A successful business could change hands many times during its life, whether to family members or unrelated parties who are passionate about continuing what you started. When it comes time to sell your business, it is important to present it to potential buyers in the best possible light. This doesn’t mean just looking good on the outside, your business should be profitable and functioning well to appeal to prospective buyers. Importantly, has the business “divorced” itself from you (the owner) so that the Goodwill vests in the business itself and is not seen to be part of you.
We’ve discussed the importance of exit planning here, but to recap – exit planning is essential for the survival of your business, for the sole fact that not all sales are gradual processes. Some occur due to sudden events, such as ill-health or family issues. Having an exit strategy in place ensures a smoother transition when it comes time to sell your business.
A great way to prepare your business for sale is to view your business through the eyes of a prospective buyer. Would you want to buy your business if you viewed it with fresh eyes? If the answer isn’t a concrete ‘YES’ then you have work to do. Here are some ways you can add value to your business when preparing to sell:
- Make sure all financials are up to date
- Show proof of profitability (even with certain adjustments)
- Ensure all necessary contracts are in place, up to date and transferrable
- Tidy up processes, manuals and other key operational documents
- Make sure your lease is secure
- Sell off plant and equipment as well as other assets that no longer contribute to the business so that they do not represent any weaknesses and become a distraction in the sale process. The same applies with any redundant or old stock.
- Do a general ‘tidy’ of the premises. Although we don’t like to judge a book by its cover, the tattered book stays on the shelf
- Organisational structure – are there key staff in place and how critical are your functions to the business?
By doing the above, you are adding value to your business – which ultimately looks attractive to potential buyers. For more information on what you can do to add value to your business, contact Core Business Brokers today, on (02) 9413 2977, or email Roy on [email protected]. Our experience in business sales is second-to-none, which allows us to provide honest advice to our clients.