Thinking of selling your business? Of course that means you want to maximise your sale price, right?
If you’re in this position, a little advance planning is compulsory. Polishing up your business to sell requires you to start getting ready at least 12 – 18 months in advance.
It’s frightening how many owners I see who fail to prepare and then expect a top price for their business. In most cases it’s a disappointing result.
Target potential purchasers
Think about who’s likely to buy your business, then prepare a marketing package and a plan designed just for them. Explore all possibilities – a good buyer will often be an existing customer, or a staff member. Start having conversations to flush out these possible buyers well in advance.
Simple procedures & checklists
We all hate preparing documents, but put yourself in the shoes of a potential buyer. One of the big worries for a buyer is that the business depends too much on you, the owner. If you can show a buyer a simple documented explanation of how each of the the key parts of the business work, you’ll take away a big reason for them not to buy. Checklists make things simple. Such as: lists of who does what, lists of customers, key suppliers, staff, how the money is handled, how quotes are prepared, your guide to chasing debtors, bookkeeping processes, cleaning routines, paying accounts, rates of pay for staff etc. All of the things that you take for granted should be clearly explained in a Procedures Guide. The result = a potential buyer will be more comfortable, and the fact is comfortable buyers will often be prepared to pay more.
Start preparing key staff
If you’ve built a good business, you’ll probably have some great staff. But you’re likely hanging on to most of the key management tasks. Start handing over more responsibilities to these employees many months in advance. Put processes in place so that everything works smoothly without you. Your business will be more efficient, and a new owner will find it easier to step into your shoes. Buyers need to know they’re buying a business where existing staff are capable of running the key operations of the business once you’re gone. Again, it’s about taking away a lot of the risk. It’s one of the big reasons so may buyers pay big dollars to buy into a franchised business.
By Lindsay King