Wednesday 10th of March 2021
Every entrepreneur has a retirement date in mind. Some plan to exit early and pursue other intere
...sts, while others try to work until they are physi...
Every entrepreneur has a retirement date in mind. Some plan to exit early and pursue other interests, while others try to work until they are physically and mentally capable. However, in both cases, they need to hand over the control to a new owner who can lead the business efficiently. There are several budding entrepreneurs who want to acquire high-performing businesses for sale in South Africa and can be mentored by outgoing owners.
However, finding a qualified individual with the funding and business acumen to fit into the entrepreneur’s role can be challenging. Although these individuals can be trained, they need to be screened carefully to avoid deception. Here are a few tips on how entrepreneurs can find the right buyers for their businesses. It will help you determine the suitability of the candidate for the acquisition.
Businesses cannot be sold to anyone. You must know your customers. As the seller, you need to identify who can take charge of the entity, such as a family member or acquaintance, an employee with skills, an existing entrepreneur in a different industry, a direct competitor, a working professional with entrepreneurial goals, etc. The choice depends on the seller. It is better to keep the options open and look into all categories to compare and choose.
The buyer should have financial literacy, business acumen and leadership qualities to be able to uphold the legacy of the brand. Thus, it is a bad idea to have a narrow criterion for choosing the buyers. It is better to invite expressions of interest from all types of buyers and then select the best ones.
When you decide to put up your business for sale South Africa, you need to identify its unique selling proposition. It is similar to marketing your products. You must ask your management team to highlight the aspects that make the business worth acquisition. These can include growing year-on-year turnover, profits, low employee turnover, positive work culture, long-term contracts, etc.
If the business does not have any apparent benefits, you need to work on them before selling it. The buyer will show interest only when the entity appears to have high potential. Thus, work on improving the cash flow and solidifying a loyal customer base to attract more buyers.
When you plan to sell your business, you need to calculate its value, which will help set the asking price. You must hire a real estate accountant to assess the market value of the entity and inform you about the trending prices in the industry. They will evaluate the financial standing of the business, including shares and other assets and future potential.
Make sure to add the cost of intangibles like goodwill and long-term contracts and keep some room for negotiations. The price should neither be too high nor too low. It must be competitive and should be attractive to your target audience.
Grabbing the attention of buyers is not easy when there are several businesses for sale in South Africa in the same industry. It is vital to stand out with a unique listing that showcases your business as a profitable and high-performing venture. Hire a professional writer to highlight the strengths of the business and a photographer to capture striking pictures of the office.
Inform the buyers about the turnover, location, exposure and outgoings like rent, lease term, etc. Add pictures of the frontage and interiors to give a glimpse of the property. Use compelling language to generate enquiries. Share the listing with friends and industry people and post it online on a business buying and selling site.
Start assessing the enquiries and respond to the prospective buyers. Identify those who have an intention to purchase and connect with them to answer their questions. If you feel that they are qualified for the sale, share the non-disclosure agreement with them to help them evaluate the business.
The seller must perform a financial and background check of the potential buyer by asking for their bank statements, financing options, credit history, etc. Look for red flags like unpaid debts, litigations and tax evasion. These prove that the person may deceive you and not pay the desired amount. So, avoid taking things forward with them. You can also hire a business broker to help with the screening of the buyers and marketing of the business.
Once you are satisfied with the financial information of the prospective buyers, you need to assess their professional competence. Besides having the capital to buy and run the business for sale in South Africa, they should have the zeal and determination to become an entrepreneur.
You can even choose a novice with an ambition and vision by training them for the position for a few months. It will give you the peace of mind that you are handing over your precious possessions to an able professional who will manage and develop them effectively. Find the best candidate from the pool of enquiries and mentor them to fit into your role with ease.
After the required research, get started with the paperwork. Ask your lawyer to prepare the purchase contract with the required terms and conditions about the sale structure, training period, included assets and the payment schedule.
Make sure to get the entire payment upfront instead of instalments because many buyers are unable to generate profits and pay the outgoing owner the remaining amount. Sign the agreement and help with the transition by informing the employees, clients, suppliers and stakeholders about the new owner. Provide the support and training needed and then exit.
Wrapping Up
Finding the right buyer for your business can become a cakewalk if you follow the process mentioned above. It ensures that you check all the relevant information and find a suitable candidate who is ready to take the responsibility of business ownership.
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