Most businesses that are put on the market are never sold. Don’t be that statistic.
In a previous blog, I explored why you should always have your business ready for sale, even if you don’t plan to do it today.
It’s just a healthy way to manage your business! If you haven’t yet done it, I recommend reading it (here)!
Today we will explore HOW you will ensure your business is always ready to sell. The following are the key steps you should follow to put your business up for sale:
1) Determine the value of your business: The first step in selling your business is to determine its value. This involves assessing your financial statements, assets, liabilities, and other factors that can impact the value of your business. You should contact your Business Broker (click here to contact me for a valuation) to help you with this process.
2) Conduct a SWOT analysis of your business: What are your biggest Threats and Opportunities? What is working? What is not working? This is not just a 2-minute exercise; you need to dive deep into all your operations and understand precisely what needs to be done to improve the value of your business.
3) Focus on your business's value drivers: Specific drivers will make your company more valuable for potential buyers. Identify them, work on them, and make them your top priority. Where will you get the highest impact for the least effort? Where is the “low-hanging fruit”? Is it your sales process? Is it your procurement? HR?
4) Determine your business potential: Create a marketing plan specifying the growth potential. While it’s true that buyers don’t pay for potential, knowing their future growth opportunities will make your buyers more eager to buy your company.
5) Work with your Business Broker in identifying potential buyers: Let’s face it, your buyers will not come rushing to buy your business. Although BizBuySell is an excellent tool to sell your business, most significant business purchases are made with buyers that are familiar with your business way ahead of time. You can consider competitors, suppliers, clients, investors, private equity, family offices, etc. It would be best to work with your Business Broker to identify and contact them beforehand.
6) Hire a Business Broker: You may want to save a penny or two by doing it alone, but the fact that over 70% of businesses that are put to sell are never sold should give you an idea of how hard it is to sell a business. Better hire a professional; we will help you sell faster and for a higher valuation.
7) Learn the sales process: Again, a Business Broker will help you understand all the different steps of the sale, from a sales strategy to how to analyze the offers you get, to negotiation, to the closing of the deal.
8) Understand the psychology of a business sale: You need to have fundamental psychological aspects of a business sale in mind. Buyers and Sellers come from opposite sides and with opposite objectives. Arriving at the closing table is not always easy, even if the financial and commercial factors are handled.
9) Be prepared for the Due Diligence: Due Diligence is typically the most stressful part of the sales process. You need to be very aware of how it works and what your responsibilities are. Over 50% of business purchases die in this step, which means a massive waste of time for anyone involved. Be prepared for Due Diligence even before you put the business on the market.
10) Be prepared for closing the deal: Closing the deal involves preparing legal documents such as a purchase agreement, transferring ownership of assets, and obtaining necessary approvals and licenses.
11) Have a transition plan: There will be a transition period once the deal is closed. Make sure you have a transition plan in place. This may involve providing training and support, transferring customer relationships and contracts, and helping to ensure a smooth transition for employees. A good transition plan will help the buyer be more comfortable buying the business and help you sell it faster and better.
12) Have a plan for your life after the sale: Last but not least, you have a reason to sell your business. You need to make sure you have a plan associated with it. Will you retire? Are you going to buy a new business? Are you going back to work in a corporation?
In conclusion, putting your business up for sale can be complex and challenging. By following these key steps and working with experienced professionals such as a Business Broker, Lawyer, and Accountant, you can help ensure a successful outcome and achieve the best possible sale price. Remember, selling your business is a significant decision, and it is essential to take the time to plan and prepare carefully for the transaction.