You’ve poured your heart and your soul into your business. All the time and effort that you put into your business has been paying off, and now you feel it’s the time to sell that business. What’s the next step? There are actually several next steps that need to be taken when you are preparing to sell your business. You’ll want to work with an experienced advisor that can help you with a business exit strategy. But even before you do that there are some things you can do yourself.
Know What You’re Getting Into When Preparing to Sell Your Business
Selling a business is a big undertaking, and it takes time. Generally, you should be making preparations to sell your business 1 or 2 years before the sale. But you have to start somewhere. It can be difficult to know where to start, so we’ve put together a preparing business for sale checklist that you can use when you are preparing your business for sale.
Determine if the Business Should Be Sold
Not all businesses are appropriate for sale. For example, if a business in consistently unprofitable it is probably better to close the business. Is your business profitable? Is it in an attractive industry? What shape are your assets in? What is the quality of the relationships you have with you suppliers? These are all the kinds of questions that you need to asking yourself when preparing to sell a business and when determining if your business should be sold.
Articulate Your Goals
You need to be able to clearly define what it is you are trying to accomplish from the sale. Are you looking to retire early? Have you received a more profitable job offer from another company? Perhaps you have become bored with the business and want to move on to a new challenge. Another aspect of defining your goals is to determine what is a realistic amount of money that you would be will to or be able to accept for the business. Having clear and well-defined goal is a big part of preparing to sell a business.
Discover What the Business is Worth
Once you have clearly articulated your financial goals, you will need to find out what your business is worth. This is a complicated process. But the simplest way to think about business valuation is to consider a business’s worth as a multiple of its profits. The multiplier used will vary depending on the industry and the size of the company, but it is not uncommon for a business to be valued at anywhere from 2 to 10 times its yearly profits.
Prepare Past Financial Statements
Any potential buyer is going to be doing their due diligence. Part of this due diligence process is going over your financials from previous years. Make sure your financial statements are clear and easy to understand. Any potential buyer wants the deal to go as smoothly as you do, so make it easy on them by making your financials organised. This is an important step, so it’s something that you may want to bring in an accountant to help with.
Organise Past Tax Returns
This is another step that you may want to bring in an accountant for. Knowing about and understanding the tax situation of a company that is for sale is a further part of a buyer’s due diligence process.
Make an Executive Summary
An executive summary is your chance to really sell your business. An executive summary will contain a company’s mission statement, operations summary, management structure, description of products or services, competitive advantages, and any other pertinent financial data. A well written executive summary will go a long way in making your business attractive to a potential buyer.
Get help when preparing to sell your business
This preparing business for sale checklist is a good place to start when it comes to preparing your business for sale. But there is so much more to the selling process that exceeds the scope of this blog. It all depends on your individual circumstances, which can vary and can be quite unique. It’s best to contact a business advisory firm to assist you. Taggart & Partners can provide you with the services you need to sell your business and get maximum value. To discuss how we can be of service to you, please give us a call at (07) 3391 1188, or email is at enquiries@taggartandpartners.com.au. We look forward to working with you.