When you decide to sell your business without the help of a professional, you need to have all of your affairs in order and a clear plan as to how the business will be managed.
Selling your business will take a significant investment of time, which is attention taken away from the dayto-day operations of your business.
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There are a number of things you can do to get the most out of the sale of your business.
- Prepare your business for its sale years before you actually want to exit the business. Start with the end in mind. When building a business, make sure you understand what a future buyer will be looking for and what factors they consider to be attractive in a business. Potential buyers are looking to see consistent revenue growth, profits and a long-term client base. The attractive factors of your business will be things that you would want in place even if you were not selling your business.
- Know what buyers are looking for. Some may be interested in an income, investment, opportunity or any combination of the three. They need to feel comfortable that the business will continue to generate the income they need. They will want to see an opportunity to grow the business. Recasting your financial statements and creating a growth plan is imperative to improving the value of your business to potential buyers.
- Prepare documents. You will want to have financial statements and tax returns dating back 3-5 years.
- Present to the buyers your company’s earnings in recast financial statements. The goal is to maximize the presentation of net income and cash flow. Buyers want to know the actual cash flow and the income-generating capability of the company. You want to help potential buyers recognize the capability your business has. You will also need to present to the buyer how much cash flow they will have available to them upon purchasing your business.
- Help a buyer see potential in your business by providing them a growth plan; a roadmap to opportunities that the new owner could explore, assuming additional resources were available. The plan needs to keep account of capital resources the potential buyer will have after the sale and should show the potential buyer where historic sales were constrained due to a lack of capital resources. A business’ perceived value shows a potential to expand, as long as the potential buyer has the resources to back up that potential.
- Physically make your business look attractive. Take an objective view of your business and get rid of the clutter. Organize, make it look attractive and give it a curb appeal for any potential buyer that stops by. A potential buyer doesn’t want to see a dysfunctional, unorganized office. The look of a business goes a long way toward building a potential buyer’s confidence that they are purchasing a well managed business.
- Plan what your life will be like after you sell your business. This is not a critical step to selling your business, rather a building block for preparing and securing your future. If this step is overlooked you will be left wondering what to do once you no longer own and operate your business. Whether you are retiring or taking up other opportunities, you will need to plan how the profits (if there are any) will be spent and what your next steps are going to be.
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Related:
- Download Your Pre-Sale Checklist
- Selling Assets vs Selling Shares (Stock)
- Tax Implications When Selling a Business
- Selling a Business With Debt
- How to Prepare an Online Business for Sale
Planning for the sale of your business involves investing your time so that you can see the benefits after the sale. You want to do everything to make your business look as appealing as possible for your potential buyers.
