When it comes to selling your business, preparation is everything. In this guide, we explain how to do this with minimal pain.
The task can seem daunting, but there are a few fairly simple things to consider as you head towards selling your business.
1. Assess your business
This is slightly different to valuing your business and it requires looking at your business carefully to analyse how it works.
Sit down for a few hours and pretend you are one of your customers. Then use that perspective alongside your insider knowledge.
Ask yourself the following questions:
- What do you do well?
- What could you improve on?
- Who are your suppliers?
- How many products/services do you sell annually?
- Are there specific products and services that sell better than others or with greater margins?
A great method for assessing your business is the SWOT analysis, focusing on:
This method provides a reasonably well-rounded look at your business and forces you to confront its weaknesses and vulnerabilities as well as its strengths and potential.
You’ve probably been analysing your business in your own head for years. But if you haven’t, now is the time to put it all down on paper so that prospective buyers can understand the business they may be buying.
2. Share your operations
It’s important to ensure that you, as the business owner, aren’t the only one who knows how things work. Obviously, you need to train your team throughout the business’s life, but as you prepare for sale it becomes even more crucial.
This can include anything from day-to-day operations to the once a month/year operations that you handle. You probably do most of these things without thinking, but the buyer will want to know that if you’re removed from the business that your business will still function.
Create an operation manual – this will ensure that everything you and your team have in their heads is documented.
You should also consider a succession plan so that no-one is left in the dark once you sell.
3. Consolidate the paperwork
As a business owner, you know how much paperwork is involved – from meeting minutes, to financial records, legal documents and general filing, it can be overwhelming – but it’s vital to keep everything in good order.
It’s particularly important to have every financial statement and accounting record from at least the past year, if not the past three years or longer.
Keeping paperwork accessible is not only required to prove that you have a lucrative business that is worth buying; it will also work in your favour to keep the process as smooth as possible throughout.
4. Tend to your business’s appearance
After being in business for a few years, you may notice that your premises are looking run-down.
Just take that extra time to look at your business how a customer or a buyer would. Pay attention to the peeling paint, the squeaky door or the broken tap in the break room.
These might seem insignificant to the running of the business, but they could be the deciding factor when it comes to a new owner buying your business at the asking price.
Most of our first impressions are based on what we see, so going the extra mile and fixing up the small things can’t hurt when it comes to getting your business ready to sell.
It’s the equivalent of buying fresh flowers when you’re trying to sell your house: it spruces the place up and makes it look the best it can.
At the end of the day, your prospective buyers want to be put at ease. They want to know that they’re doing the right thing by buying your business.
Having well documented financials, a succession plan, looked-after premises and a thorough assessment of your business could get a buyer over the line and result in your business selling for the price you wanted.