Is Your Business Ready for Sale?
If the prospect you’ve been waiting for suddenly appeared to buy your business, would you be ready for sale?
Just because you’ve decided it’s the right time to sell, and you’ve emotionally committed to selling – doesn’t mean your business is actually ready for sale.
Many business owners don’t understand that being prepared to sell their business – and their business being properly prepared for sale – are two very different things.
So before you decide on an approach to selling, here are five things you need to do to ensure your business is ready to be sold. If you’re properly prepared, you’re ready for a successful sale.
STEP 1: Build an Appealing Business
It sounds obvious, but in order to catch the eye of a potential buyer, you need to have a business that’s appealing. While this can be quite subjective, here’s some ways you can make your business attractive to buyers:
- Provide evidence of strong sales records that demonstrate consistent growth over the past three years;
- Profitability is good, and increasing year-on-year;
- Your service or product has an outstanding reputation;
- Excellent customer feedback, high levels of repeat business and a full order book; and
- The business runs without your day-to-day involvement.
STEP 2: Proof That Your Numbers Stack Up
Most businesses are valued using a simple formula, so astute buyers will want to see your financial results. It’s critical this information is available for a prospect to view once appropriately pre-qualified and a Confidentiality Agreement has been signed.
Remember, information that ‘stacks up’ will also give the prospective buyer confidence that they’re purchasing a well-run operation.
Step 3: Dot Your ‘I’s and Cross Your ‘T’s
Any serious prospect will also be looking for evidence of sound customer and supplier relationships. An organised Customer Relationship Management (CRM) database with documented customer contact and buying history will help with this appeal.
Formal contracts also need to be in place for your employees, as well as trading agreements with key suppliers.
STEP 4: Demonstrate That Your Business Can Fulfil its Sales Forecasts
Sales and marketing strategies will be of interest to prospects since these have a direct impact on your ability to fulfil sales forecasts. Increasingly, businesses (and in particular, service-based businesses) are relying more on enquiries and sales through the internet. If you can provide website and social media analytical data which tracks enquiries and conversions, that will also be of enormous value to your prospective buyer. Potential buyers will always be attracted to businesses that are future-proofed.
STEP 5: Help Instil Confidence in Potential Prospects
You’ll never get a second chance to make a first impression. Do the groundwork now to ensure you have everything in place to present your business at its very best. Potential new owners need to know they can successfully continue to operate your business.
It’s far better to be equipped for the day a prospect knocks on your door, rather than have an interested buyer and not be prepared.