Selling your business should be simple, right? Only if you cover all of the bases, and plan your strategy before you start.
Here's our step-by-step guide to help you on your way to the perfect sale.
Plan your exit
A solid exit strategy is one of the most important components of selling your business. It may be hard to believe but planning your exit should be something that you think about from your very first day in business.
The most successful of exits take a great deal of planning and the sooner you start thinking about it, the more rewarding the selling process is likely to be.
Put yourself in the shoes of any potential buyer. The first thing that they will want to know is why you are selling your business.
Define the strongest points of your business and look at it from the perspective of the buyer. If any potential red flags surface, now is the time to sort them out and get everything in order.
No one wants to be surprised by a big problem inherited from a previous owner, so you'll need to persuade buyers that all is well with your enterprise, before they'll come on board.
Be prepared to explain your decision in detail, and to highlight the underlying strengths of the company.
Do your preparation
In order to explain the strengths of your company, you will first need to make sure that they exist!
This means that any successful sale will normally require a lead-in period, during which time you will ensure that your reserves, assets, cash flow and strategy are all in order. This kind of foundation will serve you well in any negotiations.
Decide on your valuation
Before you try to sell anything, you need to know the parameters of your negotiating strategy. In order to do this, you must value your business accurately.
The process of valuation can vary widely and this depends on a variety of things: so make sure that you look assess your market, the current economic trends and your competition.
In most cases, it would be wise to ask a professional to do this, unless you have a very good grasp on the finances of your business.
Whatever you do, don't simply put your business on the market without knowing what you want in return.
Prepare your information
"Whatever you do, don't simply put your business on the market without knowing what you want in return."
Once you know what you are looking to get in return for your business, you need to compile all of the relevant documents.
This doesn't simply mean that you need to ensure that all of the important financial and legal documentation is up-to-date, but also that you need to summarise it in an easy to understand information pack.
Even serious buyers have a limited amount of patience, and making your business difficult to understand is a guaranteed way to drive away a potential sale.
Once you have all of your information organised, you will be in a position to advertise. However, it is imperative for any seller to keep the sale confidential.
You will need to offer your business up for sale in a way that doesn't alert customers, suppliers, competitors or employees.
In order to do this, you will need to advertise discretely and without identification using blind advertising or brokers to spread the word.
Protect your legal position
Once you have attracted serious buyers, it is time to negotiate. Don't do this, however, before you have protected your legal position. Buyers will want to perform due diligence on your company, and come up with their own valuation.
This is fine, but only permit them to see key documents once they have signed confidentiality agreements and are committed to negotiating in good faith.
Once you are in final negotiations, don't stick only to financial incentives. As the current owner, there are plenty of other potential inducements up your sleeve, and you should be using them.
For example, could you stay on as a consultant for a while, in order to smooth the business transition?
Have you spoken to key staff, and can you assure the potential new owner that he won't face an exodus of employees as soon as he takes over?
Be clever about what you offer, and the sale price of your business will go through the roof. Remember, however, that you won't get any money if you don't manage to close the sale. If you've got the large majority of your wishes, sell your business - and enjoy the profit!
Selling a business is by no means a quick and easy process and it takes a considerable amount of preparation.
But by following these steps, you will be ensuring a successful start to the selling process!
Ready to sell? You are just 10 minutes away from advertising your business to 1.3 million prospective buyers. Sell your business today.