10 tips for preparing your business to sell
- Author Don Milne
- Published February 21, 2019
- Word count 737
If selling your business is your intention – whether immediately or in the next 2 or even 5 years – there are several things you can start putting into place to ensure it’s ready. Then once the business (and you) are ready and prepped to sell, you’ll stand a better chance of securing a good deal. Here’s a quick guide on how to prepare your business for sale.
Shift your focus from the top line
Yes, the top line or gross revenue can offer the biggest wow factor, but that’s not what will impress potential buyers. Buyers are more interested in the net revenue and profit because that will tell them if the business is worth their investment. Do everything in your power to grow you net income and profit as this is what the business will be valued on.
Get your books in order
It’s likely that once an individual or company starts looking into buying your business, they’ll want to perform an audit. So, as soon as you start preparing to sell, start to consider engaging a reputable auditing firm. Not only will it tighten up your finances, it will show the buyer that you’re an honest and well-run business; giving them confidence in your numbers.
Separate business from personal – and start paying yourself
When you run your own business, it’s easy (and common) to not pay yourself as an employee and just combine personal and business assets. This is fine all the while you’re intending to stay at the helm, but as soon as you start to prepare for selling you should try and separate your personal assets from your business and make sure you’re earning a comfortable salary. This will benefit both you and the buyer as, not only will you enjoy a sense of security, the buyer will see how lucrative buying the business will be for them.
Focus on sales and growth
When running your business with the intention to keep it, depending on the nature of that business, it can benefit to focus more on retention. However, when planning and preparing to sell it makes more strategic sense to focus on growth because any buyer will look at the growth potential of your business when making their decision.
Seek professional help and guidance
Preparing and managing the sale of a business is a complex state of affairs. That’s why it can help to consultant independent expert for support and guidance in preparing your business for sale. They can also help you to reach out when you’re ready to put your business on the market, finding potential buyers, setting up meetings, and assisting with negotiations.
Be completely honest with yourself
Look at your business and the way it’s run, look at your expenses and resource allocation. Is everything working to the best of the business potential? Are there any expenses that can be cut to improve your profit margins? Do you need to hire more staff or can you use your current staff to meet growing client needs? Is your resource allocated correctly or could your move it around to get better results? When preparing to sell, you need to take a long, hard look and you may have to make some tough decisions for the good of the business.
Address any potential concerns
You don’t want any surprises to arise in the middle of the buying process, so it’s best to identify any potential fires now. And then, once you’ve put them out, own them and be open and honest when a potential buyer comes knocking. Everyone makes mistakes, it’s normal for conflicts to happen, and as long as you’re upfront about it all nothing should affect the buying process.
Make sure you’re creating a good first impression
So, you’ve got your books in order, your management team is strong, and your staff are happy, but what does your appearance say? Appearances are everything and a business is nothing different. Is your location clean and tidy? Is your equipment all in running order? What do your outdoor areas look like?
Secret squirrel mode
If customers, clients, or staff get wind of your intention to sell, you could create a sense of panic and start losing good people. That’s why it’s best to keep any notion of an impending sale very, very quiet.
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