One day you’ll want out! You’ve come a long way and it’s your baby – you have nurtured and put your all into this business. Letting go and selling your business is never easy. But the time will come when other pastures and missions call, when the passion starts to wane, or a life event dictates that it’s time to cash up and exit your business.
As an entrepreneur this can go against the grain. You thrive on building and innovation – not on selling out. Your business started as an idea and a vision – you had the passion and tenacity to stick with it, to develop and innovate, and to commercialise and drive it into being the successful operation it is today.
However, there is a final payday to this journey.
Having built and grown a successful business, you come to the final stage of selling up and reaping the reward of your hard work. Once you have decided to sell, it is best to prepare your business to get the best price and return on those long hours and effort you have put in over the years.
There are a number of factors that will influence your business’s value and the sale:
1) Have a scalable business model
A business that will operate without you, and is easy to upscale, is always going to be an advantage.
It’s okay to do some things manually at first, but a system that runs on auto is far more desirable to any potential buyer or investor. This also helps divest the goodwill to the business.
2) Ensure it has a future!
Make your business look attractive. Tidy, modernise and, if necessary, reposition your business.
Buyers like to see a business that is organised and attractive to work in, and that has a promising upside. Nobody wants to buy a dated sinking ship.
3) Strengthen the cashflow
Ensure your business accounts reflect a well-run and profitable business.
The value of a business is invariably determined by its current and future profits. Buyers and lenders will look at the past performance of the business as a guide to its value.
Look for ways to increase sales and reduce your costs.
4) Document systems and processes
Systemise and document everything. This will help move the goodwill and knowledge from you, the business owner, to key remaining staff and the new owner.
Methodically work through the key areas of your business, tidying and documenting your databases, systems and processes.
Buyers love a well-documented business – it reduces the business’ dependence on you and assists in defining exactly what is for sale. This also assists in the transfer of goodwill to the incoming owner.
5) Streamline and prepare
Dispose of any plant, vehicles, assets or stock, which are not essential to running the business. Removing these assets from the balance sheet prior to the sale will ensure you capture the value, and that the asking price only reflects the assets essential to running it. Prepare and package your business for sale, to ensure the opportunity is obvious and desirable.
6) Selling your business
Now that your business is sale-ready, develop a plan and market your business widely using key mediums.
Using a business broker is a good idea, especially if you lack the skills, knowledge or time to do this. Buyers want facts and will ask plenty of questions. Be prepared to answer everything and anything about your business.
Help the prospective buyer feel comfortable about buying your business. Remember that it can take time to sell, so keep your business running to your usual high standard.
Be honest and realistic in your dealings and keep up the marketing – you can’t sell a secret!