What to Do Before You Sell Your Business
It takes preparation and time to sell your business. As such, it is imperative to get professional help when preparing for a sale.
Did you consider the intellectual property value of the website, the social media presence, and the client email lists? Do you understand goodwill? Regardless of whether you want to sell your hair salon, beauty spa, fuel station, car wash, or laundromat, making use of an experienced business broker helps to avoid mistakes and achieve a good market price.
Below are a few essential tips to consider before you sell your business, in order to ensure a seamless process and the best possible price.
Use your time to fix problems that can cause the sale to fail or lead to a lower selling price. If you don’t have financial statements, have an accountant review the records and draft the necessary financial statements. Make sure that the information is clear, thereby helping the buyer to see the potential. Have the accountant draft a cash flow report to indicate what income is expected over the next three months.
Update the client, employee, and vendor information and lists. This information is extremely valuable in helping to show the value of the entity.
With the help of a broker, draft a full inventory list, as such provides the buyer with a clear indication of the tangible items that form part of the sale.
Many owners don’t make a clear distinction between their personal and operating expenses. However, it is essential to indicate which expenses are personal. Your business may be more profitable than you initially thought.
You should also classify the employees correctly. If you don’t know whether your employees are independent contractors or permanent employees, seek labour law advice. A broker can also help you with this process.
If you want your employees to keep their jobs after you sell your business, it is essential to train them. Trained staff members are more productive. Give at least one employee more responsibilities, in order to ensure that the entity can operate without your direct supervision. This will certainly be a plus for the potential buyer. Draft an operations manual to make sure that the staff members or new owners can handle the operations without you being there.
Make sure that key employees are happy. Where necessary, create incentive programmes to retain important staff members. Try to limit the staff turnover if you plan to sell your business. Bonuses and promotions can be used to retain valuable employees.
The potential buyer might ask about the option of a lease renewal. To this end, make sure that you have a good relationship with your building’s owner or agency. This is especially important in the retail sector, where a large part of your business’s success is dependent on the location and favourable lease terms.
If you are carrying too much stock, hold a stock clearance sale. You will want to remove clutter from the warehouse or retail store before having buyers visit.
Finally, seek broker advice on how to prepare the premises, books, stock, inventory, and operations for a sale. Once ready, have one of our consultants list and sell your business.