For most business owners, selling occurs out of need as opposed to want. You may need to sell due to financial, health or family reasons, which unfortunately dictate one of the most crucial planning points of a sale, the question of ‘when’ it occurs.
Ultimately, if you are in the position to make a clear and calculated decision when it comes to deciding when to sell your business, for example in order to retire; you will most likely achieve a higher sale price than if the timeframe is out of your hands due to reasons outside of your control.
So… I am planning to sell but am flexible with the timeframe. How do I know when the right time is?
How long is a piece of string? Many people may tell you that certain periods of the year are busier than others – and whilst this may be correct, it is based on past figures which are never a sure-fire, concrete determination of what the future holds. Instead of thinking of the right time being a certain period in the year, it is better to equip yourself and your business with the attributes that make it appealing to a potential buyer whenthe right time arises.
Below is a ‘to-do’ list when preparing your business for sale:
- Improve your profits: Some buyers may not mind a ‘fixer-upper’, but it’s safe to say that most will look for a profitable business. If you know your business well, try to sell when the profits are high, as opposed to waiting for them to drop and then trying to convince buyers that profits will improve. “Trend is your friend” and buyers love to see a positive trend in sales and profits.
- Make sure your financials are up-to-date and accurate: A great time to sell would be directly after your EOFY tax return. All documents are recent, relevant and (hopefully) neatly compiled. However, we do sell businesses throughout the year, so don’t let this deter you.
- Ask your Core Business Broker about past trends in your industry: You may only sell your business once, but they sell businesses like yours every day. Their insight could save you a great deal and achieve a better sale price at the end of the day.
- Standardise documents and procedures: A potential buyer will want to step into a business that is being run efficiently, with a clear outline of operations and procedures. Try and ensure that the ‘goodwill’ of your business does not rely entirely on you personally.
- Resolve outstanding issues and debts: Eliminate liabilities and resolve outstanding debts and any issues that may detract from the business prior to listing your business for sale. Think of your business like a person who is getting ready for their first date. They want to look good, but ultimately if it’s all for show, they are going to be discovered eventually. Make some positive changes prior to listing your business for sale and genuine, qualified buyers will show interest. Work on a SWOT analysis with continual improvements to the areas that will be attractive to a buyer.
If you are planning to sell your business, contact Core Business Brokers today. We will be more than happy to discuss your industry, past sale history and guide you through your business sale process. Contact us on (02) 9413 2977 to chat with one of our experienced and friendly team or email us at [email protected]