Create a workbook and call it ‘My Business Sale’
When are you going to sell your business and for how much?
Just take a guess at this stage and you will fine-tune this very important equation as we go on your guess will become more educated. Write it in your workbook.
Ask the question “who is going to buy your business?”
Once you know who might buy you can start to think about what that buyer wants and adapt your business accordingly. A mum and dad (private) buyer wants different things compared to an industry buyer.
Create a business plan.
A good business plan answers these questions:
– Where are they now?
– Where do we want to go?
– How are we getting there?
Form a team.
You will free yourself up to work on your business. Find a good lawyer, accountant, financial advisor, business broker.
Ask where you are in the industry cycle.
You need to be selling your business before your product or service is out of date or replaced by a cheaper and more efficient variety. Make yourself future-proof or get out.
Ask where you are in your lifecycle.
How well are you performing mentally? How long have you got to go before you start to become less able to operate or build the business. Do you want to sell this one and buy another? Are you stale? Don’t leave it too late.
Ask where you are in your calendar cycle.
What is the best time of year for you to sell. This is the shortest of the cycles but still important for your sale planning. Better to sell coming into your busy time or when stock is low. Think about it.
Ask where you are in the economic cycle.
This is the longest of all the cycles and is probably one of the easiest to plot. You won’t know exactly when the boom or bust will end but statistics can give you plenty of clues for educated estimates.
Keep stock to minimum levels.
Make sure you only keep good and saleable stock. Sell off excess stock.
Systemise your operation.
Systems make it easy for your people to run your business.
Create and document your social media policy and plan. This gives certainty and is a crucial part of handover. Tell your story via a company blog. This is an inexpensive way to communicate with your clients and supporters. This forms part of your intellectual property.
Systemise you sales operation.
Join a networking group. Then when you sell, your successor can always slot into your place.
Make sure your financial records are clean and up to date.
Reduce the need for extra money in the business. Reduce stock levels. Reduce debtors, extend terms with creditors and factor your debts.
Make sure you present an attractive image, clean up you place, office and factory. You want a buyer to say “I’d love to work here” step back and take an honest look.
Make sure your profit statement is provable.
Buyers will be happy to find a business that has a verifiable history. They will discount the price if there is uncertainty, messiness or hint of misrepresentation.
Ensure you have an even spread of clients.
This way you are not exposed if a major client leaves and takes their business elsewhere. Grow the long tail of your client list.
Invest in your people.
Hire staff wisely and to fill gaps think of outsourcing to overseas workers if possible. Pay your staff well. Happy staff stay longer and that is a key strength when you are selling. Have regular training sessions. Staff will stay longer and it shows stability in a business to have long serving staff. Buy uniforms for your staff. They will feel part of a team and it will help when you sell, appearance is everything.
Keep a register of employees with pay rates, weekly hours, duties, special skills and length of employment. Keep it up to date.
Make yourself less important to the business.
This makes your business more transferable and hence more valuable. Delegate more to key staff in your business. Trust in the people you have delegated tasks to and take more time off from your business.
Differentiate your product or service.
Find other differentiating factors besides price.
Build sales but in a way that is repeatable and sustainable. Nobody will pay money for sales and profit that are one off or built on heavy one-off discounts.
Have a good spread of suppliers.
Don’t be at the mercy of one supplier. Give yourself choice. Shop around.
Keep your equipment up to date.
Poor equipment will let your business down.
Build your online strength.
The more you trade online, the less vulnerable you are to personal relationship risk at transaction stage.
Brand is built up over many years. It makes your business desirable and vulnerable and is the feeling your customer or potential customers get when they see or hear your company or product name. A good brand says to the market “trust me and I will look after you.” Be ready to show client testimonials, press write-ups and any customer satisfaction surveys you may have.
Maintain a good credit rating.
Your credit history is searchable. Bad credit history will make a buyer nervous about your business.
Understand your competitors.
What do they do well? What could you copy? What do you want to compete on? Price? Service? Location? Fun? Speed?
If possible, buy your premises. This gives you much more flexibility and power when it comes to sale. If you operate from premises, lease can be critical. Make sure you have sufficient lease or get the landlord to agree to give a good lease to a buyer.
Reason for sale.
Be honest about the reason for sale. Retirement is a good one but if you are selling because you have come to the end of the road or lost energy, say so. This builds trust and will help with the sales transaction.