How to Prepare to Sell Your Business Simply in 2016
This is Part 2 of 3 in this blog post series about Selling Your Business in 2016. You can find Part 1 here!
While selling a business can be one of the biggest steps you ever take, it doesn’t need to be stressful or overly complicated. In fact, by following the steps outlined below, it can be fairly simple:
Have a realistic view of how long it will take.
72% of experienced business brokers recently interviewed stated that most business owners don’t allow enough time for an effective sale. As a result, the business ends up failing to sell, or selling for less than it could have because the sale was rushed.
Between six and nine months is the average business sale cycle, with 15 months at the top end. If you factor that realistic timeframe into your planning, you’ll be able to optimize the rest of the steps outlined below.
Start with a realistic estimate of your business’ value.
The initial ballpark valuation you get early in the process must be obtained from an independent source like an experienced accountant who specializes in business valuation or a business broker. These unbiased sources are in a better position to come up with a realistic estimate of your business’ value because they’re not emotionally tied to the business like you are.
You can also check the price that similar businesses are selling for on BusinessesForSale.com.
Get your business records and financials in order.
Incomplete or inaccurate records tell potential buyers one of two things:
- You’re incompetent, or
- You’re hiding something
In both cases, your business becomes far less appealing to them. If you want to look best to a potential buyer, you need to make sure your financial and business records are in order.
Be sure to review all legal documents, leases, permits, and contracts to make sure everything is up to date, easily accessible, and you’re personally familiar with what each document contains.
Do a thorough “spring cleaning” and maintenance on the property.
Much like when buyers tour a potential home “curbside appeal” has a huge impact on the perceived value of a business.
If the property, staff and equipment are messy and unkempt, the buyer may assume the entire business has been neglected. In contrast, a neat and clean place of business allows the buyer to focus on the true financial value of the business itself.
Start separating yourself from the business
It would be disturbing to a prospective buyer if both you and the buyer could not imagine the business running without you.
To avoid this perception, take definitive steps long before the sale to distance yourself from the day-to-day operations of the business. This will require staff development and management help, and may also require process changes to allow you to stay in the loop without needing to be there every day.
While selling a business will always be a significant event, following these six steps will hopefully help your sale go smoothly and successfully for everyone involved.
For more specific tips on how to effectively sell your business, read our free white paper, How to Sell a Business, A Step-by-step Guide.