Build a business with selling in mind:
If you intend to sell your business in the future, even if it is something you only think you might want to do; don’t leave it until you’re ready to actually sell to prepare the business.
It can take around three years to properly prepare for and sell your business. Too many business owners are ill-prepared for actually selling, which can cause them to end up with a much lower value than if the sale were planned in the beginning. If you want to sell your business, planning and building with this in mind can’t be understated.
Don’t make yourself indispensable:
An owner that does all of the work, by all accounts becomes the whole business. To sell your business, it needs to be able to operate without you.
If you have staff, use them wisely and try to build an operation that could easily function without you. The more reliance the business has on you to succeed; the lower the value will be when you sell.
A systems driven business will always generate a higher sales value than one that is highly reliant on individual team members.
So, from the start, make sure you have your processes documented and staff know how the business works.
If a buyer can run the business without any interruptions in the handover phase it’s always going to be a much quicker sales process with a higher sales value achieved.
Accounting for the taxman:
A good accountant will always save you money! Due to this, many businesses when they are run well will show slightly lower profits. When you sell your business, the profits need to be as high as possible to maximise value.
A buyer is always looking for value, more profit means the business is more valuable in the long term. Therefore it’s worth chatting to your accountant or your bookkeeper and make them aware you intend to sell your business well in advance.
Although in the short term you may end up paying more tax, you’ll end up with a better sales price when it does come to the time to exit the business.
Seek advice from an expert:
A good business sales advisor is essential. Someone with experience in your sector and who has handled the sale of similar businesses. If you instruct professional advisors, check the terms and conditions, because all too often they contain cancellation clauses.
Also, don’t be scared away by an overly generous asking price. Check the market and see what else is for sale to compare pricing, and never be afraid to ask for real examples of sold prices.
Having a business broker on your side can only ever be a good thing. They will help you maximise the end sale price.
Avoid taking risks:
Any sensible business owner will have invested in business insurance, but there are further steps you can take to protect yourself.
Have the right contracts in place; this is crucial to building value in a business. If you don’t have contracts in place you are leaving yourself open to customers just cancelling as soon as you sell or they hear you might be selling. Not good for the buyer.
Try and get a broad range of clients on the books. If you have a larger number of clients there is less chance the buyer will worry about a couple cancelling services etc.
They’ll be more confident that when they buy and are running the business themselves it will continue to be as prosperous.
Offer benefits to your staff:
We all know that the better you feel in work the more likely you are to stick around. Even after the sale has gone through.
Retaining key members of staff within the business and them having the knowledge needed to keep the business running is imperative.
Making sure people have access to the training they require and want, along with providing perks of working for your business are all effective ways to keep staff on board.
Consider intellectual property ownership:
IP is huge when it comes to selling your business. If a local competitor or even another company can just use the name of the business, manufacture the product you make or just copy everything you do then the less value you will see at the back end.
Not only is IP important to sell the business, it can help build more value if you have a novel/unique product that comes with a patent.
Keep checking the value of your business
As a business owner, you can sometimes forget to check in on how you compare to the goals you set when you first started your business.
How far along the “business ladder” have you come so far. There is no better way to understand how far you have progressed than to understand the value of your business. Our business calculator allows you to enter key bits of information, industry sector etc. and will provide you with an estimated value. Of course, if you want a more in-depth valuation then it’s worth booking a meeting with a business sales advisor.