4 ways to make your business easier to sell
Perhaps you’d always planned to build a thriving business to eventually sell for a tidy sum – or maybe for unexpected personal reasons you are thinking of selling your business.
No matter what the reason for selling your business, experts agree: it’s best to prepare well in advance as it can take years to complete a successful sale.
These four tips will help you get a head start on attracting buyers when you come to selling your business.
Get a business valuation
Even if a business sale isn’t imminent for the next five years, it isn’t too early to meet with an appraiser. A valuation will not just give you a realistic picture of what your business is worth right now. It will also provide invaluable information on what you can do to improve its value.
When you’re ready to sell, having an appraisal is a real plus for potential buyers. Sharing the details of your valuation shows transparency, creating trust and building credibility. At the same time it saves a buyer the expense of obtaining one themselves.
Remember that timing is often everything with a business sale. Once you know what your business is worth, you can decide whether it’s best to move forward. It may be better to wait for a growth phase or improved economic conditions.
Make a succession plan
Every business, large or small, needs a succession plan. And when you’re ready to sell, having an exit strategy in place will put a buyer’s mind at ease because you’ll have already ironed out a smooth transition for you and the new owner.
A succession plan should include both the human resources aspect (e.g. a training plan for the new owner and any employees that stay on when ownership is transferred), as well as the management of any financial, legal, or tax issues.
Once you’ve made all the hard decisions about how the business will run without you, be sure to review it once a year to make sure it’s always up to date.
Tidy up your financials
The biggest red flag for anyone considering a business deal has to be disorganized or incomplete financial records.
A potential buyer will want to see your financial results for the last three to five years. This will include annual tax returns as well as balance sheets and income statements. You may also be asked to share accurate sales and marketing data, the value of your assets and any outstanding liabilities – as well as your plans to resolve them.
Hire a business broker
Hiring a business broker with a proven track record can really simplify the sales process—especially if you’re too busy to look for an interested buyer or need professional expertise to get your business in order to sell on your preferred timeline.
You’ll want to meet with a few brokers to make sure you find the right fit. Look for someone with experience selling businesses in your industry, a large database of interested buyers, and an impressive closing ratio.
When you interview a broker ask for testimonials and info on the strategies they’ll use to market and sell your business. Reach out to your network for referrals, as you would for any professional service. When it comes to business brokers an honest recommendation can help you find a winner.
Final tips
Ask your broker about the best way to structure your business sale for the best return. If you’ve built up some solid equity it may be wise to offer a buyer a gradual sale or lease. In addition to a continued income stream for you, this type of arrangement can help make the deal attractive by reducing the new owner’s financial burden.