Key steps in preparing to sell a business:
All businesses are different. However, there are basic steps you can take to prepare for marketing. Do your own research. Make the time to research your market. You know your business better than anyone. Before meeting with a broker, have an understanding of what your business is worth based on your net profit plus any add-backs (your personal expenses drawn from the business such as directors wages, super, car, etc.), your standard industry multiple (generally speaking, the smallest business can achieve between 1 – 2 times annual net profit) and location. If you are unsure what multiple to work from, contact your industry body for assistance in Canberra ACT, Syndey NSW, or anywhere in Australia, or call Andrew from Summit Business Brokers for guidance.
Contact your accountant and solicitor. Not only will they advise on the information they require to start the process of preparing the necessary paperwork to complete a sale, but they will also be an integral intermediary during the sales process and will provide instruction along the way.
Have ALL of your paperwork up to date. Nobody wants to buy a business based on the owner’s word that it is running well and turning a profit. They need to see legitimate figures produced by your accountant. If you have all the paperwork up to date, your chances of a sale are greatly increased.
The sales process of businesses can be frustrating and lengthy. Write up a plan of achievements you want to meet each week, month, year. If you have decided to sell, any improvements will add value and make the sales process smoother. Now is not the time to sit back and let the business run itself; too many people become complacent after deciding to sell. Inspire your team and drive sales; any increase in turnover looks really good on paper.
Presentation of your business will play a key role in determining the result. If your business is looking tired, prospective buyers will see the work in front of them required to resuscitate the business. Now is the time for a spring clean; your customers will appreciate the effort too. Ask some friends to take a look and give an honest assessment of the appeal of the business. Whether you do the work yourself, organize a working bee with friends or hire someone to provide a facelift, small changes will positively impact the result.
When showing your business to potential buyers, be open, honest, and genuine. Providing a smokescreen will not fool anyone and will only turn buyers off.
Be realistic, and you will not sell your business for twice what it is worth, no matter what you may have been told. Go back to point one, do your own research.
- Emotion can be the biggest deterrent to a successful business sale. Whether you have built your business from start-up, purchased an established business or inherited a business from family or friends, there will be an emotional attachment that can be difficult to break. It is integral to try and remove emotion and focus entirely on the financial aspect of the sale. Have clearly defined objectives to be achieved when selling and once you have made your decision, don’t second guess yourself, your new life begins at the back of the sale.