A few years ago, a business owner named Don was ready to sell his company. Instead of taking him as a client, we asked him to take the "Sell Test." Don failed. He was shocked. He wanted to know what it meant.

Asking a business owner to take the "Sell Test" means making sure the proposed transaction will ultimately accomplish the business owner's goals.

Let's look at the "Sell Test" one question at a time.

1:  Are You Selling for the Right Reasons? We worked with Don to help him truly understand why he wanted to sell and what other options were available to him. Don realized that he may have been motivated to sell because he was burned out rather than because it was a good business move.

2:  Would a Sale Meet Your Personal and Business goals? Specifically would it:

(a) Allow you to leave your business on your terms? Don was not sure exactly what he wanted to do with the rest of his life after he sold the business.  This often is a cause for seller's remorse after a transaction closes.

(b) Provide financial security to you and your family? Don wasn't sure how much he actually needed to ensure his financial security.  He needed to work with a financial advisor to get a handle on this important issue.

(c) Achieve your other legacy objectives (such as maintaining the name of the company, protecting the jobs of key employees, or keeping the business in town).

3:  What is Your Business Worth? At the very least, Don needed to have a ball park idea of what his business was worth.  Don was using out-dated and inaccurate rules of thumb to value his business so his value expecations were way off.

4:  Is the Company Ready for Sale? Don's company wasn't ready for sale. He needed to work on a few things to ensure his company was saleable before putting it on the market. Recommendations included simple things like updating his marketing materials and website and improving his financial reporting systems.

5:  Is Now the Best Time to Sell the Company? Don needed to know if now was the right time to sell his company based on market conditions, the overall economy, and the company's specific situation.

6:  Have You Done Everything Possible to Maximize the Proceeds You Receive from a Sale? Don had not done any tax planning. He still needed to talk with a tax advisor to minimize the capital gains taxes and estate taxes that would result from the sale.

Take the "Sell Test" before you make any important decisions about selling your business. At the very least it will confirm that you are making the right decision. On the other hand, it could save you from making a mistake you might regret for a long time to come.