The process of selling a business needs to start well before it is on the market. The main reason for this is that the business needs to be prepared for sale. A good preparation results in a better overall result for the seller, including a better sale price and a quicker transaction.
The following are the main things a seller needs to consider in order to get their business ready for sale:
Prepare an initial exit strategy in writing so that you have a plan. Include your timeframes, costs and objectives in this strategy so that you know what you are aiming for.
Get a current market value appraisal for your business. This is the best indicator of what sale price you can expect to get with your business in its current operational state.
Improve any aspects of the business that would make it more marketable based on the feedback of the appraisal.
Improve the bottom line by cutting costs that are unnecessary, including those of a long term nature.
Clean the premises and organize it efficiently. This is the time to paint the walls and carry out the repairs that you have been avoiding
Make the asset register current and up to date and spruce up the plant, equipment and machinery.
Optimize stock levels and use as much old and dead stock as possible. This will reduce your purchases and increase your book profits.
Have a good, objective look at your brand. How can it be improved? What is the digital footprint and how can it be enhanced?
If you haven’t already done so, this is the time to solicit your customers for reviews and recommendations to add to your marketing material and display in the physical premises.
Settle any outstanding matters such as legal, tax and compliance issues. Buyers will be turned off by these.
Get a good understanding of all business liabilities, such as staff leaves, so that you know how much you will need to put aside to cover these at or before settlement.
Examine the roles played by your staff, particularly key employees. What would happen if they got cold feet and left during the sale process? How can you protect the value of your investment?
Maintain as much confidentiality as possible as you go through this process in order to ensure your perceived business value is not eroded. Pay particular attention to competitors, as they can use the news of a business sale to their advantage.
Profile your ideal buyer and note down any existing contacts who be interested in purchasing so that they can be made aware of the sale at the right time.
Get a good team around you, including your accountant, legal representative, banker and broker. They are all key components for the sale if your business.
Work on the business and not on the sale of the business. If your business figures take a nosedive because you are not focusing on the operation of your business, then your business value will also nosedive. This is one of the main reasons it is critically important to work with a business broker who is able to handle all aspects of the sale, while you handle all aspects of your business.
Contact Us if you would like further assistance in getting your business sale ready. We are able to provide you with a FREE Business Value Appraisal and FREE Advice from a volunteer broker.