Preparation when selling your business is hugely important and should be considered well in advance to placing your business on the market. To assist you, we have prepared a simple guide with the top 7 tips to help you get your business ready for sale. I hope you find it helpful
Number 1. Meet with your business broker to ascertain the current value of your business and get tips on whether you need to make any changes to achieve the maximum price possible. Once presented with your appraisal, ask as many questions as you need to have a complete understanding of the process, the justification behind your business appraisal, and the intricacies of the process from start to finish.
Understanding how your business is valued will help you to make the necessary changes to enable a successful sale.
Number 2. Ensure you have clean, precise and accurate financials. Ideally a good, strong healthy operating profit is great to see. With fewer add backs, the cleaner and stronger the business will look. When preparing your business for sale, ensure that you have your figures prepared by your accountant prior to meeting with your business broker as these numbers will also be the final figures used in the information memorandum which will be presented to potential purchasers once on the market.
Number 3. Have your systems and procedures well documented. A purchaser wants to have as much security as possible. In most cases they want to be assured that the business can operate without them being there. That said, if all of your business systems and procedures are clearly and precisely documented it means that they can be easily passed on to either new or existing employees, and also help in the training process.
Number 4. Ensure that the business premises are clean and tidy. Get rid of any old stock and sell any redundant equipment so that the purchaser can see exactly what they are getting. A cluttered premises will make the business look untidy, and may also make it seem to have reached its capacity with no room left for growth. Also, as applicable, make sure that all safety guidelines are being met.
Number 5. Talk to your accountant in relation to the tax implications of selling your business. Ensure that you know the market value of your plant and equipment as this will be documented in the information memorandum. It should be the fair market value; to have it too high could be detrimental to the vendor for capital gains issues, and too low gives the purchaser less to depreciate and carries fewer tax benefits.
Number 6. If possible, keep your stock level at a consistent level that keeps the business running smoothly. An overstocked business puts pressure on cash flow and working capital and is also a negative when you try to sell. It is important to remember that although you as the current owner may not have any cash flow issues, an incoming purchaser may not have the same access to such extra funds. So, keep costs to a reasonable level for the sake of the business cash flow.
Number 7. Make sure that your customer database is as broad as possible.
Document any supply agreements that you may have. Instill the buyer with confidence with the quality and accuracy of the business documentation. It must be precise, with more written and few verbal agreements.
For buying and selling business brokers with incredible attention to detail and thoroughness trust the brokerage services offered by Bottom Line Management, Inc. at https://www.botline.com, or call them at 470.990.0160. They have the experience to help you successfully sell or buy a business!