Whether they’re looking to spend precious time with family, have re-evaluated life goals due to the pandemic or are looking to a good retirement, many business owenrs are worried they won’t be able to sell their businesses because of the impact of COVID-19 on the economy. We want to combat those misguided assumptions.
There’s been a marked increase in businesses needing advice on how to sell their business as the pandemic has pushed them to think more pro-actively, as well as to consider de-risking.
Investors with capital are always looking for opportunities, no matter what is happening with the economy. Foreign buyers are also still active in the UK, despite ongoing uncertainty because of Brexit – sterling remains weak, giving UK businesses additional appeal amongst buyers. There’s been a solid demand for businesses that have shown themselves to be ‘COVID-proof’ – in terms of technology, automation and security – but also green shoots for struggling sectors such as hospitality.
However, if you do decide to take forward your plans to sell it needs thorough planning and preparation.
- First and foremost, plan ahead. Where you can, plan two to three years before your hoped-for exit date for the best results. By giving yourself enough time and preparation, you will reduce the likelihood of errors in the process that could be damaging to the success of selling your business.
- Make your business look good. Regardless of what type of business it is, make your ‘shop front’ – your premises and website – as professional as you can. First impressions count when selling a business.
- Find a professional business valuer. Seeking guidance helps you put the steps in place to maximise the value of your business to a buyer.
- Take your foot off the gas once the business is on the market. A decline in sales will scare off potential buyers. You need to show the true potential of your business to entice possible buyers.
- Cut or run-down staff numbers. It is hard to sell a business where there is only one person who has all the knowledge and skills needed to run it. Sale value is not solely based on profits, so retain your key team to give a buyer confidence that it will continue to run smoothly during the transition as they take over.
- Take potential buyer comments personally. Whilst you may well have invested a great deal of your life in the business, please try to leave your feelings at home.
Preparing to exit a franchise might seem like it’s the end but we believe it’s important for franchisees to realise that for whoever is taking over, it’s the beginning. Potential buyers aren’t buying the past of the business, they buy the future and need to be able to see how it will work in their hands and grow in their hands.
Leave no doubt that your business has a viable future with growth opportunities and demonstrate this to potential buyers. Just as important – show the buyer that your involvement in the company hasn’t been focused solely on the immediate performance, but also on the long-term goals. Anyone preparing to exit needs to allow buyers to understand the current position as well as the potential direction of their business.
Consider the buyer
Think about how you’d answer questions that a potential buyer might ask. For example, what is the future potential of your business? What are your major competitors doing that you’re not? Be prepared to share your knowledge and understanding of the opportunities that exist within your sector and how they impact your business.
The time that you choose to sell your business is vital. On one hand, you need to be aware of how your business has grown and what its current vulnerabilities are resulting from this. On the other, you want to ensure that you have built sufficient value in your business to sell it at the best possible price. Business owners, whether serial entrepreneurs or would-be retirees, should always be looking at exiting their investment because this is intelligent business thinking.
During the pandemic, our regional partners have had to adapt their usual day-to-day practices. They’ve had to be more flexible in interactions with potential buyers, offering socially distanced viewings to ensure everyone stays safe. However, even with the impact of COVID-19, there’s still been significant interest from a wide range of buyers.
To find out more about Business Partnership or to get a free business valuation, contact your local office for a confidential conversation.