Many reasons can propel you into selling your business. Maybe you want to retire, and your family is not interested in running the business anymore. Or perhaps it’s not working the way you wanted it to, and it’s time for a new manager with refreshing ideas and capital to scale the business. Whatever your reasons are, you need to know that selling a business is no easy task. It requires strategic planning from an earlier stage as it could even take a year to get the most suitable buyer.
It is time to develop a well-thought-out plan so that you can achieve the best deal in the end. Locating potential business buyers for your business comes from prepping and positioning your business for a sale in the best way possible. The basic strategies remain the same no matter what kind of a business it is. Here are five critical things to do.
Do a business valuation.
As a business owner, only you know the efforts and value you have put into your business. That is in no doubt. However, it is good to get a professional business valuation from an outside source with objectivity. A business valuation gives you an idea of what you can expect from the sale of your business. A professional business evaluation also guides you on vital market factors such as your business market position, strengths, weaknesses, financial situation, etc. Look for an experienced business broker with knowledge of the current national data to perform the evaluation.
Understand the profitability of your business
Any potential buyer of your business is interested in the profits they will gain if they invest in the business. Many privately run companies have many nonoperational expenses. For example, you may be paying your automobile lease with your business profits. Ensure you have the documents to support such costs. Again there may be expenses you have incurred probably in the last couple of years that should be excluded in a buyer’s evaluation of recurring cash flow. These records help you understand the profitability of your business which will be important in attracting buyers.
Make your business attractive to potential buyers.
You need to make your business attractive to buyers. You can do that by developing customers/business relationships that will attract potential buyers. You should also build a group of loyal customers who pay on time. That means you have to strategically plan for quite sometime before you announce the sale of your business. It can be disruptive because some employees may learn that you are selling the business and start resigning or looking for new jobs. So, run your business as usual to position it in the best light to interested buyers.
Organize your legal paperwork and financial records
Check all the business legal paperwork such as leasing agreements, customer/business contracts, supplier contracts, permits, incorporation papers, etc. Download all the important contract templates from LegalTemplates, to save time on forming a new contract every time it is necessary. Also, consult with your financial advisor or accountant and have all your financial and tax records in order.
Understand your reasons for the sale
Every potential buyer will be interested to know why you are selling the business. Understand them and be ready to articulate them to the buyer without hesitation.
A key takeaway
Position your business/company in a good light to make an excellent first impression. Ensure that when a potential buyer visits your business, they see order and not chaos.