You’ve grown your business over the years to be a success and the next step in selling. Selling your business is a major step for many business owners, however it can be a daunting and scary task. You obviously want to get the most out of selling your business, so here’s some tips on how to.
Planning ahead can really help you when you’re hoping to sell your business. For example if you’re selling your business due to ill health and need a quick sale, you’re more likely to agree on a lower price for a quick sale, therefore planning ahead can mean you won’t have to settle for a lower price.
To get the very best value for your business, you should look to start implementing some of the below steps 2 to 3 years prior to finally committing to selling your business.
Succession Planning is a process in which the business can operate without your input, if the business relies on you to operate it’ll achieve less value at sale.
If your business does rely on you, you need to start delegating tasks, this way if you didn’t come into work, the business would still run to it’s full potential.
You should also have a look into your business processes to ensure they are cost effective, mapping out your processes can allow you to stop issues and make changes.
Three Years Accounts
Most buyers, if not all, will like to see the companies accounts to make sure the business lives up to the valuation. Make sure you have three solid years worth of accounts ready.
At Hilton Smythe we will only release accounts to buyers how have positively viewed the business.
Assess Your Cost Base
It is extremely important to assess your cost base, get rid of any costs which you don’t need, this will increase your bottom line profit, making the business more desirable.
Other factors such as staff numbers are essential; do you have too many staff? Extra costs that are unnecessary may put a potential buyer off the business.
Although not always appropriate for every business, wherever you supply to customers regularly or rely on a price from a supplier, ensure you have written contracts in place to protect the business. With this protection the business will instantly be more desirable.
Does your balance sheet reflect the business? Ensure any major assets (e.g. machinery or premises) are revalued, this will ensure you can get the best value for your business.
The valuation should be carried out by a professional and any findings should be reflected in the final accounts, or the reports should be made available to demonstrate to potential buyers the assets are worth what is stated in the accounts.
Stay on After the Sale
Are you prepared to stay on after the sale? some buyers may want you to stay on after the sale to handover the business. Businesses with a large turnover or small businesses where the seller has relationships with key suppliers/customers may benefit the buyer to fully understand the business.