Deciding to sell your business is a big decision, both in terms of being mentally ready to move on to pastures new, and making sure you get the right deal for you. Years of hard work and dedication come down to this. This guide will look at some of the factors you need to consider, how to navigate the complexities of the sale process, and how you can make sure you do avoid the common pitfalls sellers can fall foul of.
Here’s how you can give yourself the best chance of achieving a smooth and successful transaction.
One of the biggest mistakes business owners make is not preparing adequately for the sale. This involves more than just deciding to sell; it requires detailed planning and organisation. Begin by ensuring your financial records are in order and up to date. Prospective buyers will scrutinise your financial health, and any discrepancies can derail the sale.
Additionally, gather all relevant documents, including contracts, leases, intellectual property records and statutory compliance records. Also question whether preparation needs to extend to your team as well – consider when the best time is to inform them that you’re selling and which team members need to know at which time. It’s vital to maintain operational stability, but there will likely be certain people who need to be involved to help you prepare from an early stage depending on the size of your business.
Overestimating the value of your business is a common pitfall that can lead to prolonged sale processes and frustration. It’s crucial to have a realistic valuation.
Get a free valuation today here from us.
We can help you assess various factors, including market conditions, financial performance, and growth potential. Securing the right deal is difficult, and it all starts by making sure that the asking price is right.
The sale process can be lengthy and demanding, often taking several months to find a buyer. During this period, it’s vital to continue running your business as usual. Neglecting day-to-day operations can lead to a decline in performance, which won’t help you attract potential buyers. Additionally, even after a potential offer for your business is accepted, it’s crucial to maintain focus and keep driving the business forward until the transaction has completed.
Have a think to see if you can delegate any tasks to colleagues whilst you focus on preparing the business for sale and the sale process.
Not all interested parties are suitable buyers. It’s essential to qualify potential buyers to ensure they have the financial capability and genuine interest in acquiring your business. Qualifying potential buyers saves time and money whilst making sure that you can give sufficient attention to the right potential buyers.
You can vet interested parties by requesting proof of funds and holding preliminary discussions to assess their seriousness and capabilities. You need to try and avoid any potential deal falling through down the line, especially if it’s taken months of work to get to that point. Vet potential buyers as early as possible.
Maintaining confidentiality throughout the sale process is crucial. Premature disclosure of your intention to sell can unsettle employees, suppliers, and customers, potentially harming your business. Again this comes back to taking the time to consider when the right time is to advise specific employees, as well as relevant stakeholders – which could be waiting until after the sale in some circumstances.
Negotiation is a critical component of the sale process, alongside making sure you’re actually negotiating with the right buyer in the first place.
It pays to get a professional in your corner as soon as possible to deal with both of these aspects – the search for your ideal buyer and the negotiation. Not to mention the rest of the complexities of the sale process.
Sell your business with Business Partnership.
At Business Partnership we can provide you with a free valuation today.
There’s never any obligation and it’s always confidential. Find out what we could achieve for you and how we can help you every step of the way.
Call our team on 0207 145 0040 or find your local contact here.
Selling your business is a significant milestone. It’s something to celebrate but also something that can be incredibly nerve-wracking – especially if it’s your main nest egg. The key is to prepare as thoroughly as you can before you start negotiations with potential buyers. Then you will be ready to navigate the negotiation process and realise the best possible sale price.
Negotiating the sale price of your business is a journey in itself, but with the right approach, you can maximise your returns and walk away feeling satisfied with the deal and ready for the next chapter of your life.
Here are the key elements that will lead you to success when negotiating your business’ sale price.
Before you start any negotiation, you need to know 2 things:
What you need to sell. See it as a minimum target too set for your sale. The ideal person to do this is a wealth manager.
The value of your business. Understand what a fair price for your business is. This involves conducting a thorough valuation.
You should consider factors such as revenue, assets, intellectual property, market position, and future growth potential. Consulting with an expert at this point usually comes with no obligation and could make a huge difference to what you’re ultimately able to achieve for your company. If you were previously undervaluing your business in your mind this could make you a lot of money. Equally, if you perceived your business was worth more, an accurate valuation will be the catalyst to help you recognise what you need to change to help you get to the valuation that you want. Our Value Builder tool is an ideal place to start.
Once you know your business is worth more than you need you are ready to sell and as knowledge is always power you strengthen your hand by knowing where you need to be when negotiating.
While aiming for the highest possible price is natural, it’s essential to be realistic and flexible to facilitate productive discussions.
Different buyers will have different views on the value of your business to them. Others will have the ability to pay more up front. What we are not saying is to accept a low cash offer, over a higher one paid over time, but opening any negotiation with flexibility helps discussions to progress, you can then decide whether to pursue the offer that results or not.
Also consider factors such as market conditions, industry trends, and the buyer’s financial capabilities and why they NEED to buy you when setting your shortlist of suitors.
Once you get to the negotiation table it’s vital to have a clear understanding about the unique strengths your business has to offer to a buyer (and they may differ between buyers) and sell your value proposition. Think of it as a “Why you list”. Whether that’s a loyal customer base, innovative products or services, proprietary technology, or strong brand reputation, highlighting these assets can serve to justify a higher sale price.
Put yourself in a potential buyer’s shoes ahead of time to anticipate any potential concerns and consider their objectives. Understanding this will give you the insight you need to tailor your negotiation strategy to your benefit, the buyer’s benefit, and for the benefit of the whole deal. Mitigating potential risk matters as much as highlighting potential.
It goes without saying that you want to leverage your strengths and competitive advantages during negotiations to bolster your position, and it’s important to keep this front of mind at all times. Your buyer will want to focus on the issues and you will want to always be on a positive footing rather than defending your position. So acknowledge and allay their concerns, but do not be afraid to blow the trumpet!
Whether it’s multiple interested buyers, a unique market niche, or strong financial performance etc., consistently emphasising your strengths and your position can secure you a better deal.
There’s always going to be most emphasis on the core elements of the deal — the price and the terms, but it’s a good idea to be open-minded and willing to explore creative solutions that benefit both parties. Especially if negotiations stall for whatever reason.
This could include seller financing, considerations around future performance, or structuring the deal in a different way — perhaps for taxation reasons.
NB – Whenever vendor financing is offered, always ask if they have a track record of successful deals and if they will provide a reference – after all they want to borrow your money.
Approaching negotiations like this could help you salvage a deal or get an improved offer.
Negotiating the sale price of your business is a complex process that requires expertise and experience. Get the advice and support that you need — it will pay for itself many times over. And without it, it will likely be difficult to secure a sale at all. Find a partner that can help you.
Negotiations can be prolonged and challenging so mentally things can get quite difficult. It’s important to keep the end in mind and keep going. Ensure you have a trusted and experienced sounding board. Don’t lessen your goal without good reason. Stay the course.
Avoid rushing into hasty decisions or compromising your position out of desperation. Stay focused and maintain open communication with the buyer. Trust and put up with the process to achieve the best possible result.
At Business Partnership we can provide you with a free valuation today.
There’s never any obligation and it’s always confidential. Find out what we could achieve for you and how we can help you every step of the way.
Call our team on 0207 145 0040 or find your local contact here.
Deciding to sell your business is a big step to take and it’s important to gain as much knowledge as possible about the process to make it go as smoothly as possible. In addition to learning more about each aspect of the process yourself, it pays to have the right experts in place to help you from the moment you make the decision to sell. Especially when it comes to the legalities.
Remember, selling your business is not just a transaction – it’s a culmination of your hard work and dedication, so protecting your interests should be a top priority throughout the sale process.
Here are the key legal considerations you need to navigate throughout the process of selling your business.
Be sure to review and update any necessary contracts with customers, suppliers, staff and any other stakeholders that may be relevant before you put your business on the market.
Protect the company’s primary assets – from people to products to property.
Identify anything that could pose a problem during the sale process and seek to resolve it as a matter of urgency.
Before you start sharing sensitive information with prospective buyers, put confidentiality agreements in place. Any breach of confidential information could harm your business’ value and reputation therefore making securing a sale more difficult.
Prepare yourself in advance knowing that buyers will conduct thorough due diligence to assess the value and risks associated with your business. As a seller, you must be prepared to provide accurate and comprehensive information about your company’s financials, operations, legal status, and any potential liabilities. Working closely with experienced advisors can help you navigate this process, identify any potential red flags, and help you address any concerns that a buyer may have.
If your business is governed by a regulatory body make sure that all your obligations are met and you get the appropriate experts in place to ensure the sale remains compliant.
Once you’ve found a suitable buyer, negotiating the terms of the sale and preparing the agreement is a critical step in finalising the deal. This agreement will outline the terms and conditions of the sale, including the purchase price, payment structure, warranties, and indemnities. Again, having the right experts assigned will protect your current and future interests – the relevant legal professionals and an experienced business broker are must-haves.
Depending on the nature of your business, transferring assets and liabilities to the buyer can be complex. From intellectual property rights to outstanding debts, all parties need to carefully consider what’s included in the sale/purchase, how things will be passed over to the buyer, and what will happen in the future in relation to any IP or assets that aren’t included in the original deal.
Once the sale is complete you will likely still have some legal obligations to fulfil. These could include managing the transfer of ownership, notifying relevant authorities, and settling any outstanding liabilities as agreed.
Also, you as an individual may have post-sale commitments, such as providing transitional support to the new owner, taking on a new role either as either an executive or advisor/consultant, or adhering to non-compete agreements.
Business Partnership is a network of business brokers covering the UK. Find your local expert here. We will provide a free valuation of your business and can work with you through every step of the sale process – including being able to recommend legal professionals from our contacts.
There’s never any obligation and discussions are always confidential.
Over the 40 or so years we’ve been selling businesses we have gained an understanding of the importance of targeting the right buyer – not only in terms of maximising value, but also the speed of transaction and protecting the legacy of what you have built. Below are some insights and strategies that we’ve experienced along the way that will help you pinpoint the ideal buyer for your business.
Let’s start with a clear understanding – embarking on the journey of selling your business is a significant decision and one that requires careful planning and strategic execution.
First and foremost, it’s crucial to recognise that not all buyers are created equal. Your business is unique, and finding the right match requires a thoughtful approach.
Let’s explore some key steps to guide you through the process.
Before you start searching for potential buyers, take the time to thoroughly understand your business and its appeal to different buyers. What makes it stand out? What are its strengths and weaknesses? Gain a clear understanding of your value proposition to effectively communicate the appeal of your business to your best potential buyers.
Know your numbers. Know your forecasts and the marketing plan they are built upon. Develop a clear, simple-to-understand winning pitch.
Consider the characteristics of an ideal buyer for your business. Are you looking for an individual entrepreneur, a strategic investor, an investment group, or perhaps a competitor seeking to expand their market share or to take you out? Clearly defining your ideal buyer will help you tailor your business sale marketing to make sure that you’re outlining the right benefits to the right buyer.
It also allows you to focus on what you want for the future of the business and enables you to focus your attention on targeting those who align with your vision and protect that legacy.
Understanding the market landscape is crucial to understanding who you should be targeting as potential buyers for your business. Analyse industry trends, competitor activities, and the overall economic climate. This knowledge equips you with the insight that you need to position your business as an attractive investment opportunity.
We touched on this earlier. Crafting a compelling narrative that highlights the unique value proposition of your business is a critical determining factor in securing a sale. Focus on the positives, develop the potential and paint a positive, captivating vision for the future, backed up with hard data.
Make your business emotionally attractive as well as showcasing it as an all-round practical investment.
Practice your pitch, refine it, and deliver it more effectively each time. Know it off the top of your head and inside out. Think Dragons Den, could you pitch your business effectively?
Seek the guidance of experienced professionals such as business brokers, financial advisors, and legal experts. Their expertise can be invaluable in identifying potential buyers, negotiating deals, and navigating the complex aspects of the sale. This professional support and guidance pays for itself when the right deal is secured as a result.
Confidentiality is paramount when selling a business. The premature disclosure of your intention to sell can lead to uncertainty among employees, customers, and suppliers. Are you protected before you tell trade competitors? Incorrect disclosure can negatively impact the value, so work closely with your advisors to implement a robust confidentiality plan that safeguards sensitive information until the appropriate time.
Building relationships within your industry can open doors to potential buyers. Becoming well acquainted with competitors can even lead to huge future opportunity.
Attend industry events, network with key players, be seen and heard online, and be part of all the important associations related to your business sector. Being seen as a thought leader attracts buyers and adds value. Often a personal connection can often be the catalyst that leads to a successful business transaction.
Of course, if you haven’t looked to do this to date and you’re looking for a quick exit find a broker with these connections instead.
A competitive sale (sealed bid) process creates value, but also be wary of buyers who want to have exclusivity or access to sensitive data before a deal has been agreed – do not give them that advantage.
Ultimately, finding the right buyer can take time, and then there are the negotiations and due diligence processes that follow. The journey will likely have its ups and downs so stay focused on the end goal with patience in mind. Be willing to adapt your strategy if it becomes evident that you need to in order to secure the right exit.
At Business Partnership we have over 10 regional offices throughout the UK, each with a local expert on hand to provide you with a free valuation and offer up advice. We can take all this work off your hands whilst securing you the sale and the financial future that you want.
There’s never any obligation and everything is confidential.
Call our team on 0207 145 0040 or find your local contact here.
The term ‘memo of sale’ may sound familiar to anyone who’s bought or sold a property. When it comes to the sale of a business the same document is most commonly referred to as Sales Particulars or Information Memorandum.
A Memo of Sale, Sales Particulars of Information Memorandum for Business Transactions
This is an initial marketing document that’s released in order to generate interest in a business. In other words, it comes out when you decide to sell and long before any sale is agreed.
This is a document that contains all the basic information about a company, whilst steering away from anything that would identify the business. It’s designed to give a potential buyer enough information to let them decide whether they wish to find out more. It does however provide sufficient detail to enable an assessment of the wellbeing of the business.
What Should Sales Particulars Include?
Whatever name you use, these documents should present a short summary of the business being sold, including what it does, together with staff numbers, premises, turnover and profit. This is followed by an overview, explaining why the business is a good investment and what’s included in the sale. There’s also a brief description of the products and services offered, how they benefit the customer, and the extent to which the business is viable.
Financial Performance
It should provide detail about the preferred sale structure, along with key financial figures such as asset value, profit, debt, and cash flow, together with any unique selling points.
There should be an explanation of the staff and management structure, as well as the seller’s role in the business. But take care not to provide information that could identify the business, such as revealing personal names of staff members.
Creating these documents gives no access to a business’s accounts, but usually gives headline figures from the last three years, including turnover, gross profit and adjusted net earnings. It also aims to forecast the revenue for the following year, and any potential for growth and expansion. An overview of property liabilities such as sight leases and rents is also useful.
Reasons or Selling
No one wants to buy a business that’s on its way out, so a memo of sale, sales particulars or information memorandum gives you an opportunity to explain your motivations. If you plan to start another project, it’s best to explain what that is. A buyer will always be suspicious that you’re selling a dud or that you aim to set up in competition and saddle them with debts.
Business Partnership
For help composing your sales documentation, contact Business Partnership. We’ve been helping clients buy and sell businesses for thirty years, and we can help you too.
(Originally posted 2018. Updated 2024)
Selling a business is a complex venture that involves several considerations. The sale also requires a lot of time and effort, and whether your business profits will rely on you establishing a good reason for the sale, planning the timing of the sale and the strength of the business’s operation. In this blog, we advise on how business owners can build a solid plan and make negotiations as successful as possible.
What are your reasons for wanting to sell? This is the first question a buyer will ask you. Of course, there are many reasons for a business owner to want to sell their company. Whether you are looking to start a new venture, want to relocate, or it’s time to retire, it’s important that you communicate your purpose to prospects.
As the saying goes, if you fail to prepare, prepare to fail. And the sooner you start preparing for your sale, the better. Early preparation will put you in the best possible position when it comes to negotiating by allowing you to improve your financial records, business structure, and customer base to make the business more profitable. Remember, your business will be attractive to buyers if it has increasing profits, consistent income figures or a strong customer base. Use this time to work at getting these attributes in place ahead of your sale.
Before a sale, it is vital to determine your business’s worth. This way, you avoid pricing it too high or too low. This means working with a business broker and accountant to establish an accurate profit before personal expenses . Planning for an exit may mean that rather than trying to reduce your net profit in order to pay less tax, perhaps by making large pension contributions, you leave the cash in the business to demonstrate a higher level of profitability.
Selling a business independently allows you to avoid paying a broker’s commission. However, if you are still an integral part of the day-to-day operations of your company, spending your time trying to get the most out of your sale is simply impossible. A broker will help free up time for you to keep the business up and running and allow you to keep the sale quiet whilst also getting the best deal. A good broker will offer a secure online portal so you can always monitor progress and feedback to ensure you are never out of the loop.
When selling your business, it is important to prepare your documents ahead of time. We recommend gathering your tax returns and financial statements dating back three to four years and reviewing them with an accountant. If you saw a significant drop in turnover during the pandemic, you may need to go back further to demonstrate previous trends and subsequent recovery. Also, start putting together a list of all the invaluable equipment you are selling with the business. Similarly, you will want another list of contacts related to sales transactions and supplies, as these will add value to your sale. If you can, dig up any relevant paperwork, such as your current lease and create copies ready to distribute once you have financially qualified prospects.
Create an information pack which gives an overview of how you run your business and include an up-to-date operating manual. If a prospect wants to view the business’s premises, ensure it is presentable. For example, if some of the equipment in your workplace is broken or run down, you should fix or replace it before the visit.
Due to the challenges of finding a buyer, a business sale can take time. The average timescale is usually around nine to twelve months. So, once you eventually find two to three prospective buyers to safeguard you in case one deal falls through, it becomes important to keep the process moving.
Do this by keeping in touch with your potential buyers. Also, determine if your potential buyer is pre-qualified for financing before giving out information about your business. If you plan to finance the sale, work out the details with an accountant or lawyer to reach an agreement with the buyer.
This is the time to stand firm on the price you set out to get for your business. Of course, you can be flexible, but stay as close to your desired figure as possible. Then put any agreements in writing. It should be your priority to ensure your potential buyer signs a nondisclosure or confidentiality agreement to protect your information immediately after their first enquiry comes in.
Ideally, you should be speaking with your financial advisor before the sale completes to begin to understand the options you have available with the lump sum you are going to receive. Work with them creating a plan outlining your financial goals and learning about the tax consequences of different investment strategies. Doing this will allow you to see the long-term benefits, such as using the money to get out of debt or saving for retirement.
Using these tips, you should be able to better understand the selling process and find potential buyers or prospective clients to ensure you get the best price for your business. For more advice on buying or selling a business, please get in touch on 0207 1450 040 or enquiry@business-partnership.com(Opens new window).
If the past few years have proved anything, circumstances can change at the drop of a hat when you own a business. Preparing for foreseeable expenses such as quarterly VAT bills, or corporation tax can be accounted for in the business plan. Unforeseen situations, like the pandemic, Brexit, war or wholesale shortages can leave your businesses with serious long-term cash-flow issues, which ultimately forces some business owners to sell. So, here is how to sell a business that has started to fail due to unforeseen circumstances rather than historically poor performance.
Accepting that your business has started to fail is always difficult, especially when things go wrong that are out of your control. You will have thrown your full weight behind ideas and strategies to turn things around, but, unfortunately, nothing has been able to pull you back from the brink, and now there is no option other than to sell. There is, however, still hope of getting a reasonable price for your business.
When selling any business, the first thing to do is find its value. When valuing a business that has started to fail, an excellent place to start is to find out the total cost of the business, including any required investment in equipment or refurbishment of the building. This is an entry point for anyone interested in that business. If you own a retail store, for example, the good news is your unit may be more valuable than you realise, as good contracts and well-maintained equipment or other similar assets can help the price of a business.
If the business you are trying to sell is growing and the turnover is increasing but currently unprofitable, you will need to provide some forecasts to show that the future is looking better. Suppose you are facing temporary issues, such as roadworks which reduced footfall to the business but is expected to recover to previous profit levels soon. In that case, you might take a 15 per cent discount from your valuation. You will then be expected to provide historical accounts and fully explain the situation to give the buyer a full understanding of the circumstances. If you can, we recommend researching your industry and finding out what other struggling businesses have sold for.
To ensure you succeed in negotiating the sale of your failing business and get the very best deal, it is crucial to have all the necessary skills required to close your sale. Selling a business is a process that takes finesse and sensitivity, as well as grit.
Despite you being on the back foot when selling a failing business, try not to let on. First, we recommend you set out clear negotiating goals for selling your business to help you answer critical questions and guide your negotiations when selling. Then put together a negotiation strategy. By being proactive and planning a strategy, you will stay ahead of the curve. Also, when in communication with a buyer, despite the fact that you need to sell, make it clear you are willing to walk away from a deal if it is not up to scratch. As well as this, always try to lead the discussions. This way, you will be in the driver’s seat throughout the sales process.
It is also crucial to ensure you know your numbers and everything about your accounts. Have you ever seen Dragons’ Den when the person pitching cannot remember their figures? Never be that person. A prospective buyer usually requests to see records of three years’ worth of trading, so even if it’s a while off selling, make sure your accountant can advise on how best to present statements. Items of interest could be changes in profits, a consistent but varied client base, and regular revenue growth.
Finally, when it comes to selling your business, believe in yourself! Your business has not started failing because you are a bad owner; it started failing because of events no one could predict. If you are not upbeat, positive and, most importantly, passionate about your business, it might be more difficult to sell. Keep in mind all your business’s best assets and ask yourself what would interest your prospective buyer.
There is a lot more to the art of selling a business that has started to fail due to unforeseen circumstances than just hanging a price tag on it and hoping for the best. Following these tips, you should have no problem maximising the sale price. For more advice on buying or selling a business, please get in touch with your nearest office.
Despite many retail businesses suffering throughout the pandemic, is 2022 shaping up to be a great year to sell a retail business? With buyer demand growing, sellers are in an ideal position to negotiate with the many entrepreneurs seeking business ownership.
According to BizBuySell’s Insight Report, business for sale transactions experienced steady growth in the first quarter of 2022, rising 24% over the previous year and just 3.7% shy of Q1 2019, long before COVID-19 shocked the market1. Median sale prices have also continued to sit at record levels, up 6% over the previous year to $345,0001. These statistics, which come from the USA, prove that not only is there a demand to sell, but buyers are willing to pay a premium for businesses that are performing well. We expect a similar movement to take place in the UK over the next couple of years.
So, while many businesses in retail experienced a torrid time over the past two years, some businesses, like zero waste shops, pharmacies or other health stores, have proved invaluable. Therefore, these businesses have become the most sought-after among buyers in this market because they are less likely to be impacted by economic uncertainty. The retail businesses that seem to be performing well in sales often share three common traits:
It is no secret that with the Great Resignation, more individuals are choosing entrepreneurship over returning to the 9-to-5 job. According to PwC’s Global Workforce Hopes and Fears Survey 2022, one in five workers plan to quit their jobs in 20222 in the pursuit of higher salaries or to start a family-run business. And with all the benefits attached to running your own retail business, like a zero waste shop or a health store, it is easy to understand why the demand for retail businesses is expected to remain strong in 2022.
Zero waste stores are just one example of retail businesses performing exceptionally well in recent times. These businesses are often mainstays in the local community, and capture the ever-growing environmental consciousness of the shopping public. With an increasing number of foods, toiletries, cleaning products and sustainable packaging options they provided a lifeline to many people throughout the pandemic who didn’t want to be in crowded supermarkets. As well as their popular locations and growth potential, these businesses make good levels of turnover and profit, making them the ideal business for first time buyers.
Right now, 2022 has proven itself to be a seller’s market. Over the past two years, many business owners have chosen to wait to sell their businesses. In turn, this has created an imbalance in the market because buyer demand exceeds the supply of available businesses for sale. We can expect median sale prices to continue growing as premium prices are being paid for strong, successful businesses. So, 2022 could be the perfect time to sell your retail business – as the effects of the pandemic fade and more people retire and exit their businesses, the market is expected to become more balanced.
To ensure you succeed in negotiating the sale of your retail business and get the very best deal, it is crucial to have all the necessary skills required to close your sale. Selling a retail business is a process that takes finesse and sensitivity, as well as grit.
If you’re considering putting your retail business on the market, the first step is to carry out a business valuation to calculate the value of your business and determine a starting point for your sale price. At Business Partnership, we recommend you set out clear negotiating goals for selling your business to help you answer critical questions and guide your negotiations when selling. Then put together a negotiation strategy. By being proactive and planning a strategy, you will stay ahead of the curve. Make it clear you are willing to walk away from a deal that isn’t right for you and always try to lead the discussions. This way, you will be in the driver’s seat throughout the sales process.
It is also crucial to ensure you understand and know everything about your accounts. Prospective buyers usually request to see records of three years’ worth of trading, so even if it is a while before you consider selling, make sure your accountant can advise on how best to present statements. Items of interest could be increased profits, a consistent but varied client base, and regular revenue growth.
Finally, when it comes to selling your retail business, believe in yourself! No one will want to buy your business if you are not passionate about it. Keep in mind all your business’s best assets and ask yourself what would be of interest to your prospective buyer. Do not doubt yourself and let the success of the business do the talking.
By following these tips, you should have no problem selling in 2022. For more advice on buying or selling a business, please get in touch with our Regional Partner closest to you.
1BizBuySell, 2022, BizBuySell Insight Report
2 PwC, 2022, Global Workforce Hopes and Fears Survey
This article was originally posted in December 2020 and has been updated to reflect the current market.
Seasonal businesses follow a cycle in which activity peaks at certain times of the year. If you’re thinking about selling, there are a few things to keep in mind to prepare to sell your seasonal business at the proper time and for the highest value.
At Business Partnership, we believe that getting the timing of your business sale right can make a significant difference to the offers you receive, helping you to maximise your profits and sell successfully. Here are the three tips for business owners to consider when selling their seasonal business.
Patience is a virtue when it comes to selling a business because the process can often be long and drawn out. However, this does allow you plenty of time to prepare yourself for the sale. The main advantage of selling a seasonal business is that you can use your off-season to get your business ready. With the prices and demand of a seasonal business likely to peak near the start of your busy season, you should start preparing for the sale ahead of time. In the off-season, focus on maximising the value of your business by investing in essential equipment, tackling any potential dealbreakers, and making sure the business is ready to hand over.
No business can be valued on its performance in the last few months of sales or the averages for the year, so it is essential to have monthly or even weekly sales breakdowns to hand for any interested buyers. A buyer could be parting with a large amount of money, so they need to know how reliable your in-season sales are, how they build to their peak and how quickly they decline. For example, this would be gradual for a campsite. Although, if you sell Christmas trees, this peak and decline will all happen within one month.
When you’re ready to sell your seasonal business, one of the most important things to consider is the timing to ensure you get the maximum sale price. For example, if you are trying to sell a campsite or caravan site business at the end of the main holiday season, a buyer has to take into account that they will have little or no money coming in over the winter and part of the spring the following year. Maintenance and improvement work may also take place in the off-season to minimise disruption during the peak season, and this may affect the sale and value of the business. The ideal time to sell a business such as this is typically at the beginning of a peak season as buyers are more attracted to a profitable and growing business and the seller will achieve a higher price
Of course, there are always exceptions. Buyers are unlikely to choose a business that needs improvements at the start of the peak season as they will miss a season of profits. In this case, selling during the off-season can be more effective. However, it is also worth considering whether you can make the improvements yourself so you can sell for a higher price when business is about to boom.
Always look to diversify and evolve your business. Try to bring in new innovative ideas to boost income throughout the off-season. For example, improving your website, creating content for your blog, growing your social media presence, and finding creative ways to reach potential customers. Then push all these buttons once the season heats up again to help grow your database of contacts. You could brainstorm one-off events, services and products that would sit well in your business and fill the off-season income gaps. For example, if your business traditionally supplies wedding hampers, why not introduce baby hampers, Christmas hampers or summer festival hampers to boost income and, therefore, the value of the business.
When it comes to selling your seasonal business, there is not just one season. A clothing business generally has the four seasons of spring, summer, autumn, and winter where the collections change. Gift card businesses can have multiple seasons, with popular celebrations, such as Valentine’s Day, Mother’s Day, wedding season and Christmas.
By understanding the seasonality of your business and following these tips, you can significantly increase the offers you receive when selling your seasonal business.
For advice on buying or selling a business, please find you local office.
With the pandemic forcing people to consider how and where they work, more businesses are going on the market now than in recent years. So, to ensure you succeed in negotiations and get the very best deal, it is crucial to have all the necessary skills required to close your sale. Selling a business is a process that takes finesse and sensitivity, as well as grit.
Below are five key skills for negotiating the sale of your franchise.
As with anything in life, if you fail to prepare, you may as well prepare to fail. So, setting out clear negotiating goals for selling your business is massively important. By creating a plan, or a set of goals, you will answer critical questions that will guide your negotiations when selling. Think of it like this: if the buyer plans and you do not, who will likely have a better outcome?
To find your negotiation goals, consider the best possible outcome for you. For example, what is your business worth, and what could you sell it for? What’s the cost of a new business and what makes your business re-sale more attractive? It is essential to be honest with yourself at this stage – there is no point in valuing your business at a ridiculous price because it just will not sell. However, you do not want to undersell yourself either. So, establish what you could realistically ask for, and once you have this number in mind, decide on your bottom line. This is the number you will not go below. By doing this, you create a target in your head to aim for.
The final step is to identify a plan B. This is your best alternative to a negotiated agreement. I would recommend getting this in place before you begin serious negotiations because if negotiations fall through, you can still protect yourself, your family and your business.
Once you have ascertained that your buyer is qualified financially to buy your business, it is time to put together a negotiation strategy. This strategy is vital because when you get your negotiation strategy wrong, you can lose the sale instantly. By being proactive and planning a strategy, you will stay ahead of the curve in negotiations.
First off, make it clear that you are always willing to walk. So, do not go and grant a buyer exclusivity at the first meeting. If a buyer knows you need a sale, they have leverage and can squeeze you until there is very little value in a sale for you. But if you are willing to walk and have other options, and a buyer knows it, you start on a more level playing field. Your time is important. If you are getting pressed, communicate to the buyer that you look forward to working with them, but you do not need to.
Next, try to lead the negotiation. Many sellers sit back and wait for the buyer to drive the sales negotiation. But top-performing sales negotiators are almost twice as likely to take the lead. The rest often play catch-up and react instead of leading the negotiation to a successful conclusion. Sellers should lead. They should set the agenda for meetings, go first with offers and ideas, and go first with sharing objectives and concerns.
When looking to sell a business, you must be honest about the condition and potential of your business. However, how you present information will be integral to success. Remember – the more you say, the more you give away. So, whilst everything you say must be truthful, you do not need to say everything. Being too open can leave you with less leverage. And because the initial meeting with potential buyers is key – making a mistake by saying too much at this stage is hard to rectify and will generally result in failure or receiving a lousy offer. There is a real skill at disclosing all salient facts, especially the tricky ones, without losing the attraction of the business for sale.
Picture this: You are selling your business with the aim of moving away in six months to start a new life, but to do this, you must sell the business. Suppose you accidentally share these post-sale plans with your potential buyers. What is preventing them from holding up negotiations until the last minute and offering a reduced price that you may be forced to accept? There is a fine line between reassuring your buyer that you are offering a bona fide opportunity and giving them the upper hand.
Once in negotiation with a buyer, you need to get to know them. Don’t worry, this doesn’t mean becoming their best friend. But understanding your buyer’s needs increases the chances of successful negotiation and will help you leverage a better deal.
When it comes to selling a business, it is rare that you will know your buyer personally. This means that you will not know what they value most, how exacting their standards will be and how easy or challenging they will be during negotiations. So, to gain the upper hand, I recommend asking questions to find out the buyer’s motivation to purchase your business, their readiness, willingness, and ability to transact, and the time frame in which they hope to do the deal. Also, ask if they have prior experiences in the market and what they understand about the market’s trends. The more you know about the buyer, the better you can negotiate.
I suggest asking these questions early in the negotiation when the buyers’ enthusiasm is high. If you leave these questions too late in the process, you may come across as trying to oversell the business and damage negotiations.
Believing in yourself and your business is perhaps the most important thing a seller can do when entering negotiations. Why? Because no one is going to want to buy your business if you are not passionate about it. Keep in mind all your business’s best assets and ask yourself what would be of interest to your prospective buyer. So, do not doubt yourself and let the business’s success do the talking.
There is a lot more to the art of selling a business than hanging a price tag on it and hoping for the best. Work on these five negotiating techniques and you will be well on the way to selling your business.
For advice on buying or selling a business, please get in touch with your closest office for a free and confidential discussion.
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