You’ve decided to sell your business. Now it’s time to get it ready for sale.
Taking time to prepare now will bring big benefits later. You’ll make your business more attractive to more serious potential buyers. And, importantly, earn you a higher final sale price.
While the needs of a business will vary depending on specific industry, below is a short list of some of the things you can do to prepare your business for sale.
Update Capital Assets
Objectively review all of your capital assets, including technology, infrastructure and equipment.
Are you still using outdated software? Update it. Running inefficient machinery? Consider upgrading. What about your company vehicles, hardware or building? An investment in improving these now will pay dividends when you’re ready to sell.
Upgraded assets does not just give a new owner extra years of depreciable value. They also save them the owner from the hassle of actually having to do the upgrades.
Refine and Document Processes
Buyers want to invest in an opportunity that will run smoothly right from the start.
That’s why refining and clearly documenting your business processes will make your business more appealing to a buyer. The new owner can step in and carry on where you left off.
Outlining processes on paper, including guidelines for each area of the business, will help a buyer better understand how your business works. At minimum, you should be able to provide a document outlining company policies and procedures.
Consider hiring a consultant to review your internal processes. An outsider’s eye will spot inefficiencies and offer solutions you might not recognize.
Audit Financial Records
Prospective buyers want to see proof of an organized financial system, and ideally, up-to-date audited financial records. If you haven’t organized your business financials and don’t have third-party validation, your business will be less appealing to buyers.
If your current system consists of receipts in a shoe box, get yourself an accountant who can put your financials in order.
Only then will you have the full and accurate account of your business that any serious buyer will demand.
Limit Risk in Cash Flows
While preparing your business for sale, try to limit cash flow risk.
This means identifying and fixing anything that could reduce the money immediately available to the business. You’ve got to ensure that revenue continues to come in while streamlining your costs.
Steps to limit cash flow risk vary by type of business. However, most businesses can take a few key actions: increase recurring revenue, find new clients to increase customer diversification and limit variable expenses.
Again, a consultant could provide the outside perspective that may be required to identify ways to improve cash flow to make your business more attractive to a buyer.
Your Main Goal in Preparing Your Business for Sale
When preparing your business for sale, the main goal is to do everything you can to make the business more appealing to buyers.
This means providing a clear picture of what the business involves and the return they can expect should they take over.
Any improvements you can make as a seller to make the buyer’s takeover process smoother and more appealing will contribute to a quicker sale and greater sale value.
Understanding what your business is worth with Arthur Klein at Small Business BC’s What’s My Business Worth? Preparing Your Business for Sale seminar on Thursday, February 16, 2017 from 10:30 am to 12:00 pm. Sign up today!
Are you taking advantage of Small Business BC’s wide selection of seminars for entrepreneurs and small to medium-sized business owners? Space is limited, so don’t miss your chance to register today.
And if you want specific questions answered for your business, make an appointment to meet with a Small Business BC Business Advisor, or if you have questions about buying or selling a business, schedule an appointment with an Ask a Business Broker now.