If you are looking to retire, one of your priorities might be selling your business. Waiting for a sale to go through can be frustrating, especially if there seems to be a lot of interest but no takers.
One aspect to look at when selling seems slow is how your business has been valued. While it is something you have worked hard to raise, using the wrong business valuation methods can inhibit the sale.
Here are more tips to consider when selling a retail business:
Prepare the documents
Any serious buyer wants to see the business records. Making sure all your bills are paid, including paying off any debts, can make the business attractive to a buyer.
In addition to this, all your financial records and permits should be up to date and available. Potential buyers want to assess the business’s success based on its history. A failing business will be harder to sell.
However, make sure the documents are accurate and can be backed up by evidence. A serious buyer will check many different avenues to ensure they are buying into success, so falsifying or altering documents to improve the business’s image will not help.
In addition to the financial records, you need to prepare all the legal documents as well as all the business’s planning documents. A potential buyer needs to see operating procedures, as well as a list of employees and their roles. Ensuring the buyer understands the business’s practices is setting up future owners for success.
Reduce risks
Risks drive away buyers. Some common risks that buyers shy away from include finances, technology, the market, and operational information. Beyond having many debts or having made losses in recent times, there are other financial risks that may turn away buyers.
Not keeping accurate financial records, disorganized finances, risky investments, and bad decisions can scare away buyers. Employ an accountant or auditor to help you organize your records effectively before putting the business on the market.
Having old or outdated technology can drive away buyers because of potential risks. Older technology is easier to hack, and you can’t guarantee that customers’ information is protected.
Your customer base should also be diverse and coming from a wide catchment area. Having customers from only the local area or only members of one demographic can indicate customers’ mistrust in the business.
Finally, understanding the daily operations of the business is essential to making a good sale. Being unable to tell a buyer what the day-to-day running looks like can make them nervous since it appears that you – as the owner – do not understand the business.
Related: Owner's Guide to Small Business Risk Management
Sort out tax
Much like having all your finances in order, you need to get your tax in order. Making sure all your taxes are paid and filed is essential before you pass the business to a new owner. If you are unsure of the tax requirements before selling, ask your broker about tax considerations when selling a business. In addition to business taxes, you need to also consider sales taxes.
When a business changes hands as a result of a sale, there may be transfer taxes to pay. To ensure the taxes are paid correctly, you need to research who is responsible for which aspect of the taxes.
Showing the buyer that you have researched all the necessary tax considerations can instill trust and may make the sale go smoother and faster. While you are checking that the business’s taxes are in order, ensure all other taxable transactions and debts are addressed as well to make an attractive package for the buyer.
Exercise transparency
While many buyers are not likely to take a second look at a failing business, transparency can aid your sale. Allowing the buyer insight into every aspect of the business, including its shortcomings, can instill trust. When a buyer trusts the seller, they are more likely to complete the sale even if the business is not successful.
Transparency shows the buyer that you are aware of the business’s shortcomings and have been working to address them. Showing buyers that you have nothing to hide can drive up interest in the business. It also means buyers get access to all the information they need to run the business successfully after taking it over.
Transparency is also necessary when it comes to setting a price. Buyers want to know why you value the business at the level that you do. After evaluating the business’s documents, they might believe the business is worth more, or less, than what you are asking. You need to be able to justify your price by providing concrete evidence.
Brand yourself
As a retailer, it is likely you have a popular brand. While many people may be aware of your store, having own-branded products can boost your brand. Own-branded products tend to be cheaper than the big brands and can be a strong drawcard for customers.
Besides, having own-branded products at the same quality but lower cost than big brands could drive their sales and get the brand’s name out to the general populace.
When a buyer sees that a retailer has a successful line of own-branded products, they may believe the investment is worthwhile.
Own-branded products show a trust in the brand and a connection with manufacturers, which can give your retail business an advantage over competitors. This is another aspect that can make the business more attractive to potential buyers.
Improve technology
As mentioned previously, outdated technology provides a risk factor as it opens you up to hackers. Updating information-storing technology is only one step to improving technology.
Having efficient and improved methods for stock take can save the business money since stock take often requires stores to close down. Using efficient technology for stock take means spending less time closed during stock take, and potentially reduces the need to pay staff overtime.
One of the most important technological aspects that may need improvement is your payment technology. Consumers do not use cash as much as they did in the past. While many still rely on bank and credit cards, the global economy is moving towards mobile money.
Having facilities that allow buyers to pay using their phones may attract more customers who are aiming for convenience in their shopping experience. Using modern technology in your retail store makes it more attractive to buyers since they will not need to make a large financial investment to upgrade.
Create a schedule
Selling on a schedule can seem stressful, but it can help you anchor the sale faster. Allow buyers enough time to view the store and check the store’s documents.
This includes allowing time for them to do their own research into the business’s books and image since they want to be sure they are buying a successful business. Once you have established the time frame, make sure all potential buyers are aware of the cut-off.
Once you reach the cut-off for potential buyers to do their due diligence, you can open up the sales process. This includes accepting bids and offers and evaluating the merit of each one.
Set a closed period of time for the bidding process, and make a decision to accept an offer shortly after bids close. When you use a tight, well-communicated schedule, buyers are more competitive and will be less likely to back out of a deal, meaning you can make your sale quickly.
Online presence
When you put your business up for sale, potential buyers are going to have a look at your online presence. Ensuring you have an online presence can help buyers feel more confident in buying your retail business. However, simply having an online presence might not be enough. Running a website is only one aspect of a successful online presence.
When potential buyers search for your online presence, they want to see high interaction between your pages and customers. They will also look for successful campaigns and the ratio between your successful and unsuccessful campaigns.
Potential buyers will also look at reviews by previous customers to gauge whether there is an overall positive or negative attitude towards your store.
Making sure your online presence is unbiased, but also mostly positive is important to gaining buyers’ trust. While you should not alter or delete reviews that criticize your brand, it is important that you take the necessary steps to address and rectify the issues.
Timing is key
Putting your business onto the market requires careful planning and strategic timing. When deciding to sell your business, you need to monitor the market conditions, as well as run your business efficiently for success.
When markets are lower, such as in times of recession, it may be difficult or impossible to make the sale. However, maintaining the same asking price when selling during a market upswing could see many bidders vying for the business.
Video: Timing of the Sale | Volaris Group
While you may aim for a private sale to avoid unnecessary costs, it might be important to hire a broker or agent to assess the market and advise your sale. Selling at the right time is just as important as selling at the right price.
Selling when markets are unfavorable might result in you receiving less than your asking price or a slow sale. Monitoring the markets for a year or more before your planned sale can provide you with necessary insights.
While stock market crashes can be unpredictable, often, there are seasonal booms. Watching the market for those booms in the market can help you choose the right time to sell.
Selective sales channels
When listing your business for sale, choose your listing channels carefully. Listing the business in a local newspaper or Facebook marketplace might seem efficient, but it can lead buyers to believe that the business is failing.
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Choosing to list your business with reputable agents or brokers can show potential buyers that you value the business and will only sell through the most reliable channels.
You can even sell your business to investors and venture capitalists. While most venture capitalists aim to invest in startups, selling them a successful business could be attractive since it gives them additional capital for future investments.
Despite your desire to sell, it is important to show potential buyers that you fully believe in the business. While you may no longer be involved in its daily operations, you care that they reach success when they take over your business. Showing your interest in buyers’ success can boost buyer confidence, increasing bids and speeding up your sale.
Final thoughts
When you aim to sell your retail store, you need to consider many legal aspects. Getting all the documents in order, ensuring your finances are clear and well-organized, and providing open channels of communication are some steps you can take.
It is also important to ensure your store runs on modern technology, and that investors are attracted to the sale by listing it in the right channels. While many business sales take long to complete, selling according to a schedule can help you close the deal faster. Just make sure buyers know you believe in the business’s success even after the sale to ensure investor confidence.
Author Bio:
Leon Collier is a blogger and academic writer from the UK who loves to write about a wide range of topics, from management to technology. He is currently working for college-paper.org that provides students with thesis, essays and dissertation help. When he’s free, he loves reading books and playing tabletop games with his friends. Follow him on twitter @LeonCollier12
