It’s best to start planning for this as early as possible. Business owners often think about selling during a downward trend though the best time to sell is when your business is in good shape. If you plan ahead, you’ll be ready when the time comes.
Decide whether you’ll continue to help the business through its transition. Consider whether you need to sell by a certain date, for a minimum price or prefer to wait for a higher price.
It’s essential to get expert advice from your lawyer, accountant and broker. Talk to your lawyer as they can protect any trade secrets by writing up a confidentiality agreement. This will help safeguard your intellectual property (IP).
Your accountant can help calculate your business’s goodwill, give advice to determine the optimal price to sell, and make sure that your financial records are organized. By providing accurate sales figures, you’ll reduce the element of risk for potential buyers.
Hiring a broker will assist to smooth negotiations with prospective buyers, can help keep your identity confidential so suppliers and customers don’t get concerned, and will allow you to focus on running your business while they look for buyers.
Ask your experts to note any weaknesses they see in your business. Address any problems by doing your own due diligence before offering your business for sale.
Think about what kind of person would be interested in your business. Determine if you’ll be able to find them locally or if you should advertise elsewhere.
A potential buyer needs correct and comprehensive information to make an informed decision on whether your business is suitable for them. You can help this process by understanding who your potential buyer is, and what they may want to know about your business.
Potential buyers will want to know:
It’s likely that potential buyers will want to view at least three years of financial statements, including income statements and balance sheets. They’ll be buying into your business’s profitability, so you’ll need to identify any non-operating expenses like interest.
Potential buyers are searching for businesses that are in top working order. It’s critical you work through a process of getting every aspect of your business in the best possible shape to attract the right buyer. Make sure you:
If you run a service business, speak to your most valued customers about what they want improved and what they like about your business. Don’t assume you already know. Use this information to enhance certain features of service to your customers. Keeping them content may be a useful bargaining tool with potential buyers.
Once you’ve received expert advice and prepared your business for sale, it’s essential to define your objectives clearly. Consider the following:
Clarifying these objectives will help guide your decisions for a smoother selling process.
Each potential buyer will have some key conditions they need met.
Make a great first impression when buyers come to see your business. Your premises should be immaculate and orderly. Friendly staff and lively activity will help project a place of efficient work.
If a potential buyer asks for more information, make it available quickly and guarantee its accuracy. Demonstrating how sharp your internal processes are will show buyers that your business is functioning capably.
One question a buyer might ask is your reason for selling, so make sure you give them an honest response that doesn’t suggest the need for urgency.
They’ll probably also be interested in your relationships with customers and suppliers. Buyers will be aware that there’s a risk of customers leaving after you sell. You’ll need to reassure them that your customers are loyal to the business rather than just to you.
Buyers prefer low risk with high reward when they consider investing in a small business. Ultimately, they will look for good cash flow and solid systems with the potential for further growth. They want to make money so get your financial position in excellent shape.