Being self-employed is a dream for many people. Getting a business started is no small feat, nor is selling one either. I know and have been there, done that a few times. I’ve also helped business leaders buy, sell and merge companies. Maybe the business is at its peak, so you wonder if you should sell or not. Perhaps you see market shifts coming that will require your company to make significant changes to compete for profitability. For whatever reason, at some time in your business life you thought it was time to sell. Just because you put your sign up that says you're for sale doesn’t mean you’re going to get peak value. Let me share a few tips and strategies to help you prepare your business to sell.
Keep On Keeping On
One of the first rules of selling a business is that you have to keep your business running. A sale can take months or even years to capture the right buyer. Closing the deal itself can take months and months. You want to keep your business running on all cylinders until the check clears.
A buyer will want to validate all income claims you make. This means up to the day you sign papers and get a check. While in negotiations, the business must not decline during this period of time. Having a good management team in place is essential, and that starts years before you sell the business. Remember, the people you have and how you’ve done business is part of your assets and value. They are part of what keeps the customers coming into your business. If you have an excellent P&L, but you have uncontrolled chaos, it will bring your value down.
A deal isn’t done until the check clears, so that means you run your business until the last hour.
Start Preparing Today for a Sale Tomorrow
Many times, small businesses get so busy they don’t have the time to tend to details. Having a clean and orderly business should be what you do every day. If you only clean it up once in a while, it will show. This “attitude” also shows up in how employees manage on a day-to-day basis.
Being organized shows a buyer that you have a well-managed business. It shows that you and your people care for the property and the customers every day. If a buyer is interested only to find disarray, it leads to uncertainty or creates more worry than what’s needed and could slow down the sale. A disorganized business that’s even generously profitable doesn’t bring the most value and can be heavily discounted.
Now is the time to make sure all your record-keeping and accounting practices are in order. A buyer will want to see at least 2-3 years of financial records. As soon as these are requested, you want to respond vs. waiting days or weeks to organize them. Consistently keeping good records for assets, employees and inventory should just be what you do to achieve operational excellence.
Walk into your business like it was the first time. Call into your business like it was your first time. Does everything look, feel and sound the best it can be? It’s often the little things that can add up to real value when you sell a business.