Deciding to sell your business can be for different reasons, those can include; lack of interest in continuing to run that particular type of business, a game plan implemented to only own the business for a short period of time or various other reasons. No matter the reason you have for wanting to sellyour business, there are a number of things you need to keep in view in order to achieve the kind of sale that you want.
Now you see selling any business will require a good amount of work which includes financial analysis and market research. Therefore, in order to get this right there is the need to take note of these seven tips. Doing so will not only ensure a smooth sale, but it will also make sure that you get true value for your effort(s) at the end of the day.
- Start Now
If you have been considering selling your business and haven’t drawn up a plan or have had one put in place yet on the over all process, then you have to change the status quo immediately and begin to do that right now. This is because planning is very important if you want to make a successful sale of your business. In doing this, there are a number of key questions you need to provide answers to. They are:
• Why sell? – Now your response has to convince prospective buyers
• Is this the best time to offer your business for sale? – This question addresses getting the best value for your sale based on current market conditions.
• What is going to be sold? – For example assets, stock, property, debts, liabilities and obligations, etc.
These and other related questions are what you need to provide answers to as you plan to exit your business.
- The Buyer’s Perspective
Understanding the buyer’s perspective is critical to making a good sale of your business. The considerations that buyers have differ from that of the sellers. To achieve this, you have to put yourself in their shoes and anticipate the questions and issues they will have.
You see people purchase businesses for various reasons. Most do so in order to earn good returns, while some others are more concerned with the freedom as well as the challenges that business ownership brings.
Knowing your potential buyers are in line with the KYC (Know Your Customer) principle and it will only serve to help you place your business in a better position for a more successful sale.
- Put your Financials in Order
Restructuring your financials so that they can be easily read and understood by prospects is vital in the business sale process. Ensure you settle any outstanding issue with lenders or the Revenue office as this may lead to distrust on the part of prospective buyers. Be clear about cash-flow figures separating same from extras, like nonessential travels. This cannot be said enough as presenting a murky financial state of affairs to prospects will probably lead to only one outcome: ruin the deal.
In addition to this, be aware that there are tax implications for selling your business. Tax issues you need to consider include Goods and Services Tax (GST), Capital Gains Tax (CGT) among others.
- Know Exactly What You are Selling
Before taking the step to sell your business, you should know what every asset of your business is and what it is you are offering for sale. Determine the physical assets as well as other forms of assets you are going to sell. In this regard, consider other forms of assets such as trademarks, goodwill, and client lists, etc. that your business may possess. Now the value these assets will actually have depends on their respective quality.
Also, in the case of an incorporated business, you will have to decide whether you will be going for a share sale (in which everything within the corporation including the incorporated company is sold) or an asset sale (in which everything within the corporation is sold, but not with the incorporated business itself).
- Make the Extra Effort by Adding Value to Your Business
One of the things you must ensure that you do even as you are in the process of putting up your business for sale is not to allow things slide. This strategy is similar with what home sellers use. Think about it, home sellers upgrade or correct fixtures before taking property to the market knowing full well that this increases the value of the property in question.
In a similar vein you as the business owner who wants to sell your business needs to replace rusty equipment and if it is possible dispose unproductive assets that are not generating income. In other words, do what is necessary in order to improve the financial appeal of your business assets.
- Remain in Business as You Prepare to Sell
You may not know this, but it takes some time for businesses to sell. Therefore, without knowing when or how long it will take before your business will be sold, there is no reason for you to close shop. In fact, making use of this period to put things in order will only serve to increase the value of your business.
This means that during this waiting period, you will have time to implement the previously mentioned tips like putting your financials in order among others.
- Get Professional Guidance
Okay for most of the previous six tips given above you will most likely need professional help. This is necessary in guiding you through some of the difficult processes involved including the ones that aren’t so difficult.
Now some of the professionals you might consider hiring include:
• Professional valuator – this person will help you determine how much your business is worth. A small business owner with straightforward finances including business strategies may not require this service.
• Lawyer – regarding your sale you may need a lawyer to draw up or/and review documents. Especially the document that provides a summary of your business.
Overall you should always have a thorough and outline planned for the process of selling your business. Your decision should be thought over and be grounded as you want no regrets. Look at the buyers perspective and look into the other tips mentioned as well. If you are still unsure about what you need to do then definitely seek professional help. Good luck!