If you’re thinking ‘How to sell my business?’ this guide is a great starting point for you. There are many reasons as to why you may choose to sell your business, including retirement, a new life direction or the feeling that you’ve taken the company as far as you can, and it would benefit from a different investor or new management.
Once the decision has been made, there are factors to consider that will sometimes make the difference between achieving a sale or not, and the eventual profit that you make.
Is it the right time to sell my business?
Many factors play into the time element of selling a business, including market factors, competition, rising or falling demand and the state of your company.
It is good to get independent professional advice about the real value of your company, an appraisal of your internal processes and accounts, to get a true understanding of the readiness of your business for sale. Once this assessment is complete you will have excellent information about changes you could make to your business which might increase its sale value and its attractiveness to buyers.
Make sure your accounts are up-to-date and accurate
Most buyers will require a full account history with a special focus on at least the last three years. A lot can be told from how the books have been looked after as to the overall health of a business. Accounting procedures are often a general indicator of company health, even before you delve into the specifics of the numbers. A close look at your accounting methods and results can also highlight areas of the business needing closer attention prior to sale.
Keeping your business clean
Any serious buyer will want to know about problems and situations might exist within the business prior to purchase. Therefore, aim to maintain transparency about supplier, customer and employee relationships and supply documentation about contracts and anything else that might offer the buyer reassurance about the purchase – even if it is a warning about a problem.
Is your business growing?
Buyers will most often want to purchase a business that can be shown to be growing. Plans for expansion will need to be included, likewise any significant stock risk or personnel issues that might affect future profits. If there is too much reliance on a couple of big customers with no insurance plan if they pull out of the relationship, or if the business relies too much on one person (perhaps you), then this might turn off a potential buyer.
Understanding where your business is strong and where it is weaker prior to initiating sale proceedings is essential, and can have a significant effect on profits.
Fixing what you can before the sale will help in the long run.
Potential Buyers will look at:
- Track record and future potential
- The strength of your brand and its market position.
- The experience of the team that makes up your business, from board to basement.
- What marketing strategy you employ and the results it has gained for the business.
A final point to note is that solid future expansion possibilities and a market-proven business plan will support a buyer in gaining funding from investors.