How do I get ready to sell my business?
You’ve made that first difficult step of Googling ‘sell my business’. Now what? Well, just like selling a house you get it ready for sale. Get rid of the clutter that’s obscuring the real selling point.
Selling your business is all about preparation and that’s what this blog is about. Taking charge of your sale, being objective about its faults and weaknesses, and managing both:
- Ready with answers to key questions: from cash flow to customer segments, the serious buyer will need to see ‘the numbers’.
- Primed to spot the tyre-kickers: being prepared to repel the time-wasters and the cheap-skates.
It’s likely you’ve spent many years nurturing your business, investing a lot of money, time and energy to make it work. The last thing you want to do is let it go for way below its value. There are businesses out there seeking to acquire turnover, people and systems as a means of enhancing their own offering. Of course they’re serious in their intent of getting a good deal. You should – and can – be determined to get the same.
7 out 10 business owners cannot demonstrate the true value of their business
I am dismayed – but no longer surprised – that so many hard-working business owners do not have even basic facts at their fingertips. Risky at the best of times, such blindness when they wish to sell their business will undoubtedly put them on the back foot.
Here’s my 13 point guide to business sale preparation – you’ll note that COVID-19 is not an item on its own, it’s a template for future trading:
Organisational and operational checklist
What do you really want out of selling your business?
What are your objectives beyond getting a good deal? Being driven by a price tag is not the route to success especially if the sale doesn’t affect just you. You, your family, employees and customers should all influence how the sale of your business is structured.
What experience of selling a business do you have?
Have you done it before? If so, what did you learn about the process? What action did you take subsequently? Maybe you know anyone who has successfully sold their business – what knowledge can / do they share?
Who’s the likely buyer of your business?
Is it someone in the same sector? Or do you see your business adding to or supporting a different income stream? Maybe you’re the key to a strengthened infrastructure?
How do you score with technology and IT?
Cutting edge, in need of upgrading, yet to introduce it – which is the true answer?
Do you have an organisation chart?
I know – a trivial thing but the best I get from my clients is: “it’s a bit out of date…”. Workforces change to meet the needs of the business and its customers. Sometimes the resulting structure is difficult to understand let alone having a chart that explains it all. Yet a prospective buyer will need to understand who’s running the show and how!
Sales & marketing checklist
Do you have a marketing & communication plan?
And does digital play a big part?
Do you understand your customers?
Do you have the last 3 years’ data on new and lost customers? By ‘data’ I don’t just mean numbers of customers in and out…
What is your sustainable competitive advantage?
Where’s the value in your business? What do you do well and how do you see it continuing to be a major strength in the future?
Margins – where do you make your money?
Which products and customers are profitable or loss making? Do you have recurring sales?
What’s your cash flow looking like?
Have you taken on loans, furlough schemes, deferred leases, rates, rent and taxes and, if so, what kind of impact are they and their timetable having on the business?
Are your accounts up to date?
Assuming your accounts are online, the answer should be “yes”. If you aren’t online all’s not lost but you need a plan and fast.
Is there a schedule of all lease repayments?
What are the terms of any lease on buildings and equipment?
What’s the payroll burden
Is it sustainable?
What’s the verdict? Are you ready to sell your business?
As you can see, being ready to sell your business involves a lot of planning and preparation. I cannot emphasise enough how important it is to know what you want to achieve. Your personal plans, the state of your business and ethical considerations – these are the headline topics to help you decide whether and how to sell your business.
For some clients their objectives have changed in the last few months. That’s fair enough but when you find a potential buyer, it’s no good answering their questions with: “Well it depends upon…” You can’t build a strategy on a lack of data so any potential buyer is going to lose interest vey quickly.
Where’s the serious buyer for your business?
In the south-east, we are well placed to build a strong recovery. Sectors such as IT, professional services, construction, advanced engineering and life sciences see the way forward.
Some of these larger businesses are looking beyond Covid-19. They realise the recovery will be a bumpy ride but their balance sheets are strong and able to sustain losses. In short they are confident that their businesses will come out at the other end.
These agile businesses are able to adapt to extraordinary circumstances. However, many lack the necessary skills, knowledge and infrastructure to grow their business and will be looking to plug these gaps. Is this your cue for a plan of action to sell your business?
What makes a business more saleable? https://www.assyntcf.co.uk/what-makes-a-business-more-saleable/
Why do deals fail? https://www.assyntcf.co.uk/why-deals-fail/
How do you prepare for and go through the business exit process? https://www.assyntcf.co.uk/how-do-i-plan-for-the-day-i-want-to-leave-my-business/
How do I maximise the value in my business? https://www.assyntcf.co.uk/how-do-i-maximise-the-value-of-my-business/