5 Steps to Preparing to Sell Your Business
You are preparing to sell your business. Excited? Confused? Overwhelmed? Petrified? Likely, you are somewhere in the middle of all these emotions. Rest assured, this is completely normal. It means you’re both human and a conscientious business owner! But it also indicates that you could use some guidance, and this is an important realization.
We’ll start by covering some steps to preparing your business for sale. When you know the process, you can proceed with more confidence.
Preparing Your Business For Sale
Know this upfront: preparing to sell your business takes time. It can take months and even up to a year to line up all the variables that contribute to a successful transaction and transition. The planning and preparation are where much of the challenging work lies – but it is well worth it.
Determine the Value of Your Business
You wouldn’t sell a car without having at least a ballpark idea of its worth. You’d look it up on Kelley Blue Book; you’d look at what similar vehicles are selling for in your area; you’d factor in any wear and tear, dents, dings, or special features that would entice buyers. It is the same for your business, albeit on a much larger scale. You need to have an idea of what your business is worth. Not what you think it’s worth. Not what you hope it’s worth. But what it is really worth when it comes to the market.
An independent valuation is a must when you are preparing to sell your business. This professional does not have an emotional tie, a stake in the company, or a shirt in the game, so to speak. They’ll be able to give you an objective assessment by examining your financials, management structure, the market value of assets (including physical and intellectual property), capital structure, liabilities, future earning prospects, etc.
A valuation establishes your baseline. You know better how to price your business to sell.
Decide If Now Is the Time to Sell
When it comes to houses, we all know there are buyer’s markets and there are seller’s markets. The same is undoubtedly true for the commercial sector. What is the state of the business market? Look at comparables (comps); what types of similar deals have closed in your area recently? How are your competitors valued?
If conditions don’t look optimal, can you hang on until they improve? If they do look good, how can you move fast – but smart?
Retain Top Talent
Your people have helped make your business what it is today. If there is a buzz about you selling the company, they may jump ship. Understandable. They’re worried about their jobs and livelihood. But your top talent is also a key selling point.
Make sure you have a plan in place to retain these employees (if they choose) when the new owner takes over day-to-day operations. There are often retention agreements and payments to iron out, so be sure to cover this terrain with your business lawyer. And, of course, prioritize clear, transparent communication with your team as you are preparing your business for sale.
Retaining key employees provides continuity to the new owners – but also to customers. They, too, need to feel like they are not being abandoned.
Build a Team
We mentioned above that you need guidance and support when preparing your business for sale. The first step is to start building relationships with experts who can help position your company for an advantageous transition to new owners. Reach out to:
- Accountants who can prepare your company and you when it comes to personal and corporate taxes.
- Bookkeepers and accounting professionals who can get your financials in order.
- Business lawyers who specialize in transfers of ownership.
- Business brokers can tap into their networks to reach potential buyers, as well as help you navigate the legalities of the sales process.
- Business consultants who are able to provide you with sound guidance when it comes to building a company worth selling and taking the next steps towards that goal.
Build Value Now
You need to build a company worth purchasing. Think about this from a potential buyer’s point of view. They don’t want to take the helm of a sinking ship. Instead, they want to invest in a future with strong returns. Now is not the time to let up on your efforts to create a thriving business.
Here is another area where the right consulting partner can help. From increasing sales and decreasing expenses to automating and streamlining processes to expanding your customer base, there are myriad strategies you can implement to boost your business’s value.
Contact AMB Performance Group
Preparing to sell your business is a challenging stage, and it is riddled with financial and legal complexities, human resource intricacies, and a fair share of emotions. AMB Performance Group specializes in providing targeted solutions to empower you along this journey. Set yourself up for a successful sale – and a successful new chapter in your career and life. Contact us today.