How to Get Your Business Ready to Sell
As a business owner, you know how much hard work goes into running a business. When the time comes to sell a business, you want to make sure you’re following the right steps to get the best possible price at the end of it. Preparing your business for sale is one of the most important things you will ever do – the more effort you put into it, the higher the value of your company.
We’ve put together five important steps to preparing your business for sale that could make all the difference when it comes to finding buyers.
1. Timing of the Sale
In real estate, location is everything. In selling your business, timing is everything. While you may be eager to sell your business right away, careful planning and timing can have a positive impact on your sale price. It pays to prepare your business for sale well in advance before you actually decide to put it on the market.
Plan to allow at least six months to a year to prepare your business for sale. Diligent preparation, like having at least three years of financial records available for potential buyers to examine, will help you show your business in the best light.
2. Tidy Up Documents
One of the early steps to getting your business ready to sell is having all the documents organised and ready. Make sure that all your documentation is in order, from the finances, building documents, suppliers' details, employee details, and anything else the new buyer may need. Buyers are often interested in the finances of the last 3 to 5 years as a way to determine if the business is worth buying. It’s important they see a well-organised book and records, so be sure to dig up any relevant paperwork and make copies, ready to present them to potential buyers, valuators and lenders as the sale process proceeds.
3. Get a Business Appraisal or Valuation
When you start considering putting your business up for sale, knowing its true worth is essential. Determining the worth of your business early on can help you make sure you don't price it too high or too low. Take the time to comb through the areas and expenses of your business and build a detailed explanation of the business's worth using comparable reports. Doing some market research and finding out what other businesses similar to yours have sold recently, can help figure out the value range of your business. Once you know the value of your business, you’ll have the opportunity to increase its worth before listing. It’s better to have a professional business broker conduct a proper business appraisal on your business and help bring credibility to the business listing price.
Often a trusted business broker can provide a realistic estimate of the market value of your business. They would take a look at the industry type and benchmark data and give you an approximate range of the valuation of your business. They will also help you identify business threats and opportunities that define value. The valuation will consider everything from financial records, reliability of supply chains and the potential growth of the business. This will help give you a good idea of when and if you should sell the business now.
4. Showcasing the Business
What’s important to you and what’s of value to a potential buyer won’t necessarily be the same. A buyer needs to be able to see themselves taking over your business and be successful in it. Take the time to figure out and showcase the real value of your business. Your key values could be the history of your business, achievements, community impact, loyal customers and any detail that highlights the attractiveness of your business.
5. Reach out to Business Brokers
The most important step during the sale of your business is finding a qualified business broker. Getting a business ready to sell is incredibly time-consuming and might affect day-to-day business operations, so reaching out to a business broker in the early stages can help tremendously. They can make the process of selling your business less stressful and arm you with the right advice and legal requirements. In addition to helping free up time for you to keep the business up and running, a qualified business broker will also allow you to carry out the sale more discreetly, and you will have a better chance of keeping the sale confidential between you and your customers.
Having a business broker to help get your business ready for sale can really ease the selling journey and they can draw up a timeline of how the next few months will look for you and your business. A dedicated business broker will also help you understand the fair market price for your business and advise you on how to maximise this value. They can work with your accountant, business partners and your key staff to ensure everyone is on the same page.
Business brokers frequently keep a pool of buyers who are looking for a specific sort of business, and they may be able to connect you with business buyers who are looking to buy exactly what you’re selling.
Having some preparation before you sell your business can go a long way.