They say the three most stressful times in a person’s life are when they get married, buy a house and change jobs. Well, try selling a business – It’s your baby, the thing you have built over 15 years. You have put your heart, soul and an incalculable number of hours into it. Now you are going to sell it.
There are many things you need to do and consider, but these seven areas are of immense importance when it comes to finding a buyer, selling the business and getting the most value for it.
1. Think about who would want to buy your business:
Do you have employees that have the management ability and the mindset of an owner and the ability to access capital to pay for the business? If these people aren’t working for you now, do you have time to recruit them and teach them the business with an understanding that they might take over? What about your suppliers, customers or competitors? They might be looking for an opportunity to enter your part of the industry.
Finally, you can go to the general market. Contact a broker that has experience in your type of business or advertise it yourself through the classifieds.
2. Remove Yourself from the Business:
Many businesses are based around the owner. Customers are used to dealing with you. Suppliers have long relationships with you. Your team trusts you. All these relationships need to be transferred to your other staff or the new owner.
Start planning early!
3. Setup the Business as if you are going to Franchise it.
Who wants to buy a business that relies solely upon the current owner – the person who wants to sell and walk away from the business?
A well-systematized business is attractive to prospective buyers who see the potential to own a business that runs smoothly using systems and, importantly, can run without their personal input.
A business that can be run under management attracts a premium price when it comes time to sell.
4. Lock in your Senior Staff – The most Important People in the Business:
If your senior staff aren’t in a position to be buying the business, you need to lock them in some way. Best thing to do is talk to them and keep them fully informed.
Keep them up-to-date with developments in the sales process and make sure they understand where they will fit in after a successful sale. Consider introducing bonuses contingent on a successful sale.
5. The Customer Database – Your Pot of Gold:
This is what will add value to your sale price. Think about it from the buyer’s perspective, they are buying a business that with the hope that the customers continue to deal with them.
By developing a detailed database of your customers you will be giving them more confidence that they can manage the client relationships after you have gone.
6. Formalize Everything – Agreements:
Get all loose agreement in writing. Start with your employment agreements. Develop up-to-date agreements that lay out the terms and conditions under which your staff are employed.
Put agreements in place with your suppliers and customers as well. These should include trading terms, pricing contracts and any other “verbal” arrangements.
7. Ensure you have the Best Looking Financials:
You should aim to be able to show three years of constant growth, with healthy-looking financials. Clean up any personal items that could be questionable as business expenses – this will improve your profit figures.
Clear up all outstanding debtors – this will improve your cashflow figures. Reduce any excessive spending and make the business look as profitable and attractive as possible.
8. Get a Business Coach to give you an Outsider’s Perspective:
Clients often come to me looking for someone outside the business to assist them with the eight steps above. They are GREAT business managers, but may never have been through the business sales process before.
An experienced business coach will not only provide you with advice to keep you on the right track, but also the motivation and confidence to see the project through.
Many people wake up one day, fed up with their business and then hurriedly attempt to sell it. This doesn’t work. Plan it two to five years in advance so that you get the best outcome.
Follow the eight steps above and you will be rewarded for the many years you spent building your business.
About ActionCOACH
Brad Sugars founded the brand Action International in 1993 when he realized there was a disconnect between business advice and implementation. The answer was Action! Brad Sugars created a business coaching company so that business owners throughout the world can realize their goals in business. Today the company is known as ActionCOACH. To learn more about business, visit Brad Sugars Review blog!