If you’re thinking about selling your business then there are some important steps you should take to prepare. Spending some time getting the business ready can enhance its value and ensure the sales process goes as smoothly as possible.
How Long Will It Take to Prepare a Business for Sale?
How long you spend on each of these steps will depend on how quickly you need to sell. If you’re preparing to retire in a few years, then you might want to invest in the business now to boost its value or start gradually handing over some of your responsibilities to ensure the business can survive without you. If you need a quicker sale, then you might need to skip some of these steps and focus on marketing your business to the right buyers.
Before You Start
One of the most important steps you can take when preparing to sell your business is to find a reliable broker. A business broker can advise you on all of the following steps, including finding the perfect buyer and managing the sales process. You can contact a broker early on to get advice on when to sell and how to prepare, or wait until later in the process if you prefer. Business Partnership brokers can help you with all aspects of preparation and guide you through the whole sales process.
1. Decide What You Want from the Sale
Knowing your priorities for the sale will help you to achieve your goals, whether this means protecting your employees, completing the sale in a set time period, or reaching a specific sales price. You may need to discuss the sale with your business partner, employees, or family to ensure you’re all on the same page. Your broker can advise you on the best timescales and sales strategies to meet the goals you set.
2. Identify and Manage Any Deal-breakers
Putting your business up for sale means that it will be carefully scrutinised by potential buyers. If there are any outstanding issues such as legal disputes, incomplete company records, late payments, or significant debts, then it is best to resolve these before anyone takes a look. Your broker can help you to identify potential deal-breakers and put you in contact with legal experts or financial advisers if necessary.
3. Put Your Finances in Order
Potential buyers will also want to take a close look at your books and financial forecasts, so it’s essential to ensure these are all clear and complete. You should be ready to answer common questions such as the expected Return on Investment for buyers, your profit margins, and who your key suppliers and customers are. You might need to talk to your accountant or seek financial advice to ensure everything is in order.
4. Get a Valuation
You need to know how much your business is worth in order to make the right decisions about selling. It’s vital to choose an experienced broker who can perform a thorough valuation and advise you on the current market for businesses in your sector and area. The valuation will consider everything from your financial records to the reliability of your supply chains and the potential for growth. It can give you a good idea of what your business is worth if you sell it now.
5. Enhance the Value of Your Business
The valuation can help your broker to identify areas that can be improved to increase the value of your business. It can often be worthwhile investing in new equipment, providing more staff training to make the business less dependent on you, strengthening your supply chains, or taking other steps to increase the expected sales price. How much you can do will depend on what resources are available to you and how much time you have to prepare for the sale.
6. Decide How to Market Your Business
Once your business is ready to impress, you will need to work with a broker to reach out to the right potential buyers. An effective sales strategy will involve preparing detailed sales information, targeting the right types of buyers, and convincing them of the value of your business. You may need to keep some information confidential or find a way to appeal to buyers in a very specific niche. The right approach will ensure that your business will be entrusted to the right person.
7. Prepare the Business for Handover
Finding the right buyer won’t be the end of the sales process. You also need to prepare to hand over the business to them. You will need to pass on all your knowledge and ensure that the business can run without you. Your broker can help you to prepare for the transition to ensure the business keeps running smoothly.
Whatever stage you’re at, from thinking about whether to sell to actively looking for a buyer, having a reliable broker on your side can make a huge difference. Get in touch to find out how Business Partnership can help you to prepare your business for sale.