5 steps to ready your business for sale
Selling a business can seem as daunting as buying a business. But it definitely doesn’t have to be. As long as you have run your business well and keep the growth of your brand in mind, you shouldn’t have a problem finding buyers. However, there are number of things to do before you start talking to potential buyers.
Think about selling before you think about selling
That might technically be an oxymoron but selling a business is neither a quick nor easy endeavour. You ultimately want the highest price at the end of the sale. This means your business strategy should reflect an awareness of what is necessary for the sale years before you even intend to sell. Prepare yourself for a year-long wait once you put it on the market. Because of this, preparation must be the underlying principle behind the very way you manage your business.
This ranges across the full spectrum of your business structure. Finances need to be kept in order as they are key to the sale. Corporate structure is something that relates to businesses of any size and needs to be developed. For businesses small and large this means creating a managerial structure that allows the business to run without you. This allows for a smooth transition to your buyer.
Diversify you customers
This relates to the above point about separating yourself from your business over the long term. Just as you want your business to be manageable by those you employ (such as middle managers, supervisors and higher management), you also want to diversify your customer base so that when you leave, you don’t take your customers with you. In discussions with prospective buyers you need to be able to point to key data and projections that demonstrate the strength of your business’s brand and the processes that signify its management. Even with a strong history of growth and takings, you will struggle to find buyers if they can’t be assured that this success will continue without you.
Prepare your financial documents
As long as you have conducted your business with healthy documentation processes, the compilation of financial documents when selling shouldn’t be a nightmare. Key financial documents to prepare are:
- Profit and Loss statements,
- Tax Returns
- Balance Sheets.
There are a number of other documents you will probably need to prepare. These can include employee agreements, business registration documents (ABN), inventory list, lease agreements, internet domain costs and any other relating contracts and documentation. Once these are in order you are ready for the next step.
Seek financial advice
Receive advice from experts, including your accountant and then a solicitor/conveyancer who specialise in the sale of businesses. They can help you value your property, give you projections of growth that you can provide buyers and give you a clear indication of all those tiny details that are required in the sale of your business.
Go to market
The best thing you can do when marketing your business is to provide potential buyers with as much information as you can. This helps them come to you with a clear idea of what is on offer and feel qualified enough to talk to your broker or yourself about the business. You can still provide considerable detail without giving away your business identity. Consider including information about the history of your business, the size, location, the vision (what sets you apart), your growth and changes, how the business advertises itself.
Treat potential buyers as you would want to be treated. Getting back to them immediately and being clear in your messaging communicates that you have given your business the same degree of attention. Lastly, don’t count your chickens before they hatch. Keep your marketing and advertising up until you have completed your sale and the ink is dry on those signatures.