Preparing Your Business for Sale

People sell businesses for a variety of reasons - retirement, a change in interests, a move, family situations, changes in leadership. Whatever the reason, there are several things you’ll need to do as you approach the sale. Let’s take a look at them.

Determine Which Areas of Your Business Require Pre-Sale Improvement

Buyers of businesses prefer companies that come with high rewards and low risk, so your sale will go much smoother if you make improvements that are conducive to high rewards and low risk. Consider the following areas of your business and how you might improve them:

• Legal issues (clear ownership of assets, transferable leases, up-to-date licenses, zoning issues, etc.)
• Financial conditions (cash flow, up-to-date taxes, professionally prepared financial statements, increasing revenues and profits, etc.)
• Business image (trademarks, branding, signage, high-quality advertising, online publicity and reviews, networks & associations, etc.)
• Business operations and organisation (equipment, staff training, documented systems, a profitable business model, etc.)
• Products (in-demand products, competitive services, packaging and presentation, production process, etc.)
• Clientele (long-term customers, repeat business, etc.)
• Transferability (easy-to-transfer clientele, easy-to-duplicate systems and operations)

Create a Pre-Sale Improvement Plan

Once you know which areas of your business need attention, you can create a pre-sale improvement plan and commit to carrying it out. Prioritise the items on your list and determine which ones need the most time, attention, and resources. Delegate items on the list to people within your organisation who are the most skilled at making your chosen improvements. Create reasonable deadlines for accomplishing the work, and follow up on your deadlines.

Stay Quiet About Your Plans While You Make Your Pre-Sale Improvements

News of an upcoming sale can be unsettling to clients, shareholders, and employees. Share your sale intentions only with key staff who need to know about the sale, and consider using a confidentiality agreement to protect your company from the uncertainty that could occur if word of the possible sale gets out too soon.

Get a Business Valuation

It’s tough to negotiate a sale if you don’t know what your business is worth. That’s why it’s wise to get a business valuation before you ever start entertaining bids. A professional valuation will provide you with lots of good information that can help you through the selling process. It can tell you what your business is worth, what you might net from the sale, what the current market conditions are for businesses like yours, and much more. Your business valuation might also give you helpful insights into improvements you could make to your company’s financial situation, strengths and weaknesses, and market position.

Business services from Altus Financial can help you through the sale of your business.

Contact us to learn more.

Watch my quick video below for 3 quick tips on selling or buying a business.