Selling your business

Selling your business; it might be the hardest sale of all!

They say the three most stressful times in a person’s life are;

  1. When they get married
  2. Buy a house
  3. Change jobs

Not to mention divorce or public speaking!

Well, try selling a business – It’s your baby, the thing you have built over 15 to 35 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 take your business to market, but do you know what you would get for your business?

Would it be much more than fixtures and fittings?

Would you like to get top dollar for the sale of your business?

At Business Exit Strategy we buy, grow and sell companies and we triple the profits in about 8-12 months, maybe 18 months worst case scenario

  1. Remove Yourself from the Business:

Many businesses and small companies are built 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!

You can never start too early and these days a good accountant will tell you to set the business up with an exit plan in mind. That being said, handing over the accountability and responsibility is a very easy and liberating process, when you know how.

The art of delegation revolves around effective communicate and understood accountability, we can assist you to do this right, the first time.

Systemisation of the business and documenting of individuals tasks and responsibilities is the next step in the “stepping back from the coal face” process.

  1. Setup the Business as if you are going to sell 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.

  1. 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.

  1. 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.

  1. 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.

  1. 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 cash flow figures. Reduce any excessive spending and make the business look as profitable and attractive as possible.

  1. Get a Business Mentor 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 mentor 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.

  1. Get in a junior partner and create a succession plan

One of the best options for your business may be to sell a share of the entity to a junior partner, get them busy working and you stat taking some well deserved time off. Work a few days a week, play golf and more holidays that you ever have!

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 financial outcome.

At Business Exit Strategy we buy, grow and sell companies and we triple the profits in about 8-12 months, maybe 18 months worst case scenario

For proven strategies and methods to maximise the value of your business, in order for you to get you top dollar for the sale price of your life’s work, contact us today at Business Exit Strategy Phone: 1300 858 836 or email me at David@businessexitstrategy.com.au

Contact us today at Business Exit Strategy Phone: 1300 858 836