If you are considering selling your business, it needs to be in great shape.
Consider how your company will look under the microscope of potential buyers. If you see some potential flaws, now is the time to get everything in order so that when it comes time to post the 'for sale' sign, you attract the right buyers and attain the highest price.
Here are our five top tips to get your business in shape to sell:
1. Plan your exit strategy
What are your motivations for selling your business? Business owners who are selling because they want to pursue another opportunity or are seeking a lifestyle change can usually take the time to develop a strategic plan. This includes developing a timeline and goals.
Don’t wait until you are ready to retire or can no longer manage the operations of the business to sell it. Sellers who must sell under distressed conditions such as illness or old age are often taken advantage of by buyers.
2. Get your books in order
When selling a business, it is advisable to get an audit for the past few years. This can be a costly investment, but well worth it to be able to show your business' profit history to potential buyers.
Make sure all taxes are paid and any lawsuits are settled. Continue to keep your records up to date, and don’t let things slide in the final year or months of your leadership.
3. Spring clean
Now is the time to clean up and get your business in order so that you can provide the best first impression to potential buyers.
Spruce up the place by doing any needed repair work and replacing equipment or fixtures. Just as if you were selling a house, you want your business to show well to potential buyers. If it looks neglected, it won’t be appealing.
4. Determine what you are selling
Selling a business not only consists of the physical inventory and space. Your business’ history of profitability, competitive advantage, customer base, growth opportunities, brand loyalty, intellectual property rights, licenses and issued patents are all valuable in the eyes of a potential buyer.
If your business is incorporated, you’ll need to decide whether to sell your business as an asset sale or a share sale. The difference is that the incorporated company is included in a share sale.
5. Know what your business is worth
Consider the current market, economic trends and research what other similar businesses have recently sold for.
It’s important to get a formal valuation from a professional appraiser so that you know what you can offer a potential buyer. A professional business valuation will be regarded more favorably by potential buyers and could prevent legal trouble down the road.
Use this valuation to assist in setting your asking price, but figuring out that formula can be tricky. Set the price too low and you may lose out on opportunities, while setting the price too high could scare away potential buyers.
Selling a business is a lengthy process that requires careful preparation even before it’s time to advertise the sale. By following these tips to make sure your business is ready to sell, you are ensuring a successful start to the search for the perfect buyer.
Ready to sell? You are just 10 minutes away from advertising your business to 1.3 million prospective buyers. Sell your business today.