read and understand.

Don’t wait until your plan is “done” to get a second look. Start sharing your plan early, and find out from readers what questions your plan leaves unanswered. This early review cycle will help you spot shortcomings in your plan and address them quickly, rather than finding out about them right before you present your plan to a lender or investor.

If you need a more detailed review, you may want to explore hiring a professional plan writer to thoroughly examine it.

Use a free business plan template and business plan examples to get started

Knowing what information to include in a business plan is sometimes not quite enough. If you’re struggling to get started or need additional guidance, it may be worth using a business plan template. 

There are plenty of great options available (we’ve rounded up our 8 favorites to streamline your search).

But, if you’re looking for a free downloadable business plan template , you can get one right now; download the template used by more than 1 million businesses. 

Or, if you just want to see what a completed business plan looks like, check out our library of over 550 free business plan examples . 

We even have a growing list of industry business planning guides with tips for what to focus on depending on your business type.

Common pitfalls and how to avoid them

It’s easy to make mistakes when you’re writing your business plan. Some entrepreneurs get sucked into the writing and research process, and don’t focus enough on actually getting their business started. 

Here are a few common mistakes and how to avoid them:

Not talking to your customers : This is one of the most common mistakes. It’s easy to assume that your product or service is something that people want. Before you invest too much in your business and too much in the planning process, make sure you talk to your prospective customers and have a good understanding of their needs.

• Overly optimistic sales and profit forecasts: By nature, entrepreneurs are optimistic about the future. But it’s good to temper that optimism a little when you’re planning, and make sure your forecasts are grounded in reality. 
• Spending too much time planning: Yes, planning is crucial. But you also need to get out and talk to customers, build prototypes of your product and figure out if there’s a market for your idea. Make sure to balance planning with building.
• Not revising the plan: Planning is useful, but nothing ever goes exactly as planned. As you learn more about what’s working and what’s not—revise your plan, your budgets, and your revenue forecast. Doing so will provide a more realistic picture of where your business is going, and what your financial needs will be moving forward.
• Not using the plan to manage your business: A good business plan is a management tool. Don’t just write it and put it on the shelf to collect dust – use it to track your progress and help you reach your goals.
• Presenting your business plan

The planning process forces you to think through every aspect of your business and answer questions that you may not have thought of. That’s the real benefit of writing a business plan – the knowledge you gain about your business that you may not have been able to discover otherwise.

With all of this knowledge, you’re well prepared to convert your business plan into a pitch presentation to present your ideas. 

A pitch presentation is a summary of your plan, just hitting the highlights and key points. It’s the best way to present your business plan to investors and team members.

Dig Deeper: Learn what key slides should be included in your pitch deck

Use your business plan to manage your business

One of the biggest benefits of planning is that it gives you a tool to manage your business better. With a revenue forecast, expense budget, and projected cash flow, you know your targets and where you are headed.

And yet, nothing ever goes exactly as planned – it’s the nature of business.

That’s where using your plan as a management tool comes in. The key to leveraging it for your business is to review it periodically and compare your forecasts and projections to your actual results.

Start by setting up a regular time to review the plan – a monthly review is a good starting point. During this review, answer questions like:

• Did you meet your sales goals?
• Is spending following your budget?
• Has anything gone differently than what you expected?

Now that you see whether you’re meeting your goals or are off track, you can make adjustments and set new targets. 

Maybe you’re exceeding your sales goals and should set new, more aggressive goals. In that case, maybe you should also explore more spending or hiring more employees. 

Or maybe expenses are rising faster than you projected. If that’s the case, you would need to look at where you can cut costs.

A plan, and a method for comparing your plan to your actual results , is the tool you need to steer your business toward success.

Learn More: How to run a regular plan review

Free business plan templates and examples

Kickstart your business plan writing with one of our free business plan templates or recommended tools.

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How to write a business plan FAQ

What is a business plan?

A document that describes your business , the products and services you sell, and the customers that you sell to. It explains your business strategy, how you’re going to build and grow your business, what your marketing strategy is, and who your competitors are.

What are the benefits of a business plan?

A business plan helps you understand where you want to go with your business and what it will take to get there. It reduces your overall risk, helps you uncover your business’s potential, attracts investors, and identifies areas for growth.

Having a business plan ultimately makes you more confident as a business owner and more likely to succeed for a longer period of time.

What are the 7 steps of a business plan?

The seven steps to writing a business plan include:

• Write a brief executive summary
• Describe your products and services.
• Conduct market research and compile data into a cohesive market analysis.
• Describe your marketing and sales strategy.
• Outline your organizational structure and management team.
• Develop financial projections for sales, revenue, and cash flow.
• Add any additional documents to your appendix.

What are the 5 most common business plan mistakes?

There are plenty of mistakes that can be made when writing a business plan. However, these are the 5 most common that you should do your best to avoid:

• 1. Not taking the planning process seriously.
• Having unrealistic financial projections or incomplete financial information.
• Inconsistent information or simple mistakes.
• Failing to establish a sound business model.
• Not having a defined purpose for your business plan.

What questions should be answered in a business plan?

Writing a business plan is all about asking yourself questions about your business and being able to answer them through the planning process. You’ll likely be asking dozens and dozens of questions for each section of your plan.

However, these are the key questions you should ask and answer with your business plan:

• How will your business make money?
• Is there a need for your product or service?
• Who are your customers?
• How are you different from the competition?
• How will you reach your customers?
• How will you measure success?

How long should a business plan be?

The length of your business plan fully depends on what you intend to do with it. From the SBA and traditional lender point of view, a business plan needs to be whatever length necessary to fully explain your business. This means that you prove the viability of your business, show that you understand the market, and have a detailed strategy in place.

If you intend to use your business plan for internal management purposes, you don’t necessarily need a full 25-50 page business plan. Instead, you can start with a one-page plan to get all of the necessary information in place.

What are the different types of business plans?

While all business plans cover similar categories, the style and function fully depend on how you intend to use your plan. Here are a few common business plan types worth considering.

Traditional business plan: The tried-and-true traditional business plan is a formal document meant to be used when applying for funding or pitching to investors. This type of business plan follows the outline above and can be anywhere from 10-50 pages depending on the amount of detail included, the complexity of your business, and what you include in your appendix.

Business model canvas: The business model canvas is a one-page template designed to demystify the business planning process. It removes the need for a traditional, copy-heavy business plan, in favor of a single-page outline that can help you and outside parties better explore your business idea.

One-page business plan: This format is a simplified version of the traditional plan that focuses on the core aspects of your business. You’ll typically stick with bullet points and single sentences. It’s most useful for those exploring ideas, needing to validate their business model, or who need an internal plan to help them run and manage their business.

Lean Plan: The Lean Plan is less of a specific document type and more of a methodology. It takes the simplicity and styling of the one-page business plan and turns it into a process for you to continuously plan, test, review, refine, and take action based on performance. It’s faster, keeps your plan concise, and ensures that your plan is always up-to-date.

What’s the difference between a business plan and a strategic plan?

A business plan covers the “who” and “what” of your business. It explains what your business is doing right now and how it functions. The strategic plan explores long-term goals and explains “how” the business will get there. It encourages you to look more intently toward the future and how you will achieve your vision.

However, when approached correctly, your business plan can actually function as a strategic plan as well. If kept lean, you can define your business, outline strategic steps, and track ongoing operations all with a single plan.

See why 1.2 million entrepreneurs have written their business plans with LivePlan

Noah is the COO at Palo Alto Software, makers of the online business plan app LivePlan. He started his career at Yahoo! and then helped start the user review site Epinions.com. From there he started a software distribution business in the UK before coming to Palo Alto Software to run the marketing and product teams.

Table of Contents

• Use AI to help write your plan
• Common planning mistakes
• Manage with your business plan
• Templates and examples

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Small Business Trends

How to create a farm business plan.

If you buy something through our links, we may earn money from our affiliate partners. Learn more .

Crafting a comprehensive farm business plan is a crucial step towards transforming your agricultural visions into tangible realities. This plan serves as a blueprint, enabling you to formally articulate your thoughts, ideas, and aspirations. Engaging in this process can lead to profound insights, illuminating the path to a thriving agricultural enterprise.

Even though the term ‘farm business plan’ might evoke a sense of formal rigidity, it’s important to remember that this document is, in fact, a living, evolving entity. Just like a seedling that sprouts, grows, and changes with the seasons, your business plan is not meant to be static.

It’s something you nurture, revise, and expand as circumstances dictate and as your farm business matures. Feeling pressure to perfect your business plan from the outset could be paralyzing. Instead, we suggest you view this document as a foundation that can be continuously built upon.

To get you started, we offer a detailed farm business plan template. This invaluable resource can be tailored and expanded to suit your unique agricultural venture, whether you’re cultivating a sprawling wheat field or nurturing a boutique organic herb garden.

The most effective business plans are those that exhibit flexibility and resilience, characteristics that are at the heart of any successful farm business. Agriculture, by its very nature, is a domain subject to the whims of Mother Nature. From unpredictable weather patterns to seasonal variations, farmers of all kinds grapple with an array of external factors.

Therefore, your farm business plan should not only anticipate these challenges but also prescribe adaptive measures to navigate through them. It’s this inherent adaptability that transforms a good farm business plan into a great one.

Writing a Farm Business Plan Template: 15+ Things Entrepreneurs Should Include

A farm business plan, like any strategic document, should be comprehensive, encompassing all aspects of your operation, be it agricultural (crops) or product-based. Utilize these 15 key sections to shape your farm business plan template.

Do bear in mind that while these sections are integral, they are by no means exhaustive. Your farm business plan may necessitate additional topics based on your specific farming operations.

Creating a robust business plan is of paramount importance, whether you’re kickstarting a farm venture or acquiring an existing one. Our farm business plan template starts off with an executive summary.

Executive Summary

The executive summary provides an essential overview of your farm business. It helps to streamline communication and understanding between various stakeholders, such as internal team members, potential lenders, business partners, and customers. When drafting your executive summary, consider the following key components:

• Business Profile : Provide a snapshot of your farm business, describing its nature and scope. Are you into crop cultivation, livestock rearing, or any specialized farming practices?
• Products : Clearly outline what product or products your farm will produce. These could range from dairy products to specific crops or even services like agrotourism.
• Production Methodology : Describe how you plan to achieve your production goals. This could involve discussing your farming techniques, usage of technology, or unique methodologies.
• Target Audience : Identify the individuals or groups who will be interested in your farm products or services. These might be local consumers, restaurants, farmers’ markets, or even online customers.
• Key Strategies : Highlight the strategies you plan to implement to run and grow your business. This could cover marketing techniques, sustainability practices, or partnerships.
• Mission and Vision : Briefly outline the mission and vision of your farm business. This helps to convey your long-term objectives and core values.

Remember, your executive summary is essentially the first impression of your business plan. Making it comprehensive, clear, and compelling will help attract interest and support from stakeholders.

Goals and Objectives

A well-crafted business plan should encapsulate both personal and economic goals and objectives. Many successful farm business plans also address environmental stewardship and community outreach. You may want to include goals around preserving farm resources for future generations, ensuring that both the operational and stewardship aspects remain within the family.

Introduction

Your introduction should provide information about the business owners, including their backgrounds and levels of industry experience.

Mission Statement and Values of Your Farming Business Plan

This section enables you to express the core values that led you to the farming business, whether it’s an urban farming venture or a homemade product-based farm. Your mission statement should reflect these values. Sustainable practices and conservation are often key motivations that draw people to farming, so don’t be shy to share your commitment to such principles.

Industry History

Understanding your place within the wider agricultural landscape is key. Be sure to research farms that have historically dominated your region, whether they specialize in vineyards, urban farming, or livestock rearing. Use this research to make educated projections about the future.

Company Background and History

Share the history of your farm if it has been a long-standing family venture or the journey leading up to your purchase if it wasn’t. If your farm business is a startup, focus on the business experience and backgrounds of the involved parties.

Competitor Analysis

Understanding your competition is crucial. In the agricultural sector, farmers often share resources, such as a high-tech corn planter , or cooperate in marketing endeavors. Factor in such synergies when analyzing competitors.

Target Market

Clearly define your target market. This can include area groceries, farmers’ markets, or online customers. If you’ll be relying on online sales, ensure your website is professionally designed, keyword optimized, and easily discoverable.

Products and Services

Describe each product or service offered by your farm, highlighting those features most appealing to your target market.

Organization, Human Resources, and Management Plans

These interconnected elements cover your farm’s day-to-day operations, employee roles and responsibilities (including their job descriptions ), and overarching management plans.

SWOT Analysis

Conduct a SWOT analysis to identify your farm’s strengths, weaknesses, opportunities, and threats. This will help you strategize on how to leverage your strengths, mitigate your weaknesses, exploit opportunities, and neutralize threats.

Your vision is the roadmap for your farm’s future. It should express not just your financial aspirations but also your plans for the farm operation in the long run.

Growth Strategy

A comprehensive growth strategy should outline your plans for debt reduction, savings, and business expansion. Keeping detailed farm production records is key to evaluating the effectiveness of your growth strategy.

Financial Plan

Your financial plan should include elements like balance sheets, income statements, projected cash flows, loan repayment schedules, and depreciation factors.

Marketing Strategy

A robust marketing strategy is essential for your farm’s success. Look into brochures, advertisements, and joining co-op groups. Resources from institutions like the University of Minnesota and Cornell University offer comprehensive insights into effective marketing strategies for farm businesses.

Establishing a Farming Business Entity

Discuss the legal structure of your farm business. Will it be a sole proprietorship, a partnership, an LLC, or a corporation? Outline the pros and cons of each and why the chosen structure is the best fit for your farm business.

Detailed Description of Farm Operations

Include a section that provides an in-depth look at your day-to-day farm operations. This can cover everything from crop rotation plans, livestock breeding programs, to the use of technology and machinery in your farming activities.

Risk Management Strategies

Address potential risks and challenges your farm might face, such as natural disasters, market fluctuations, or pest infestations. Discuss the strategies you plan to implement to mitigate these risks, like insurance coverage, diversification, and emergency response plans.

Sustainability and Environmental Impact

Highlight your farm’s approach to sustainability and its impact on the environment. Discuss practices like organic farming, conservation techniques, and renewable energy usage, which demonstrate your commitment to environmental stewardship.

Community Involvement and Social Responsibility

Describe how your farm business plans to engage with and contribute to the local community. This could include hosting educational farm tours, participating in farmers’ markets, or supporting local food programs.

Supply Chain and Vendor Relationships

Detail your farm’s supply chain and vendor relationships. Explain how you plan to source inputs like seeds, feed, or equipment, and any partnerships with local suppliers or distributors.

Technology and Innovation

Discuss the role of technology and innovation in your farm business. This could include the use of precision agriculture, innovative irrigation systems, or the adoption of farm management software to enhance efficiency and productivity.

Training and Development Plans

Explain how you intend to train and develop your staff. Include plans for ongoing education, skill development, and potentially, leadership training for future farm managers.

Expansion and Diversification

Outline your long-term plans for expansion and diversification. This could involve adding new crops, branching into agrotourism, or exploring value-added products like farm-produced jams or cheeses.

Exit Strategy

Consider including an exit strategy for your farming business. This could be a plan for succession, selling the business, or transitioning to a different type of agricultural operation.

Wrap up your business plan with a conclusion that reiterates your farm’s core mission and vision, and express your enthusiasm and commitment to making your farm business a success.

Frequently Asked Questions

Include a FAQ section at the end of your business plan to address common questions potential investors or partners may have about your farm business. This can include queries about your business model, funding needs, or market potential.

Provide an addendum for additional documents that support your business plan. This can include resumes of key team members, detailed financial projections, market research data, or letters of support from future customers or partners.

Do I Need a Business Plan for My Farm?

Even if you’re knee-deep in the dirt, tending to your crops or livestock, every farming enterprise has the core elements of a business at its heart. These include aspects such as operations, marketing, human resources, and finances. When you embark on developing a farm business plan, it might astonish you to see where the journey takes you. You could end up discovering facets of your farm business that you hadn’t previously considered.

One of the many advantages of constructing your business plan is the opportunity it affords to involve others. Employees, family members, even your loyal farm dog might have innovative small farm business ideas that could significantly enhance your farm’s productivity and marketability. A different perspective can often yield solutions for issues you might not have even been aware of. Therefore, encourage an open exchange of thoughts and ideas. Who knows, the next great idea could be lying right under your hay bale!

More than just a document outlining your farm’s structure, your farm business plan should serve as a valuable decision-making tool. With it, you can confidently navigate the varied terrain of farm management, from daily operations to larger strategic initiatives. When you’ve got a meticulously crafted, robust farm business plan, it doesn’t just narrate your farm’s story, but also provides you with a roadmap to future growth and success.

Beyond this, a top-notch farm business plan can also be a lever that helps you access critical financing. Lenders and investors are more likely to support your venture when they see a well-structured, thoughtful business plan that articulates your vision, illustrates your understanding of the market, and demonstrates your commitment to fiscal responsibility.

So, where to begin? Let’s dive into our fundamental guide to crafting a farm business plan using our adaptable template. This resource has been designed to help you capture every aspect of your agricultural venture, laying a strong foundation for a bountiful future.

How Do I Write a Small Farm Business Plan?

Don’t sit down to write the whole thing. Chip away, one section at a time. Keep in mind that the plan doesn’t have to be the definitive last word. You can make adaptations.

How do you start a farm business plan?

Start with one piece of the business plan. One of the hardest sections of a business plan to write is the Mission Statement . If you get bogged down there, continue and come back to it later.

How much do farm owners make a year?

As you can imagine, the net income varies greatly by type of farm business.

The bottom line after expenses may not be high. Farmers need to consider net worth as assets grow and the farm property increases in value.

How much does it cost to start a small farm?

Getting set up to raise 100 beef cattle costs lots more than getting set up to raise 100 rabbits.

Things like property acquisition, soil preparation, equipment and machinery and the key costs. Other costs may be i rrigation systems , packaging and trucking.

What is the most profitable farming business?

Poultry farming is currently the most profitable – and common – farm business in the world. It includes chicken, turkey, quail, ducks and goose, that are being raised for meat or eggs.

It’s also one of the most expensive businesses to start, requiring significant capital investment. The industry is very labor-intensive and labor costs are high.

Image: Depositphotos

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BUSINESS STRATEGIES

How to start a clothing business online in 10 steps

• Allison Lee
• 22 min read

Get started by: Creating a website →  | Getting a domain →

While fashion is a highly competitive multi-billion dollar industry, starting a clothing business, especially online, is more accessible than ever before.

Whether you want to design your own clothing line from scratch, customize readymade wholesale garments, start clothing dropshipping  or launch a small T-shirt business with print-on-demand services, the number of resources available to new businesses like yours are at an all-time high. You can start a business , build an online store , establish your clothing brand, connect with potential customers and start selling online in no time.

In this 10 step guide, we’re going to cover everything you need to know about how to start your own clothing line—from conceptualization to selling.These steps don’t have to be completed one-by-one in a linear fashion. You can multitask and work on a few steps at the same time. For example, once you’ve decided on your brand identity (Step 2) you can start building your online store  (Step 6). Use this guide as a checklist to keep you on track.

Choose your brand strategy  

Create your brand identity  

Decide what products to sell  

Choose a business model  

Review costs  

Start building your online store  

Write a business plan  

Gather funding  

Design and create prototypes  

Get your marketing campaign up and running  

01. Choose your brand strategy

Before starting an online clothing business you need to ask yourself the following questions that will help to develop your brand strategy for this type of business :

What is your mission?  Perhaps you dream of creating a clothing line, using your own bespoke fashion designs. Or it could be as simple as creating a fashion business, offering quality, on-trend clothes you love. You might prioritize selling garments at an affordable price, manufacturing locally or using sustainable materials. Consider what factors are important to you and your clothing business. This is about your brand’s values and your purpose. This is about the product you want to provide . Be inspired by these clothing business ideas , if you're not sure.

What makes your clothing business different?  This is your   unique selling proposition (USP) , and it’s what ultimately tells customers why they should buy from you instead of your competition. This is largely about how you want your business to run. What is missing from the market that you can provide? Think about how you can set your clothing business apart.

What is your niche?  Is there a gap you can fill? Find your niche and see how you can serve it. Everyone wants to buy clothes that fit well, look great, are within their budget, and serve a purpose where it’s fashionable or practical. If you’re able to figure out which part of the equation is missing from the current market (which can be quality, price, ethics, design, function, or fit), then you have an instant in.

Who is your target audience?  Who are you creating your clothes for? Will you have direct communication with them by being a  business-to-consumer (B2C)  type of business? Do market research and get an idea of your main customer base. Deep dive into finding your ideal audience and considering ways to serve them. You may not have niched your new clothing line all the way down yet, but you should know upfront whether you’re planning to create politically-driven graphic tees for college students or comfortable slippers marketed to senior citizens. These factors are important, as they’ll shape your decisions moving forward, even if they shift slightly as you progress. Don’t worry, you can always adapt them as your clothing brand develops.

A good tactic for determining your target audience is   creating buyer personas . Think about their pain points that you can solve.

Let’s say that you want to create a clothing line that offers expensive washable silk pajamas. The following might be examples of your audience buyer personas:

Professional women aged 24-35, with no children but who are high-income earners. They are looking for high-end pyjamas that look and feel great. They want something that will hold up well, while still feeling luxurious.

Mothers aged 30-45 in upper or middle-class families who have elementary-school-aged children. They love silk but need something practical. Silk would typically be out because dry-clean only doesn’t always work for busy schedules, but machine-washable silk opens doors to practicality and convenience.

You can learn a lot about your niche and target audience through social media. Join forums on Reddit , add yourself to Facebook Groups  and follow relevant Instagram Pages  and influencers to immerse yourself in the niche you are seeking to serve. You can also use social media analytics tools as well as Google Analytics to gain valuable insights into user behavior, engagement patterns and demographic information. This will help you find and create products or styles that uniquely fill a void in the market and create marketing campaigns that speak directly to your audience.

Who are your competitors? Before committing to a niche or establishing a business model for your clothing line, you want to take a look at the competition. You can learn a lot from what they’re doing well, plus find ways to outshine them or offer something new.

If you wanted to start a high-end sock business, for example, research might show that plenty of similar companies are using subscription packages to keep reengagement high and sales up long-term.

Learn more: How to start a subscription box business

You also want to take a look at your competitor’s pricing and promotions. You don’t necessarily need to beat their pricing; many customers, for example, will pay up to  25% more for sustainably-made items , and luxury brands can charge more than those opting for affordable selling points. That being said, market pricing does need to be taken into account, especially when you’re looking at direct competitors.

During your research, look at customer feedback, including reviews on competitors' product pages. You can learn a lot about what your target audience is looking for and where your competition is falling short.

Once you’ve answered these questions, nail it all down by  creating your mission statement . Don’t overlook this step because it’ll help you stay focused as you move forward on this journey to starting your own clothing line.

02. Create your brand identity

Once you’ve determined your clothing line’s brand strategy, then you can work on creating your brand identity . When you’re getting your clothing business off the ground, you’ll need all the elements to fit together well to form a strong, cohesive brand that your audience will trust, love and want to continue purchasing from.

These are the four pillars to creating a successful brand:

Quality:  What are you offering and who will be buying it? Lower-quality items can be more accessible and reach different markets than higher-end products. Keep all your products targeted toward the same market.

Price:  Consider your product quality, materials, manufacturing costs, target audience and competition. Then create a price range that's suitable for your items. Charge more for higher quality or unique items that are currently in-demand.

Brand design and style: Put your unique flavor into your business. Make sure the overall look and feel is consistent across your product collection, clothing logo , eCommerce  website, packaging, social media and marketing campaigns. The style you’re going for should also be in line with everything else on this list. If not, something will feel out of place and customers won’t purchase. Thankfully creating a brand identity for your clothing business is easier and faster than ever before, with AI-powered tools that help you create a logo  and build a free website  just by answering a few simple questions. It's also helpful to use an industry-specific logo maker to give you inspiration and help you fully represent your brand (in this case, a fashion logo maker ).

Brand name:  For clothing lines especially, your clothing brand name  can be a powerful selling feature in and of itself, even if you aren’t a high-end designer label. Brand names can also include mission-focused associations that make your clothing business stand out, like using ethically sourced designers or high-quality materials. This will come into play as you build brand trust  and brand recognition. If you’re struggling with a name, consider using our clothing line name generator  for some ideas.

When considering how to start a clothing business, create a Pinterest board or build a list of businesses you love and admire. Study how they have created their brand identities. Look at their use of design—logo, typography, color palette and website —and see how it embodies their brand strategy.

Develop a compelling value proposition to establish your unique brand identity in the competitive fashion market. This will help you communicate the distinct benefits and value that your clothing brand offers to your target customers. Your value proposition can include factors such as the style and quality of the clothing, the brand's mission or story, ethical and sustainable practices, affordability, or a combination of these elements.

03. Decide what products to sell

You’ve analyzed the market, you’ve delved into your niche, so now it’s time to use this knowledge to choose what clothing products you will create and sell.

There are so many different directions you can go with a clothing line, including the following eCommerce business ideas :

Designing your own line of sustainable and ethically made wardrobe basics

Designing custom-made bridal or bridesmaids gowns

Customizing readymade wholesale sweaters with hand-embroidered designs

Starting a T-shirt business  using print on demand services

Dropshipping  cold weather items, like gloves and hats. Learn more about starting a dropshipping business  and creating a dropshipping website  to do this.

Personalizing items, like caps or mugs, with a customer’s dog on the front

Creating artisanal, hand-stitched accessories like scarves or hats

Manufacturing comfortable, high-quality athleisure wear

Hand-painting robes, pajamas, and kimonos

Based on your target audience and niche, choose a target style, which can include any of the following and more:

Comfortable

You also want to think about the materials you’re using to create your products, as this can ultimately be a defining feature of your brand just as much as style. These choices may include:

High-end luxury knits

Eco-friendly options, like organic or recycled materials

Affordable low-cost and widely-available materials like mass-produced cotton

Remember to start small, especially if you will be manufacturing the products and not using a dropshipper. Design a few products (or even just one) to get started with and then take it from there. You don't want to bite off more than you can chew.

04. Choose a business model

There are plenty of different business models you can choose from when it comes to starting your own clothing line. Let’s take a look at the most common business models used.

Private label

If you want to design and create your own unique clothing line and have it manufactured to your specifications, then this is the business model for you.

You’ll need to consider various factors. What will your first collection be? This is how you announce your clothing line to the world. It should reflect your brand’s unique identity. Will you make the clothes yourself? If you don’t have the technical skills to design a garment you could work with a fashion designer to bring your ideas to life. What fabrics will you use? You will need to source the right fabric, in the right amount, to keep your costs down. Do you want to hand sew each item or will you outsource the work and find manufacturers?

If using a manufacturer, once you’ve created your designs and placed an order for a set number of products, you will receive the inventory and keep it on hand to ship out as it’s ordered. Sometimes, this means you end up with left-over inventory that doesn’t sell, which can cut into your profits, so take that into account when you set out.

You’ll also need to  manage your inventory , which means storing it yourself, renting warehouse space or using a  3PL . Take time to do your research and find the right answers for your business as each factor will impact your pricing and profits. Starting this type of clothing line gives you full creative control, and makes it easier to scale once the right processes are in place.

Check out how Ashco  created a unique brand that’s trendy, comfortable and serves a specific niche in the market.

Custom wholesale

Custom wholesale  businesses purchase premade wholesale clothing and then customize each garment by hand. Whether you decide to purchase contemporary or vintage wholesale clothing, this type of clothing line is a great way to stand out from the crowd. But remember that hand customizing can take time and labor. You’ll need ample space to work as well as somewhere to pack and store inventory.

Custom clothing lines

If you want to offer made-to-order items, a couture custom clothing line may be an excellent choice. You can specialize in event clothing, tuxedos or custom made suits for prom, wedding dresses or red carpet gowns, and create bespoke pieces made to fit each client.

Custom clothing also includes made-to-order branded products such as dress shirts with a customer’s brand logo printed on them, and even aprons with a customer’s name embroidered across the top.

Custom clothing lines allow you to create something truly unique for your clients as needed, giving you an advantage in the market, but it can be much more difficult to scale than other small medium business  models as creating custom items can take time to execute, which can create a backlog overtime if the demand is high.

Dropshipping

If you are interested in curating products from sellers that align with your brand instead of manufacturing them yourself,  dropshipping  can be a good option. It’s low-cost with low overhead, because you don’t need to manufacture, store, manage, or ship any inventory. Instead, when the customer places an order, the third-party seller will ship it directly to the customer.

To  start dropshipping , just  integrate your eCommerce website with a dropshipping company , find great products and start selling. Explore eCommerce website templates  to help you figure out what's best.

Dropshipping has some downsides, especially considering the overall lack of control. You can’t control who else is selling the products you are, which can drive up competition levels. You also have very little quality control or influence on inventory availability on your end, aside from delivering customer service.

Print on demand

Print on demand  is another low-investment option that lets you customize clothing from print on demand companies  like  Printful  of  Printify’s  robust catalogs. The   print-on-demand company makes and fulfills your orders. All you need to do is create designs that you can market and sell directly to consumers.

This option, sometimes referred to as “white labeling,” is all about quickly customizing and producing products to create something unique while streamlining the process. And if you choose to integrate with a print-on-demand service, it operates within dropshipping parameters; you market the item and process the sale, and then the printing company creates the product and ships it straight to the consumer.

This can work well for items that are quickly produced, like graphic tees, and it prevents you from needing to have an enormous stock of inventory in terms of finished products that might not sell. This can reduce your potential profit loss.

Worst Year Ever  is expertly using this method to design and sell 2020-themed clothing. While the store focuses on tees, they also make use of other customizable products from the print-on-demand catalog.

04. Connect with reliable partners

Building relationships with third-party vendors who can help you create the products, styles and business you envision, is a key part of creating a clothing business. When looking to partner with another company, do everything you can to make sure they are reliable, professional, and responsible. If you’ll need someone to send you 200 yards of delicate white lace every month to make wedding dresses, for example, you’re going to want to make sure you can count on it.

As a start-up clothing line you might need to convince some of these third-party vendors, such as manufacturers, to work with you. Be prepared to answer their questions and understand their production process.

Here are some things to look out for before partnering with a company:

Look for reviews online

Request samples

Use social media to ask if anyone has experience working with them

Seek out recommendations, including businesses you can verify yourself

Ask the company about previous work

Ask to visit their premises and see their process (In person or via video call)

05. Review costs

Before you make any decisions, the first thing you should do is crunch some numbers. Knowing your expenses at the outset will help you to prepare, monitor expenses with an expense report  and even secure proper funding if needed when you create your clothing line business plan .

Remember that while starting your own clothing line or online clothing business will always involve some financial investment, it can absolutely pay off.

The following are common costs associated with starting an online clothing business:

Design:  These may include any costs of hiring a third-party designer, paying for design software, and any materials you’re using to create designs yourself.

Manufacturing:  While you might choose to source your own materials and make your own prototype, most clothing lines will find manufacturers to create a prototype and then produce the inventory. The cost of the raw materials is usually included in the price of the manufacturing. With many manufacturers, the larger the order quantity, the lower the cost per unit. This is because they have set up costs for each design. However this option is not always ideal for a small business on a tight budget with limited space for inventory.

Inventory storage and management: If you aren’t dropshipping, you’ll have a large chunk of inventory that you need to store and manage somewhere. Storage space (which may include a staffed warehouse as you grow) is an essential part of this, but   inventory management   software can help you keep track of your products.

Packaging:  Many clothing lines opt for custom packaging in order to enhance their store’s branding and to create an unboxing experience. This can include branded boxes, tape, and tissue paper. You’ll also want to think about price and brand tags for your different products.

Shipping:  Consider the costs to get the inventory to your warehouse as well as the costs to ship it to your customers. You’ll need to make sure you’re charging the customer accordingly so it doesn’t eat into your net profit  margins.

Legal contracts: You may have legal contracts with a manufacturer, third-party marketing company, rental space, or storage space. It’s best to have a lawyer review these contracts first before signing them, so you’ll want to account for legal fees.

Necessary licenses and permits: You’ll likely need a business license, and you may need special permitting depending on where you live and where your business will operate. If you’re in the US, note that these requirements vary by state. You should check your state’s requirements and   review the standard licenses you may need .

Website:  You can get site hosting  and a custom domain , and choosing a platform with strong   eCommerce features   like Wix can help you do all this at once. Beautiful product photography is key, so invest in a quality camera and some lighting or hire a photographer for a professional look. If you hire someone for site design, SEO work, or site copywriting, this should be factored into your costs, too.

Marketing:  Once you’re ready to promote your brand, you’ll need to budget for marketing, which can include paid ad spend, referral fees, affiliate fees, sponsored posts and more.

Taxes:  All businesses will need to pay taxes. You can talk to a qualified accountant to determine exactly how much you’ll want to set aside, whether or not you are eligible for certain corporate tax  benefits, and find out how often you need to pay. Some businesses may need to pay quarterly instead of annually depending on your business structure.

06. Start building your online clothing store

Once you’ve refined your brand strategy and identity you can start working on creating a professional website for your new clothing line. Your online store  should embody the spirit of your brand.

When setting out to start your online store,  you’ll want to choose an eCommerce-focused platform that has plenty of features. This’ll make it easier to build your business and offer exceptional customer service.

A platform like Wix eCommerce offers a large number of key   eCommerce features   you’ll need to create and grow your business. Use a free designer-made template or build your site from scratch and customize it to fit your brand identity by changing details like color palette, font, and layout.

Once you choose the right platform, make sure your site includes the following.

A strong homepage

Here you should feature your key products, and include a tagline that highlights why potential customers should purchase from you. Your tagline should be short and sweet, no more than a single line, while still being clear about what value you can offer your customers.

No products yet? No problem. Make an impact with a ‘Coming Soon’ landing page. Add a Subscribe form and use it to build a contact list. When you’re ready to launch, send out an email marketing campaign letting customers know when your first collection will drop.

Once you have stock you can make your online store visible and add a clear CTA   that directs your customers immediately to the product catalog. Use   banners to showcase limited time offers or coupon codes.

An “About Us” page

Your “About Us” page is where you can stress your mission and your USP to continue to highlight what makes your clothing brand different. It’s also a great place to share the faces behind your brand to build rapport.

Cherry and Mint  uses its about page to highlight the person and values behind the brand. "After creating my brand and being more into things, i [sic] started realising the negative impact fast fashion has to the environment," writes Zoey, founder of Cherry and Mint. "Therefore I try to practice ethical & sustainable views as much as possible."

High-converting product pages

These are some of the criteria to include on your   product pages :

Copy that aligns with your brand voice and explains the value of your product

A detailed   product description, including materials used, sizing information, and care instructions

Multiple high-quality images and potentially a video to show the item from multiple views (or on multiple models)

Customer reviews

A customer service or help page

Make it easy for customers to review your store policies, including your return policies, estimated shipping times, and terms and conditions. It can also be helpful to include frequently asked questions, so that customers can find the answers themselves without needing to reach out to you.

Regardless, make sure you make it easy for shoppers to receive personalized customer service if needed. High-quality customer service will increase customers’ confidence in your brand and can drive sales.

Include easy-pay options at checkout

Your checkout process must be simple, fast, and easy for customers. If it’s not, you have a much higher chance of ending up with abandoned carts and lost sales.

Incorporate easy-pay options like  PayPal   or Apple Pay on your checkout page to offer multiple fast and secure payments for customers. By reducing clicks in the checkout funnel and by offering different payment options, you make it that much less likely a shopper will abandon their cart.

Stalf   makes it easy for customers to check out with an additional option to pay with PayPal.

07. Write a business plan

Now it’s time to write a business plan for your clothing line. This plan will be the roadmap for your business. It can add structure and help to streamline your goals for the future. It should contain:

Company description: Include details like the name of your clothing business, your background, your mission statement, information on core products, your company’s goals and how you will achieve them. Include an estimated timeline for meeting these goals.

Company products: List detailed descriptions of the products you will be selling. Add images, or sketches if these are available, and be sure to include information on production costs and expected pricing.

Market analysis:  Include your research on current market trends, your competitors and your target audience. Add your conclusions as to how your business will fit into the market.

Marketing and operations plan:  This section should contain details of your brand identity, your business model and your plans to market your new clothing line.

Management and organization:  Show how your business will be structured. Perhaps it’s just you, for now, but as your clothing line grows you might gain more stakeholders who will need to be included.

Financial projections:  Show how you expect to sustain your business financially. Consider start-up costs, whether or not you might seek funding, and how long you think it will take before you turn a profit.

Appendices:  Add any other information that helps to create a full picture of your new clothing business. Don’t forget to include additional business documents such as contracts, licenses and insurance here too.

08. Gather funding 

After you’ve chosen a business model for your clothing line and started to put together basic cost projections in your business plan, you’ll want to raise money for your business .

First, assess how much cash you’ll need upfront to get everything up and running. Use that market research from early on and apply it now.

Break all your projected costs down, line-by-line, and try to estimate at least 5% over what you think you’ll need. This will allow you to be prepared for unexpected costs that arise. Your business will need to be covering everything from transaction fees, manufacturing costs, marketing spend, and loss of profit from returns.

Try to minimize your initial costs as much as possible. Store inventory in your garage instead of a warehouse, for example, and manage it using the Wix Owner app . There’s also the option to handle customer inquiries yourself using social media or through the live chat function on your site instead of outsourcing to an agency. You can scale when you’re ready, but it’s best to do so once your profit is up. Remember that you yourself likely won’t make a large profit or be able to take a salary right away.

Before reaching out for funding, create a detailed business plan. Outline your expenses and why they’re essential, your profit margins, and how you plan to promote your business. Account for everything, because this will help investors feel more confident in investing.

If you need assistance with funding, there are plenty of options to consider.

If you belong to a credit union, ask about business financing: Credit unions often have competitive financing with low interest rates, and may be able to approve you quickly.

Check out online lenders: Kabbage  and  Lending Tree  are two excellent examples, as they’ll typically respond quickly and may offer more competitive rates than large banks.

Look for investors: Investors may offer financing in the form of a loan, or they may want a certain percentage of equity in your company in exchange for the financing. Consider what options work best for you, and know that someone who wants equity may be more interested in a collaborative venture.

Regardless of where you go, there are a few key business financing options to consider:

Business loans:  Business loans offer a one-time, lump-sum payment upfront. You’ll have a set period of time to pay it off (with interest), and have pre-determined monthly payments. Some business loans have penalties for early payment.

Business lines of credit.  Business lines of credit   are a type of open, revolving financing. You’re approved for a set amount (like $20,000), and you can draw from any available funds as needed, like a credit card. The draw period will be for periods like five, ten, or even 15 years, and you only pay interest on the funds you’re actively borrowing. This is often more appealing to businesses in early stages, as they can use what they need when they need it without paying interest on the rest.

Business credit cards.  These are open lines of credit, and work exactly like personal credit cards but they’re in your business’s name. Be careful not to go too deep into debt here, as the interest rates are often much higher.

09. Design and create prototypes

If you’re creating your own clothing line, you’ll need to get started on designing your clothes. Sketch out your designs, and create your prototypes. This can be done with the help of a designer or manufacturer, but can also be done in your bedroom alone with just your sewing machine.

If you’re creating the prototype yourself, you may want to provide the manufacturer with a tech pack. This is essentially a blueprint for your design and should contain every single detail about your product, such as fabric, measurements, stitching, labelling and packaging guidelines.

If you aren’t a designer, rest assured, as many manufacturers will include creating a prototype in their cost. This gives you a chance to see and feel the quality of the product before you commit to ordering a large amount. It can also help you determine their speed, adherence to your design instructions and ultimately if you have chosen a manufacturer that is right for your clothing business. It’s worth noting that if your clothing line contains different garments, for example, you sell both knitwear and jeans, then you might need to use a different manufacturer for each item.

Whatever you do, make sure you love what you create. You want to be absolutely certain that you’re happy with every product you’re creating before you order massive quantities of them—whether it’s a scarf or the packaging that the scarf will ship in.

Test the items yourself for quality, if possible. You could wash clothing multiple times according to care instructions to make sure they hold up well, and even wear them to see if they stretch, fade, fray, or bleed onto anything. This is your brand reputation on the line, so you can’t be too sure.

If you’re dropshipping items or selling with print on demand, you should always order the items that you plan on selling in your own store to ensure that they’re exactly what you think they’ll be.

Make sure that your products are up to the standard that you expect, and that they’re consistently high quality. After you’re confident, you can start ordering your inventory.

10. Get your marketing campaigns up and running

It’s time to start creating a marketing plan to promote your business. After all, customers can’t buy from you if they don’t know that you exist.

Here are some options for promoting your new clothing business online:

Search engine optimization (SEO): Wix sites that complete SEO setup receive two times more visitors and 1.3 times higher turnover.

Organic social media marketing: Choose the best social platforms to reach your target audience. Create branded profiles and curate your content to attract and engage followers, building brand and product awareness.

Pay-per-click ads: Create  Facebook Ads  and Google Ads to create and capture customer demand. Hundreds of Wix Stores owners have seen over 1,000% return on their ad spend with Facebook and Instagram through the integrated Facebook Ads marketing tool.

Sell on multiple sales channels: Set up Facebook and Instagram Shop and start selling on social media. You can also integrate other marketplaces like eBay, Amazon and Etsy to your online store. By adding an additional sales channel to your online store you can increase your sales by up to 12%.

Influencer marketing:  Partner with   clothing brand influencers   who have an engaged following from your target audience and who can help you expand your reach quickly.

Brand ambassadors:  Find and create fans of your products. Then encourage them to provide recommendations and site reviews.

Partner with another brand: Work with more-established brands that sell to your target audience but aren’t a direct competitor to increase your reach quickly.

Content marketing: Write   blogs   or create resources, like styling videos, to provide value to your audience.

Ready to start your own clothing line? Create your online store  today.

How to market your clothing brand

There are many ways to market your clothing brand. Here are a few tips:

Define your target audience: Who are you designing for? What are their needs and wants? Once you understand your target audience, you can tailor your marketing messages accordingly.

Create a strong brand identity: What makes your clothing brand unique? What values do you represent? Your brand identity should be reflected in everything you do, from your logo and website to your social media presence and marketing materials.

Develop a marketing strategy: What are your marketing goals? What channels will you use to reach your target audience? How will you measure your success? Having a well-thought-out marketing strategy will help you stay focused and achieve your goals.

Use social media effectively: Social media is a great way to connect with your target audience and promote your brand. Be sure to post high-quality content regularly and interact with your followers.

Run targeted ads: Paid ads can be a great way to reach a large audience and generate leads and sales. Be sure to target your ads to your ideal customer.

Partner with influencers: Partnering with influencers in your industry can be a great way to get exposure for your brand and reach a new audience.

Attend trade shows and events: Trade shows and events are a great way to network with other businesses in your industry and promote your brand to potential customers.

Why start a clothing business?

Starting a clothing business can be a rewarding venture for multiple reasons. If you're a designer already, or looking to get started with a clothing business, some of the following benefits might inspire you further:

Creative expression: Designing unique styles and creating fashion trends can be fulfilling for those with a passion for creativity and design. If you have a genuine interest and passion for fashion, starting a clothing business provides an avenue to turn that passion into a profession, allowing you to work in an industry you love.

Entrepreneurial opportunities: The clothing industry offers numerous entrepreneurial opportunities, from designing and manufacturing to retail and online sales. It allows individuals to be their own boss and take control of their business. Starting a clothing business can contribute to job creation, whether by hiring employees for design, manufacturing, marketing, or retail positions. This can have a positive impact on the local economy.

Diverse market: The clothing market is vast and diverse, catering to various demographics, styles, and niches. Whether it's casual wear, activewear or niche markets like sustainable fashion, there are opportunities to find a unique position in the market. On top of that, if you have a knack for spotting trends in fashion, you can capitalize on changing consumer preferences. Staying ahead of trends can set your clothing business apart and attract a fashion-forward audience.

Brand building and customization: Building a clothing brand allows you to establish a distinct identity in the market. A strong brand can create customer loyalty and recognition, contributing to long-term success. The clothing industry also lends itself well to customization and personalization. Creating personalized or custom-designed clothing items allows you to cater to specific customer preferences.

Global reach: With the continuing rise and popularity of eCommerce , starting a clothing business provides the potential for a global customer base.

Looking to start a clothing business in a specific state?

How to start a business in Connecticut

How to start a business in Indiana

How to start a business in Wisconsin

How to start a business in Washington

How to start a business in Michigan

How to start a business in Utah

How to start a business in Virginia

How to start a business in Arizona

How to start a business in Texas

How to start a business in Ohio

How to start a business in Georgia  

How to start a clothing brand FAQ

Do i need a license to start a clothing line.

The requirements for licensing vary depending on your location. In some jurisdictions, you may need a business license, a permit to sell clothing and a tax ID number. You may also need to comply with certain labeling and safety regulations in order to license your business.

How much does it cost to start a clothing line?

How do i name my clothing brand, can i put my own label on wholesale clothing, how can i open a clothing store with no money, related posts.

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Realigning global licensing for Microsoft 365

Learn about changes to Microsoft 365, Office 365, and Microsoft Teams licensing effective April 1, 2024.

April 1, 2024

Last year Microsoft updated the way Microsoft 365, Office 365, and Teams were licensed in the European Economic Area (EEA) and Switzerland . Now we are announcing our plan to extend that approach worldwide.

Globally consistent licensing helps ensure clarity for customers and streamline decision making and negotiations. To that end, we are now updating the way Microsoft 365, Office 365, and Teams are licensed outside of Europe in keeping with the recent changes in the EEA. Starting today, we are introducing 1) a new lineup of commercial Microsoft 365 and Office 365 suites that do not include Teams in regions outside the EEA and Switzerland, and 2) a new standalone Teams offering for Enterprise customers in those regions.

As in the EEA and Switzerland, customers with existing subscriptions that include Microsoft Teams will be able to continue using plans they have already chosen. Additional details follow below.

Changes to Enterprise Suites:

With today’s introduction of the new commercial lineup outside the EEA and Switzerland,  Office 365 E1, Office 365 E3, Office 365 E5, Microsoft 365 E3, and Microsoft 365 E5 suites with Teams will no longer be available to net new subscribers, worldwide. Here is how customers may be impacted: 

• Customers who are currently subscribed to any of the suites involved will have new options. They can continue to use, renew, upgrade, and add seats to their current plans as usual. Or, if they wish to switch to the new lineup, they can do so on their contract anniversary or renewal.
• Net new subscribers to Office/Microsoft 365 Enterprise suites outside the EEA and Switzerland who wish to provide their end users with Teams will need to purchase two SKUs : one Microsoft 365 (no Teams) or Office 365 (no Teams) suite and Microsoft Teams Enterprise. See details of the new lineup in the table below:

Changes to Frontline suites:

Current Frontline suites will coexist with the new lineup. Customers will be able to choose between the existing Microsoft 365 F1, Office 365 F3, and Microsoft 365 F3 suites with Teams included, or the new versions of those suites without Teams. See details of the new lineup on the table below:

Changes to Microsoft 365 Business suites:

Microsoft 365 Business suites will coexist with the new lineup. Customers will be able to choose between the existing Microsoft 365 Business Basic, Microsoft 365 Business Standard, and Microsoft 365 Business Premium suites with Teams or the new versions of those suites without Teams. See details of the new lineup on the table below:

These changes are intended to realign our global subscription structure following changes made in Europe in 2023. For additional context on those changes, please read the official announcement on the EU Policy Blog and the accompanying licensing details on Licensing News .

Existing customers who already subscribe to Microsoft 365 or Office 365 suites with Teams will have new options. They may continue to use, renew, upgrade, and otherwise adjust their subscriptions as before. They may also now switch to suites without Teams at anniversary/renewal or add new user subscriptions to suites without Teams or to the new Teams standalone at any time (including alongside suites with Teams).

Starting today in regions outside the EEA and Switzerland:

New commercial customers who wish to provide information workers with both Microsoft Teams and the value in existing Microsoft 365 E3/E5 or Office 365 E1/E3/E5 suites will need to purchase two SKUs: one E1/E3/E5 (no Teams) suite and Microsoft Teams Enterprise.

New small and medium business customers will be able to choose between the existing Microsoft 365 Business Basic/Standard/Premium suites with Teams or the new (no Teams) versions of those suites.

For Frontline workers , customers will be able to choose between the existing Microsoft 365 F1, Office 365 F3, and Microsoft 365 F3 suites with Teams included or the new (no Teams) versions of those suites.

No. All the EEA-specific offerings introduced in October 2023 will remain available alongside the offerings for other regions announced above. Licensing details for the EEA and Switzerland are available here .

The changes announced above apply only to commercial SKUs (Enterprise, Business, and Frontline). Consumer, Academic, US Government, and Nonprofit-specific SKUs are not currently impacted.

Microsoft Teams Enterprise provides meetings, chat, calling (VOIP), and collaboration without any limitation on seat numbers and a 1000-seat cap on meeting attendees.

Microsoft Teams Essentials remains unchanged; it provides meetings, chat, calling (VOIP), and collaboration for customers worldwide with up to 300 users, with a 300-seat meeting attendee cap.

No. The new “no Teams” suites and Teams Enterprise are intended for purchase by customers with enrollments in countries outside the EEA and Switzerland, from non-EEA pricelists, for deployment on non-EEA/Switzerland tenants out of datacenters outside the EEA and Switzerland.

Multinational organizations will be able to purchase “EEA (no Teams)” SKUs to cover enrollments and tenants inside the EEA/Switzerland, and non-EEA “no Teams” SKUs to cover enrollments and tenants outside the EEA/Switzerland.

Retaining a separate structure in the EEA is intended to minimize change for EEA customers while realigning the available options worldwide.

Deputies: Dunkirk man made $90,000 by selling fuel he stole from a local business

SILVER CREEK, N.Y. (WKBW) — A Dunkirk man is charged with Grand Larceny, accused of taking fuel and selling it at his own rate.

According to the Chautauqua County Sheriff's Office, 50-year-old Matthew Weaver was taking gasoline and diesel fuel from a business in the Town of Sheridan.

During an investigation in March, authorities say they found Weaver had been taking fuel and selling it since October 2023. They say he kept the proceeds of the stolen fuel, which totaled more than $90,000.

Weaver turned himself into the Chautauqua County Sheriff's Office Monday for arraignment.

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How to Get Student Loan Forgiveness in 2024

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Student loan forgiveness has a mixed track record. Last summer, the Supreme Court struck down a broad plan that would’ve erased up to $20,000 per borrower. Still, student loan forgiveness is more accessible now than ever before. A handful of existing federal student loan forgiveness programs have erased $143.6 billion in student debt for 3.96 million borrowers as of March 21, according to the Education Department, with more to come this year.

The White House is currently trying to push through a narrower forgiveness ‘Plan B’ version of its failed broad forgiveness plan. The proven paths to forgiveness, however, include programs that range from income-driven repayment (IDR) plans — which cap monthly bills at a percentage of your income and forgive your remaining balance after 10 to 25 years — to niche programs for borrowers with certain loan types, jobs or school circumstances.

Here’s how to get student loan forgiveness in 2024 — and what you need to know before pursuing this path.

Check your eligibility

You must have federal student loans to qualify for a forgiveness program. Private student loans aren’t eligible.

To verify you have federal loans, go to StudentAid.gov , and try to log in or recover your account.

Next, check which types of federal student loans you have. If you have certain types of loans, like commercially held FFELP or Perkins loans, you may have to consolidate them before going after forgiveness .

Income-driven repayment

The newest IDR plan — Saving on a Valuable Education, or SAVE — is the most accessible path to forgiveness. All borrowers with federal direct loans are eligible to enroll.

The SAVE plan forgives remaining student debt in as little as 10 years if you have an original balance of $12,000 or less, and in up to 20 or 25 years for other borrowers. While working toward forgiveness, your monthly bills could be $0 per month if you earn less than $32,800 as an individual or $67,500 as a family of four; otherwise, they’ll be capped at 5%-10% of your income.

Public Service Loan Forgiveness

If you work for a qualifying government or nonprofit employer, you could be eligible for Public Service Loan Forgiveness (PSLF) . This program erases your remaining balance after a decade of repayment.

“Generally, the PSLF program is the best one if you have access to it,” says Scott Stark, a financial coach and certified financial planner at Financial Finesse, a workplace financial wellness company.

Other forgiveness programs

Outside of IDR and PSLF, your student loan forgiveness options may include:

Teacher Loan Forgiveness , if you work in a qualifying low-income school. 

Borrower defense to repayment , if you think your school defrauded you. 

Closed school discharge , if your school closed during or shortly after your time there.

Perkins loan cancellation , if you have Perkins loans and work in public service.  

State-based student loan payment assistance , if you work in health care or are willing to relocate to a new area. 

Do the math

Use the Education Department’s loan simulator to see how much debt you could get erased under various forgiveness programs and repayment plans, how much your monthly payments could be and how long you’ll be in repayment.

If an IDR plan will result in you paying more interest for a longer period or paying off your debt before getting forgiveness, then it may not be a good choice for you. (Public Service Loan Forgiveness also requires enrollment in an IDR plan.)

“It really is a case-by-case kind of thing, but generally speaking, for people whose income is relatively high compared to their student debt loads, the income-driven repayment plans can be pretty unattractive,” says Tisa Silver Canady, founder of the Maryland Center for Collegiate Financial Wellness. “It might behoove them to just stay on a balance-driven plan and pay extra when they feel it makes sense.” Making extra payments toward the principal while on a balance-driven plan — like the standard 10-year plan , which splits your loan into 120 payments — allows you to shrink your debt faster and reduce total interest costs.

On the other hand, if the math for IDR works out such that borrowers can have smaller payments and keep more of their money to reach other financial goals, pursuing forgiveness is a good option, Stark says.

Prepare for a future tax bomb

IDR student loan forgiveness is exempt from federal taxes through 2025. After that, any amount forgiven could result in a student loan tax bomb . A small number of states tax IDR forgiveness, too.

It’s important to plan for a tax bomb if your forgiveness timeline will extend past 2025. Put a small amount of money aside each month to cover your future tax bill, Stark says.

Use the loan simulator to determine how much forgiveness you could ultimately receive: Your taxable income will increase by that amount in the year you get forgiveness. In some cases, the forgiveness could push you into a higher tax bracket, which could further increase your tax burden. If the amount you have to set aside each month to cover the tax bill is larger than the amount you’d save on the IDR plan, it might not be worth it.

Loan balances forgiven through PSLF, Teacher Loan Forgiveness, borrower defense to repayment, closed school discharge and Perkins loan cancellation are exempt from federal taxation.

Change your repayment plan

If you decide IDR forgiveness is the right choice, you must switch to an IDR plan like SAVE.

To sign up for an IDR plan, submit an online application at StudentAid.gov/IDR or call your student loan servicer.

You must also sign up for an IDR plan if you’re striving for PSLF. Choose the plan that gives you the smallest monthly bill to maximize the amount you could get forgiven after 10 years. It’s a good idea to submit your PSLF employer verification form each year to stay on track for forgiveness, Canady says. You can do this through the Education Department’s online PSLF Help Tool .

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How One Family Lost $900,000 in a Timeshare Scam

A mexican drug cartel is targeting seniors and their timeshares..

This transcript was created using speech recognition software. While it has been reviewed by human transcribers, it may contain errors. Please review the episode audio before quoting from this transcript and email [email protected] with any questions.

Hello, James.

Hey. How’s it going?

Yeah. I’m not having much luck. So the problem is funding. And all of my money is in Mexico, all of it.

From “The New York Times,” I’m Katrin Bennhold. This is “The Daily.” A massive scam targeting elderly Americans who own timeshare properties has resulted in hundreds of millions of dollars sent to Mexico.

Once you move forward and make your payment, if anything were to happen, he will directly pay you the full amount of what you’re entitled to, including the gains. He will pay you the full amount.

You’ve got all my money. It’s been sent. I sold a freaking house.

Listen to this. I sold a house that I grew up in so that I could come up with funds to send to Mexico.

I don’t even have anything from the sale, nothing.

My colleague Maria Abi-Habib on one victim who lost everything and the people on the other side of the phone.

That’s it. That’s it. There’s nothing —

You know what? That’s what has been said every freaking time. Every time, just pay this. That releases the funds.

But that’s why we won’t allow it to happen again. This is the last time, James.

It’s Friday, April 12.

Maria, you’ve been looking into this scam that’s targeting Americans. Where did your investigation start?

So several weeks ago, I received a phone call from a lawyer based in St. Petersburg, Florida, who had been contacted by a family who was very concerned that the father, this man named James, was in the middle of being scammed. He’d sent hundreds of thousands dollars to Mexico. And he was considering sending another $157,000 when his daughter decided to call up this law firm and try to get her father to stop, stop sending money to Mexico.

So I called him a few weeks ago as I was trying to understand what was going on.

Hi, James. How are you?

Good. Thank you.

He’s asked that his last name be withheld for privacy concerns because he’s quite embarrassed about the story that I’m about to tell you.

You’re retired now, but what were you doing for work? And if your wife was working, what was her job?

I was with the Highway Patrol.

James is a retired state trooper from California. And his wife Nikki is a former school nurse.

She was born in ‘51. So 71-ish.

Two. She’s just reminded me, 72.

And they’re both in their early 70s. And they own this timeshare that is in Lake Tahoe, California. And they bought it in the 1990s for about $8,000.

And for someone who did not grow up vacationing in a timeshare, remind me how exactly timeshares work.

Timeshares are essentially vacation properties. And they tend to be beach resorts. And multiple people can buy into this property. The ownership is a shared ownership. And this gives you the right to use the timeshare for one to two weeks out of every year.

And so James and Nikki used their timeshare every other year with their daughters. But as they hit retirement age and their daughters are growing up and starting their own families, they’re just not really using it that much anymore. And timeshares require the owners to pay off yearly maintenance fees. And so they’re starting to think about maybe letting go of their timeshare and selling it.

Then one day, in late 2022, James gets a phone call from a company that is purporting to be based out of Atlanta, Georgia called Worry Free Vacations.

Worry Free Vacations?

That sounds enticing.

Yeah. And they start off with a simple question, which is, do you want to buy a timeshare? And James says, I already have a timeshare. And then they say, great. Well, what about selling the timeshare? Do you want to sell? There’s this Mexican businessman, and he’s interested in your timeshare. And he’s willing to buy it for about $20,000.

So we figured, well, what the heck? If we can make a few bucks on it, we’ll go for it.

And James jumps at the opportunity.

And did he do anything to try and verify that this was real?

Yeah. So remember, James is former law enforcement. And he feels very confident in his abilities to sniff out untrustworthy people. So he goes online, and he googles this Mexican businessman and sees that, yeah, he is a real person.

He’s a very well-respected individual in Mexico, very well off. And —

And this makes James feel at ease, that he’s selling to a legitimate person, that Worry Free Vacations are who they claim to be and that he’s going to double his money overnight, essentially.

And what happens next?

Well, a couple of weeks after he makes the agreement with the buyer, he’s told that he needs to send a couple thousand dollars to facilitate the purchase.

What does that mean, facilitate?

[MUSIC PLAYING]

I can’t remember specifically whether it was supposed to be cross-border registration —

So he’s being told that there are these fees that are paid directly to the Mexican government.

Or SPID or some other fee that was Mexican government required or not.

A lot of these fees are the same types of fees that you would pay in the United States for a real estate transaction. So he begins wiring money to an account in Mexico.

After that —

— a few days later, we get a notification. Well, everything went well, except that we have to pay an additional fee.

Every time that he sends one fee, he’s being told that he’s got to send another fee right afterwards.

Does he get suspicious at any point?

His wife is suspicious. After the first couple of payments, she starts saying, this does not feel right.

But James is the former law enforcement officer, right? And he’s the one that basically handles the family finances. And he’s confident that all of this is going to work out because he’s being told that the buyer of the timeshare will reimburse James for all of these fees once the sale goes through.

Michael from the Worry Free Vacations was constantly reassuring me the money’s in that account. Check with the commercial escrow account. It’s there. It’s just these fees have to be paid, and you’re being reimbursed for all of this.

They’re sending James documents that show all of the reimbursements that he’s owed and how much money he’s going to get. And this just makes him feel like all of this is kosher.

We have this commercial escrow company that was involved out of New York. So there was an air of legitimacy that I was comfortable with.

Maybe OK, these guys just need one more fee and everything is going to finally be cleared.

But about a year in, James starts to get suspicious. He begins asking questions because he wants his money.

And every time I asked, hey, is there a way I can get a partial release of these funds, there was always no, these funds have to be paid from your account before they’re released.

But Worry Free Vacations, they pivot. And they tell him that, listen, there are all these complications. It’s going to be really hard to get your money out from this transaction.

I could pay about $30,000 and change to reinvest the $313,000 into an environmentally-conscious development in Loreto, Mexico.

Instead, we’ve got this other investment opportunity in Mexico.

And I’m sure you know where that is, over on the East Coast of Baja.

And that is going to make you a huge return, even more money than you had thought that you were going to make, much more than the $20,000.

I’m supposed to have 54 million pesos in a Mexican bank account.

So this is now no longer just about his timeshare. They are now partners in a real estate investment.

Right. And there’s this whole new round of fees and fines associated with that.

So how many payments would you say?

Quite a few. Couple dozen at least, maybe more.

When was your last payment?

It would have been 17 January.

Uh-huh. And what was that for?

Good question.

And all along, he believed it was necessary to pay these costs just to get the money that he’s owed.

The amount of money that I’ve sent to Mexico is just freaking exorbitant. And I mean, it is approaching $900,000 or more.

And at this point, he’s sent about $900,000 to Mexico over about a year and a half.

Nearly $1 million.

That was almost all the money that he and his wife had saved for their retirement.

It also included money from the sale of James’s childhood home and money that he had borrowed from his daughter and son-in-law, about $150,000 from them.

It’s awful. So they were completely cleaned out by these guys.

Yeah. And this is when his daughter asks a law firm to look into this, which is the point in the story when I meet James. And when we start talking, it was clear to me that he just did not know what to think, even after losing this much money.

So this started in 2022. When did it end?

We’re still in it.

And he’s still talking to the scammers.

And as a matter of fact, presently, there was a request for $157,000 and change to clear up this whole thing. It would clear the entire issue out. Now —

And James is even considering putting a second mortgage on his house to send that money that he’d been promised would finally clear all this up — one final payment of $157,000.

It really sounds like he’s still wanted to believe that this was somehow legit.

Yeah. It was pretty clear to me that he was being scammed. But I didn’t definitively know what was going on, so I asked him if he could start recording his phone calls with the scammers.

Would you be so kind as to do me a favor?

Would you be willing to give them a call and record them?

[LAUGHS]: I’ll let you in on a little secret. I’ve been recording them.

And it turns out he already had been.

Worry Free Vacations.

So he shared the recordings of these calls that he’d had with these scammers over the last year or so. And it was just remarkable. It gave me huge insight into how the scam worked and the way that it sounded over the phone.

Is this is Michael in? I think he’s trying to call me. I couldn’t get through pick up.

Yes, I believe he did try to call you, sir. Give me a second. I think he’s only going to be in for a couple of minutes. One second.

There are two main takeaways for me listening to these calls.

Good afternoon. Michael McCarthy.

Michael, I missed your call. I was trying to pick up.

Yeah, don’t worry. Yeah, I figured something was wrong with your phone. Everything OK?

The first is that these scammers had really gotten to know James so well, and they really made James believe that Worry Free was a company that was working for him.

That’s why we need to hurry up and get this money over to you. Because hey, I’m losing my mind too. I’m not even here to convince you, James. I’m not — I’m your broker, and —

One of the things they continuously say is, trust me.

Look, I’m doing everything I can in my power and will on my end. So James, just look — like I told you from the get-go, I’m going to resolve this. And we are doing it. I just need you to focus on the goal.

They would refocus the conversation on what James needed to do to get his money back.

Look, if you make your payment as a security deposit, right away they will release the funds to you. With these —

And the other thing —

I’ve been having so much trouble trying to reach you, and I have not been successful.

— is that the scammers had created this elaborate cast of characters.

Why don’t you answer my calls?

And some of them were really aggressive. James shared a recording of this one man who claimed to be an agent for the Mexican government. And he basically started yelling at James.

I don’t care if your wife is at the hospital. To be honest with you, I don’t give a damn! But you know where I do give a damn? It’s your money, and my name is written all over it! Do you understand?

And he even threatened James. If James didn’t pay off these fines, then he would lose all the money that he’d sent to Mexico already.

You could get the best lawyer you want. You could get whoever you want. And this is not a threat. This is facts. But anyways, who am I to convince you, right?

Well, thank you for the information. And — are you still there? Hello?

Wow. So these scammers were basically doing a good cop, bad cop routine to stop James from walking away and to squeeze every last penny out of him.

If you provide me your email, contact information, I will certainly be happy to forward all of the wire transfer information from my bank account to you so that you can see where those funds went.

Yeah, that would be great. I have your email.

James asks me, a reporter who’s based in Mexico, who speaks the language, if I could help him figure out where his money had gone to.

Thank you very much. I really appreciate your assistance.

I’m just doing my job. Thanks again, and we’ll talk soon.

And the only way that I could figure that out was to understand who was on the other side of the phone.

We’ll be right back.

So Maria, who was on the other side of that phone line?

So by the time that I’d met James, I’d already gotten a tip from US law enforcement agencies that they were seeing a new trend. Mexican drug cartels were getting involved in the timeshare scam industry.

Drug cartels?

Yeah. And not just any drug cartel. This is one of the most notorious, violent, bloody drug cartels that exists in Mexico and Latin America, the Jalisco New Generation cartel. And when I looked at James’s bank records, guess what? All the money that he was sending was going to various bank accounts that were all located in Jalisco state in Mexico.

Wow. So why would the drug cartels get into the timeshare scamming business?

It is a huge business. The FBI told me that it’s about $300 million in profits over the last five years.

But the thing is is that the potential for it to actually be multitudes more is huge. Because the FBI estimates that most of the scams are actually not even reported. In fact, only about 20 percent are. So that means the total timeshare scam business could actually be much larger than the $300 million that they have knowledge of over the last five years.

But wait. I thought the drug business was a pretty lucrative business in itself. So why get into the scamming of elderly people for their properties in Lake Tahoe?

Well, you have to remember that these drug cartels, they’re not just doing one thing. They’re doing multiple things. They’re essentially conglomerates. Because it’s really expensive to run a cartel. You need to pay off officials, both Mexican and American. You need to maintain basically an army in order to secure your routes up to the United States, ports of entry into Mexico from Colombia. And any big business, you need to diversify your income to make sure that you keep the money flowing. Because you never know when one business is going to be shut down by authorities or taken over by your rivals.

We’ve reported that they’re now in the avocado business and the construction business. And timeshare fraud is basically no different than any of those. So we’re seeing that the cartels have their fingers in many pies, the legitimate and the illegitimate economy here in Mexico.

It’s kind of fascinating to think of these drug cartels as like sprawling diversified business empires. But when did the cartels first get into the scamming business?

So Jalisco New Generation started about 15 years ago.

And when they started to consolidate their empire in Jalisco state, they found that there were all these scam timeshare call centers all over the state that were being run by various players, and that this was a huge, huge moneymaker. Because essentially, all you have to do is call up retired senior citizens in the US and Canada. It doesn’t take that much money to run that kind of a scheme. There’s no product you’re making.

So essentially, they conducted a hostile takeover of these call centers. They went in. They kicked down doors and dragged out the people who were managing these call centers by their hair and threatened to kill them unless they gave up the call centers or started handing over a cut of what they made. And slowly, slowly Jalisco New Generation cartel took over the entire timeshare fraud industry.

Interesting. Were you able to find any of these call centers?

So these call centers are pretty hard to find. They look like any other storefront. But I was able to visit two that were located in an upscale neighborhood in Guadalajara, which is the capital of Jalisco state. And it was just really perturbing because it was just so normal. Two villas about a mile away from each other outside. Outside of one villa, parents were walking by, holding their children’s hands as they did drop off at school.

It was right next to a park where people taking their morning exercise or their dogs for a walk. There was no real sign that the cartel was doing business there. But a few months before, Mexican law enforcement had found the bodies of eight young people who had used to work at one of these call centers and said that the Jalisco cartel had killed them.

Wow. What happened?

So I wasn’t able to talk directly to any of the victims’ families. They’re just too scared. But in general, this is usually how it starts.

The cartel seeks out English speakers to work for their call centers. Sometimes they don’t even tell them what exactly they are doing. They would tell the recruits that the job was adjacent to the hotel industry.

You have to remember, Jalisco is a huge, huge tourism magnet for Americans and Canadians and others. And the cartel would get their call lists from bribing hotel employees to give them the names of people who stayed at these hotels and also at the timeshare resorts. And the people who would work at the call centers are provided the names and a manual of what you need to do when you call, like a loose script of how to try to suck as much money as you can out of these people up North in Canada and the States.

So we don’t know for sure what exactly happened with the eight young Mexicans who were killed last year. But through an intermediary, one sibling told us that when their family member knew what their job actually was, they became extremely uncomfortable and tried to leave the call center and find another job maybe.

But the Jalisco New Generation cartel is known for being extremely brutal. They chop off heads, and they’ll put them on the gates of a playground, for instance. So that everybody in the neighborhood knows what went down. And in this case, it’s possible that they wanted to send a warning that there’s no defection from their timeshare call centers.

So basically making a very scary example of these guys, in case anyone else is thinking about quitting one of the call centers.

Exactly. And one man, who runs an organization who advocates for missing people and actually organizes search parties to comb the forests of Jalisco state looking for the missing, says that he knows of about 30 people who have disappeared from the call centers in Jalisco state since 2017. So while Americans and Canadians might be losing much of their life savings, in Mexico, this is actually deadly.

Are the authorities doing anything about this?

Not really, other than the fact that these two call centers were shut down. The authorities haven’t arrested others. They’re not putting pressure on Mexican banks, for instance, to look into these payments coming from senior citizens in the US or Canada. And you have to remember that people are really afraid. But you also have to remember that in Mexico things are not that clear. There is a lot of corruption and government collusion with organized crime and cartels.

And the tourism industry, it is huge in Mexico and particularly in Jalisco state. This is a multi-billion dollar industry. They don’t want Americans or Canadians or Europeans who are coming to Jalisco for its beautiful beaches and its mountains to hear about these stories regarding the cartels being involved in the tourism industry and think, I’m not going to send my family there for that beach vacation. It’s just simply too dangerous.

So everybody has an incentive to have the scam continue, whether because they’re too afraid and don’t want to speak out or because they’re in on it.

So in a way, local authorities have an interest in sweeping it under the carpet in order to just maintain this idea of a tourist destination.

Exactly. I mean, the spokeswoman for the prosecutor’s office was very responsive to me until I told her what I wanted to ask her questions about. And then she just simply never answered any of my texts or phone calls.

So Maria, based on everything you know, all the information you have, would you say that you’re confident that the cartels were the ones who scammed James?

Yes, 100 percent. Everything I’ve seen points in that direction.

What did James say when you told him this?

So it took him quite a while to really allow himself to believe it. On the advice of his lawyers, he stopped picking up the phone calls. And about a week ago, they stopped after the scammers kept trying to call him.

But you said he was in it for over a year. Why do you think it took him so long?

Can you tell me, after all of that had been presented to you, why do you think you weren’t willing to be entirely convinced?

Well, I actually asked him that question.

That’s a very good question. Why wasn’t I able to pick up on that right away? And I think in the back of my mind, I’m finding out that I’m a little more stubborn than I thought I was.

And for him, it was pretty complicated.

And I think that I didn’t want to believe that I had fallen for this. I didn’t feel I was that foolish and stupid when it came to this. You know? I guess I didn’t want to believe that I could be fooled.

To come to terms with the fact that he had lost so much money was to come to terms with the fact that he wasn’t the person that he thought that he was, that he wasn’t this kind of clever former law enforcement officer who was used to fighting the bad guys and winning.

I’m disappointed in myself. There’s a huge level of anger towards the perpetrators. And all of those things wrapped into one. And part of that, I think, contributes to not wanting to actually believe that I was wrong.

Hmm. Yeah, I hear you. I’m sorry. I can hear the pain in your voice.

[LAUGHS]: Yeah.

Some of it’s based on shame, right? That he lost all this money, everything that he’s worked for, and the fact that this was all supposed to be money that his children and his grandchildren were going to inherit. And now it’s gone.

And have you told your daughter that you think you’ve come to terms with the fact that this might have been a scam?

Oh, she’s been involved. Yeah. They know.

My daughter does.

I’m sorry. This is a tough time.

So I’ve got to make some sort of arrangement to compensate them for this on top of our regular debt. So yeah. It’s been a swell experience, all of it brought on by my — evidently, my stubbornness to believe that I couldn’t possibly be a victim.

How’s your wife doing throughout this whole process, with this new knowledge?

She’s not real happy, obviously, at all. I hear a lot of “I told you so.” And at this point, I’ve got no defense. She’s absolutely right. There’s no question about it.

Do you worry this is going to affect your marriage?

Yes, there has been an effect.

And do you think that at this point there’s any way for James and his family to get some kind of justice or at least find some kind of closure?

Ay. Justice? Unlikely.

At this point, I’m not necessarily expecting much in the way of restitution.

And as for closure, it’s a little bit too soon to tell. In a way, James has gone through several stages of acceptance for what happened. There’s fear. There’s shame. There’s resignation. And now he’s talking to me partly because he feels like it’s a public service, that he needs to be vocal so that other people don’t go through what he’s gone through and fall for the scam. And I think it also helps him feel a little bit empowered in a situation for over the last year and a half he was at the mercy of these people who were calling him multiple times a week.

I want to try to get as much information to as many of these official organizations as possible. I have a streak of anger through me now that I’ve developed to the point where I’m not going to let this go.

Well, Maria, thank you.

Thank you for having me.

Here’s what else you need to know today. OJ Simpson, the football star who was accused and later acquitted of murdering his former wife and her friend, died of cancer at his home in Las Vegas, his family said Thursday. He was 76.

Today’s episode was produced by Astha Chaturvedi and Will Reid, with help from Clare Toeniskoetter and Lindsay Garrison. It was edited by Brendan Klinkenberg and Michael Benoist, contains original music by Marion Lozano, Rowan Niemisto, Dan Powell, Pat McCusker, and Will Reid, and was engineered by Chris Wood. Our theme music is by Jim Brunberg and Ben Landsverk of Wonderly.

[THEME MUSIC]

That’s it for “The Daily.” I’m Katrin Bennhold. See you on Monday.

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• April 14, 2024   •   46:17 The Sunday Read: ‘What I Saw Working at The National Enquirer During Donald Trump’s Rise’
• April 12, 2024   •   34:23 How One Family Lost $900,000 in a Timeshare Scam
• April 11, 2024   •   28:39 The Staggering Success of Trump’s Trial Delay Tactics
• April 10, 2024   •   22:49 Trump’s Abortion Dilemma
• April 9, 2024   •   30:48 How Tesla Planted the Seeds for Its Own Potential Downfall
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Hosted by Katrin Bennhold

Produced by Asthaa Chaturvedi and Will Reid

With Clare Toeniskoetter and Lynsea Garrison

Edited by Brendan Klinkenberg and Michael Benoist

Original music by Marion Lozano ,  Rowan Niemisto ,  Dan Powell ,  Pat McCusker and Will Reid

Engineered by Chris Wood

Listen and follow The Daily Apple Podcasts | Spotify | Amazon Music

Warning: this episode contains descriptions of violence.

A massive scam targeting older Americans who own timeshare properties has resulted in hundreds of millions of dollars sent to Mexico.

Maria Abi-Habib, an investigative correspondent for The Times, tells the story of a victim who lost everything, and of the criminal group making the scam calls — Jalisco New Generation, one of Mexico’s most violent cartels.

On today’s episode

Maria Abi-Habib , an investigative correspondent for The New York Times based in Mexico City.

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How a brutal Mexican drug cartel came to target seniors and their timeshares .

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The Daily is made by Rachel Quester, Lynsea Garrison, Clare Toeniskoetter, Paige Cowett, Michael Simon Johnson, Brad Fisher, Chris Wood, Jessica Cheung, Stella Tan, Alexandra Leigh Young, Lisa Chow, Eric Krupke, Marc Georges, Luke Vander Ploeg, M.J. Davis Lin, Dan Powell, Sydney Harper, Mike Benoist, Liz O. Baylen, Asthaa Chaturvedi, Rachelle Bonja, Diana Nguyen, Marion Lozano, Corey Schreppel, Rob Szypko, Elisheba Ittoop, Mooj Zadie, Patricia Willens, Rowan Niemisto, Jody Becker, Rikki Novetsky, John Ketchum, Nina Feldman, Will Reid, Carlos Prieto, Ben Calhoun, Susan Lee, Lexie Diao, Mary Wilson, Alex Stern, Dan Farrell, Sophia Lanman, Shannon Lin, Diane Wong, Devon Taylor, Alyssa Moxley, Summer Thomad, Olivia Natt, Daniel Ramirez and Brendan Klinkenberg.

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Katrin Bennhold is the Berlin bureau chief. A former Nieman fellow at Harvard University, she previously reported from London and Paris, covering a range of topics from the rise of populism to gender. More about Katrin Bennhold

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