Ready to Sell Your Business? 8 Simple Steps to Sell & Profit!
As a small business owner, you’ve poured your heart and soul into chasing your dream. You’ve built your business from the ground up and brought your entrepreneurial vision to life.
As in all walks of life, there are different stages and divergent paths. Perhaps you’re heading towards retirement or now ready to make that move to a new locale? Or maybe you’re just ready to start a new adventure and try a new business dream!
Or perhaps you’ve given your business your all and now it’s simply time for something new? No matter what your circumstances, being prepared is the secret to setting yourself up for the transition from business owner to successful seller.
When you’re getting ready to sell your business, it’s wise to follow a plan that prepares you for the best possible outcome. That means finding the right buyer – and the right price too!
Key Steps to Exiting Your Business with Ease
1. Ask the tough questions. Clarify your ideal outcomes by asking yourself some hard questions. Do you have a timeframe in mind to sell? Are you after a specific price? Do you want to stay on in the business for a while? These are all ideal starting points for how you’ll approach the sale process. Know what’s flexible and what isn’t, so that you can move quickly when the opportunity presents itself.
2. Consider the structure of the business. The right business structure sets you up for success and helps you set an appropriate valuation. Beyond the sale price, there are important details like terms and conditions, key sale terms, and tax implications. Also consider assets like buildings and equipment, to help strike a fair deal. These are all moves that can help maximise your position. Although selling a business can take up to 12 months, having the right structure in place can accelerate the final sale.
3. Think about your customers and staff. Even though you’re ready for change, your customers and employees may not be! Consider their needs and how they factor into the sale to ensure you select a buyer that aligns with your future vision of the business. This also assures staff and customers they can still rely on the business, which can help increase its value.
4. Get the right advice. There’s a team of experts behind every business sale. From your financial advisor to your lawyer to your all-important business broker, look for specialists who can share the load so you can keep running your business throughout the sale period. Seek out professionals who can offer advice on increasing your valuation, boosting credibility, and setting a realistic price. They can also explain sales strategies ( such as private versus public) and how to expand your reach to find more potential buyers.
5. Do your market research. Positioning your business for the sale helps you understand the competitive landscape, market position, and value in your customers’ eyes – which in turn should translate into value for your buyer. This includes planning on when to take the business to the market, how to do it, and who your targets are – and where they hang out. Strategic positioning is all about doing research to increase the probability of a sale.
6. Operational excellence is meaningful. Buyers will see more value if you have robust systems and accurate procedures in place. Update your accounting systems, KPIs, customer management systems, and operating procedures. Effective systems demonstrate that the business can operate without you, while operational performance is the synergy between various company units to produce greater collaborative output. These sorts of measures are essential if you want to generate a sale.
7. Numbers don’t lie. Buyers want assurances that your business has a solid financial history and is growing into a sustainable future. Show stable cash flows, make wise capital expenditures, use depreciation where necessary, make allowances for bad debt or old stock, and liquidate underused assets. Also, look at inventory management and tight credit control to improve working capital.
8. Reduce risks. Now is the time to transform that agreement from a handshake to a signature on the dotted line While you’re at it, ensure your credit lines and any staff financial incentives are secure. Diversify your customer base to de-risk cash flow and resolve any loose ends like expiring leases.
Effective Marketing Makes the World Go Round
Beyond making it easy for a buyer to step into your well-oiled business machine, you need to find these potential buyers and effectively market your business to them. You can start identifying who these people are by going through lists of competitors, suppliers, customers, staff, and investors. Once you have a solid list, you need to decide on a strategy and make an approach. If things go well, you might need a hand evaluating the offer – or even multiple offers. Some things to consider include the payment terms, ongoing responsibilities or liabilities for you, and your buyer’s vision for the future.
Selling your business can be complicated, but it doesn’t have to be. To position your business for a profitable sale, we always recommend finding a financial advisor you can trust.
At PrimeAdvisory, we’ve got your back. For 15 years, we’ve been helping clients like you through every aspect of business ownership – and we’d love to help you too! With Prime, you can be confident that the best possible outcomes are just around the corner.
We provide financial advice without jargon so that together we can help you structure and position your business for the all-important sale. Using our 21-step Business Owner Guide, our accountants can show you the ropes and take you through the basics of essential business management and successfully preparing for a sale. And once the deal is signed, sealed and delivered… we’ll be delighted to celebrate the milestone with you!