To get the best price, you need to properly prepare your business for sale. Ideally, you’re beginning this process at least two years in advance of when you plan to take the plunge. But as the saying goes, if you couldn’t start two years ago, the next best time to start is right now. Thankfully we’re here to help – and whatever state your business is in, there are a number of simple steps you can take to optimise your position. And given that the most valuable businesses are normally profitable ones, this preparation goes hand-in-hand with good business practice. You can expect these tips to help you on a day-to-day basis all the way up to handing over the keys to its new owner.
1. Determine the Value of Your Business
It is crucial that in aspects of your preparation, try and see your business through the eyes of the buyer. That goes double for the valuation – you need to take a step back from the blood, sweat and tears you have poured into the venture and ensure your valuation is realistic. You can get a free valuation on Daltons!
Additionally, the valuation of your business should reflect your motivations for selling. If you need to sell quickly, then a lower price is likely to attract more buyers. However, with the right time-frame and preparation, you will be able to hold out for maximum profit.
2. Study the Marketplace
Once you have a valuation, the next step is to compare your price, turn-over, profits, and assets with other listed businesses to see where you stand. Studying the marketplace will help you to get an idea of the competition and discover just how unique your venture is.
When you are preparing to sell your business, it’s a good idea to regularly check up on what the market is doing. This may help you come to a firm decision when the offers come in, whilst also allowing you to negotiate from a knowledgeable position.
3. Bring Your Business up to Scratch
If you want to maximise your profit when selling your business, then it pays to ensure it is running optimally. All those small jobs that have been pushed to the back of the to-do list over the years should be completed to ensure your business is at its best when the time comes.
Preparing to sell your business may also involve making minor improvements that may help to show your business in a better light. Simple things such as new signage, redecorating shops or warehouses, and organising stock rooms or offices will go a long way to creating a good first impression.
4. Organise all Books and Paperwork
As a general rule, three years of financial information should be available to prospective buyers. However, if more is available then all the better. Remember, your books should be presented as professionally as possible, with clarity and accessibility im mind.
You will also want to make sure that any legal paperwork is filed and on hand. Licences and certificates that are crucial to the legal operation of your business should not be left to lapse and should be presented upon request. The same goes for third-party leases and contracts.
5. Consider Employees and Management
If you have employees or even business partners, they will need to be kept in the loop; particularly if they are crucial to the running of your business. Ensure those that need to know, know, and discuss the future of the business openly with members of staff.
If you are the indispensable cog in the machine, then it’s time to start taking yourself out of the equation. No buyer will be interested in buying a business that falls to its knees the moment you or an employee walks out of the door.
6. Keep Your Business Running Smoothly
After all this preparation in order to sell your business, it’s easy to forget the day-to-day success of your venture. However, it’s more important than ever to keep your business ticking over. In fact, you don’t want to give prospective buyers an opportunity to lower their offer during negotiations.
With this in mind, you should be running your business optimally, or even rolling out continuous improvements where possible. This will give you the upper hand when it comes to selling, providing a strong position from which to negotiate.
Preparing to Sell a Business – Last Word
These six tips will get you started as you prepare your business for sale. As previously mentioned, many of the preparations for selling a business form a best-practice for the daily operations of any venture. If your business is healthy you may need to look closely at only a few of the points listed above. Wherever you are on your journey as a business owner, the Daltons Business guide to selling a business can help achieve a quick and profitable sale.
