Last Updated on 28 April 2022 by Gertrude
Do you have a business that you want to sell?
Are you thinking about retiring from work or venturing into a different business industry and you want to sell your current business?
You are in the right place.
There are so many reasons why business owners would want to put up the “for sale” sign on their businesses. From moving to a different location or closing down a business true to low sales.
Regardless of your reasons to sell your business, you have to prepare yourself for this process.
It is quite obvious that you do not want to sell your business to the first buyer that walks into your premises.
You want to make sure that you sell it to the right person at the right price.
Preparing your business for sale will take you time, effort and in some cases, some money to prepare.
If you do not skimp on the preparation of your business for sale, you will not only leave your business in the right hands but also make good profits in selling your business.
In this article, I will take you through everything you need to know about how to prepare your business for sale.
These steps are highly effective and they will help you to get the best deal in your business.
19 Tips on How to Prepare Your Business for SALE
Here are 20 ways you can prepare your business for sale today.
- Know your reason for selling
If you want to prepare your business for sale, then you must know the reason why you are selling your business.
Why have you decided to sell your business?
Are you planning on moving to a different location, hence making it geographically difficult to run this business?
Do you want to venture into a different business industry?
Are you running losses or low sales and you want to sell your business to someone who can revive it and better manage the business?
Are you just tired and want to retire?
Do you start your business as a short term investment and are now ready to sell it?
Knowing the reasons for putting your business up for sale will allow you to prepare your business the right way in terms of when you want to sell it and by how much.
For example, if you are planning to move, you will want to get things done fast and effectively.
- Set your objectives
What are your objectives when you want to sell your business?
When you set your objectives, you will have to state why you are selling your business, how you are going to do it and what you want to achieve from the sale of the business.
This is a very important step that you shouldn’t skip over because it gives you a clear vision of what you want and how you are going to achieve it.
If you are planning on selling your business part of the preparation process is to set solid objectives that will catapult you in the direction you want to go.
- Evaluate your business
Evaluating your business means going over your inventory and analysing how it moves, looking at the sales process, paying close attention to your customers and how they interact with your business, looking at your financials etc.
Before a buyer decides to take ownership of the business, they will want to look at how the business performs overall.
This is especially important if their intention is to operate in the same line of business that you are.
You need to provide a thorough evaluation of your business so that they may not feel duped and you suffer the risk of lawsuits.
You need to know how your business is as part of the process of evaluating your business.
- Get a business valuation
Business valuation means the amount of money you are going to sell your business for.
This is how much your business is worth.
You can get your business valuation from the startup costs that you had to incur when you were first starting this business.
If there are any additional costs that you had to incur, you can charge it to the potential buyer.
If part of the preparation process involves you revamping the business, then this calls for a higher valuation of your business.
I have to tell you though, that getting a valuation for your business is not going to be easy.
You need to have people who are going to help you to have a fair and accurate business valuation.
You can have financial advisors and legal experts help you with this.
- Define who might be your potential buyer
Prepare a list of buyers and define who can be a potential buyers for your business.
Doing this helps you reduce a lot of time wastage and also saves you money that you would otherwise be using on different marketing platforms.
Here is an example; if you are planning on selling a bakery business, your ideal buyer would be someone who has some baking skills, has interpersonal skills and is ready and willing to operate in a competitive business environment.
You cannot just sell your business to anyone who just walks into your premises.
Much as you are transferring ownership of your business, you need to know that you are living it in safe hands.
- Understand the profitability of your business
When you are preparing your business for sale, you need to know what makes your business profitable and announce your wins. Any time your business performs exceptionally well, you need to make it known.
This will not only build your business reputation but also attract a pool of buyers or investors who are ready and willing to buy your business.
When your cab understands what makes your business profitable, it becomes easier to identify your strengths and improve on your weaknesses.
This is what buyers want to see before they make a purchase so make sure you do not slack on this.
- Get your financial details in order
Prepare your books of account and make sure they are in order before you decide to put your business up for sale.
Make sure that your statement of income and financial position are well balanced so that the potential buyers can have a clear understanding of how assets and liabilities are distributed in your business.
You have to be honest and not leave out any details that may be of importance to the buyer.
You can hire an accountant to help prepare your financial details.
Just make sure it is someone trustworthy and reputable.
- Consult your financial advisor
A financial advisor will help you make the necessary steps to improve your business outlook in terms of financial performance.
You need to consult with a financial advisor earlier in the preparation process before the sale so that they can give you a clear path on what you must do to have a better financial standing.
Inform the pitch financial advisor of your intentions to sell your business.
They will help you get a valuation for your business, check your books of account, monitor your financial progress and help you meet your financial goals. This is a very important part of preparing for your business.
- Think of a price and a sales pitch
Once you have your business valuation, you can think of the price for which you want to sell your business and prepare a sales pitch.
The sales pitch should back up the price for which you want to sell your business.
Make sure that you prepare your pitch earlier before meeting with investors and potential buyers.
In your sales pitch, don’t forget to mention all the surprising benefits that your business has and the rate of return on investment.
Talk about the competitive advantage that your business has in the industry and the kind of market environment it operates in.
When you do this, you will increase the purchasing power of your potential buyers.
- Cultivate or improve a healthy workplace environment
The truth of the matter is that no one wants to buy a business that doesn’t have a conducive work environment for its employees.
When you are preparing your business for sale, look at the current work environment that you are offering.
Do your employees complain about it?
Have you made any changes concerning this?
Whether you are operating in an open office or closed office layout, you have to have a healthy workplace for your staff.
This includes installing safety equipment and fostering positive communication with them through training. If you are planning on transferring your staff to the new buyer, this is something you need to be keen about.
- Portray your business as a great opportunity
Make it look –to your investor– that investing in your business is the wisest decision they can make today.
Talk to them about how they can make a lot of profit and serve a wider market with this business.
Talk highly about your business.
Show them how reputable your business is so that they can understand they are passing up a great opportunity if they do not purchase your business.
You can sell your talk on your marketing platforms or when you have meetings with your potential buyers.
When these potential buyers can see your business as a great opportunity, they are more likely to buy your business.
- Invest in your business relationships
Fostering good relationships in your business is a very vital preparation process for your business before selling.
You have to have a good relationship with your customers, suppliers, employees and other businesses in your industry.
When you have a good relationship with your customers, potential buyers are assured of continued workflow and business growth.
Your suppliers will also be diligent to provide you with supplies in a timely fashion.
If you have a good relationship with other related businesses in the industry, you get to learn from each other and seize opportunities together. This is a good way to grow your business and attract buyers.
- Get your advisory team in place
When you are preparing your business for sale, do not do it alone.
Preparing a business for sale can be overwhelming and frustrating and sometimes important details can fly right over your head.
If you want to make sure you prepare your business effectively, get people who are going to advise you on how to do it. Have your legal team guide you through the legal requirements and processes.
A finance team will help you determine the price to sell your business and take you through your financials.
You can also get your family and friends on board for moral support.
- Make solid prospects for future growth
If you are planning on selling your business, you need to prepare for solid prospects for future growth.
This is what potential buyers want to see.
No one wants to buy a business that has no plan for expansion, especially in the long term.
You need to have a solid plan for how the buyer can grow their business and expand it into wider markets.
If you plan to scale it, then you should also prepare a plan for that.
When your potential buyers can see solid prospects for future growth, they are more likely than not, going to buy your business.
- Consider management succession
If you have a team of management and you want them to keep working in your business, then you need to talk to your buyers about management succession.
You need to know if their intention is to get a whole nother team on board or if they are willing to go with your team.
Knowing this will help you prepare effectively for how you are going to communicate with your employees on the way forward.
Always ask your potential buyers what management they want before you sell your business.
- Organise your legal paperwork
Your potential buyers need to see that all the legal documents are in order.
They need to know that what they are buying is legitimate.
No one wants to incur heavy fines for failure to comply with government rules and regulations.
Worse off, it is going to be bad if they have to shut down their business for your own negligence.
Just make sure that you get all the business permits, licence and tax certificates in order before putting your business up for sale.
- Make a good first impression
When buyers come to visit your business premise, make sure you leave a good first impression.
First impressions matter.
If you are selling a storefront business, make sure that you keep things in order.
Starting from the design of the business to how workers relate with customers.
Your buyers are going to come down to your business to see if everything is to their liking.
You have to make sure it is.
Maintain cleanliness and have an overall conducive work environment if you want to nail it with the first impressions.
- Put together all marketing materials
So you have finally prepared to sell your business.
The only way that buyers are going to know about your business is if you put your business details and information out there.
You need to prepare the marketing materials and strategies that you are going to use to allow buyers to contact you effectively.
When you are planning on marketing, you can do it both online and offline.
Go on social media and advertise your business.
You can also go to the press or talk about it on your website.
With offline marketing, you can hang up a “for sale” signpost next to your business or go the billboard way.
Do not forget to budget for the marketing strategies that you are going to use because it will cost you money.
Make sure they you have your correct contact details so that people will reach you.
- Keep your focused on your business
Sometimes when you are preparing your business for sale, you may lose focus of your business as it is.
Do not do this. Keep your eyes focused on how your business is still operating so that you do not start incurring losses arising from negligence.
The little you do to make sure your business keeps on running will be highly beneficial to you when you are selling your business.
Do not stagnate the business activities, but rather work to ensure full performance of the business.
When you get busy, you also embrace the preparation process.
This will attract potential buyers.
Preparing your business for sale is important because your potential buyers are going to drive a hard bargain to purchase your business.
You do not want to go at a loss when you are selling a business that you have put so much hard work and money into.
When you prepare your business for sale, you not only prepare yourself for any unexpected changes but also increase your selling power.
Buyers are more compelled to buy from a business that is well and proper.
Preparing your business before selling is one of the wisest decisions you can make as an entrepreneur.
Always create a list of your potential buyers and find out what their interests are.
Make sure that they are fully capable to pay you the sales price to avoid any inconveniences.
If you do not prepare your business for sale, you incur a very huge risk.
Do not do this.
Follow the guidelines in this article to help prepare your business for sale and sell your business effectively.