Managing the sale process: On a recent road trip I spoke with a lot of business owners who were in the process of selling. It amazed me that nearly all of these owners had some wonderful ideas about how the new owners could improve the business and what potential their business had.
It’s an interesting comment because whilst there may be potential unless some of that potential is in the profit figures it is usually something a buyer is not willing to pay for - it also raises a very simple question. Why aren’t you doing that?
Now there are very legitimate reasons (poor health for instance) but in the main – some of those could be classed as excuses. So my challenge to you is this – if you were selling your business what opportunities/potential would you tell a prospective buyer about AND what’s stopping you from doing it?
If you are thinking about selling your business, then some planning needs to take place ahead of putting it on the market.
As a business owner selling can be a very stressful time. Its difficult enough running a business without adding anything else to the pile.
All of a sudden there are extra things to deal with:
- Sales Brokers
a. Who to use?
b. What is the difference between a good broker and a bad broker
- Potential Buyers
a. Who is serious and who is just a tyre kicker
a. What Information do I have to prepare.
b. When do I hand that information over
- How much is my business worth?
a. What do I tell them?
b. When do I tell them?
c. What if they leave?
In the spirit of keeping things simple from the outset the following should be helpful:
- Start Planning for the sale as early as possible. 2-3 years would be ideal
• You would be surprised at what can be accomplished with sufficient planning to make a business more saleable.
- Keep your financial figures up to date!
• It sounds self-fulfilling but keeping your financials up to date will give you the best information about how much your business is worth.
• It will undoubtedly make it easier for your broker to sell it.
• It also helps from the viewpoint of a serious buyer.
- Having worked for buyers as part of potential sale the phrase the accountants are working on the numbers is frustrating. It can also
cast doubt about the information provided to date.
- If its taking so long to do up the accounts how do we know that the figures we have been given to date are accurate
- Set a selling period
• If it’s not sold by a particular date, take it off the market.
- Uncertainitity causes stress so setting a specific time period for selling your business will help manage the stress and uncertaintity you
and your staff may feel.
- This will also help you manage the fatigue factor when it comes to selling. How many times have you heard that the seller just got tired of
the process and eventually sold it for less than what they wanted.
- Have a plan B
• What happens if it doesn’t sell?
• What happens if I can sell it but the buyers will pay less than my asking price?
• Having a plan B helps deal with these situations.
- Your business may allow you to run it under management
- Whilst in the short term it may not be ideal it may partially allow you to achieve some of your goals in stepping back from your business.
- Thinking outside the box – could you sell your business to your staff?
Some of these may seem simple but a little bit of planning can save an awful lot of stress and ultimately put more money in your pocket.
If you’d like to talk about change management or transitioning out of your business, contact us for a complimentary consultation.