If you’re planning to sell your business, for whatever reason, it is absolutely crucial to ensure that you start planning early. To attract the highest possible interest, it makes sense to put in the hard work as soon as possible to make your business appealing to prospective buyers.
The sad fact is that many business owners make the decision to sell far too late, which negatively impacts preparation. It’s never too early to start the process, so here are six areas you should focus on.
1. Be clear what you want to achieve
There are many reasons to sell a business. A good way of staying focused is to make a list of those reasons, and perhaps incorporate them into a progression plan. These could include:
- Retirement: Whatever the reason for retiring, whether you have reached the right age, want to take it easier a bit earlier than planned, pass the business on, etc. it’s vital to understand a figure that will allow you to achieve your aim.
- Monetary gain: If you want to make a healthy profit by selling, it’s important that you continue to add value to the business whilst you’re the owner. Ways of doing this include keeping detailed records, constantly improving your offer, investing in your staff and giving them independence, and don’t be afraid to diversify.
- Trying something new: some business owners fancy taking the plunge into other sectors, and it’s important to know you will have the capital to do so.
2. Make sure you understand your accounts
Prospective buyers usually request to see records of three years’ worth of trading, so even if it’s a while off selling, make sure your accountant can advise on how best to present statements.
Items of interest would be an increase in profits, a consistent but varied client base, and regular revenue growth. Know your accounts in detail.
It’s also important to explain how you have dealt with financial hurdles during the COVID-19 pandemic.
3. Get your paperwork in order
A good idea is to gather all your important paperwork in one place; having one key file containing all the information a buyer needs could save a lot of time.
A file should contain:
- Any licences you hold
- Insurance policy documents
- Details of VAT and tax returns
- A full list of all your assets, including non-physical assets
- Building lease details
- Supplier information
- An anonymised, but detailed, staff list
- If you own a limited company, check the details registered with companies house are up to date
We recommend saving these as both a digital file and physical documents as a backup.
4. Maximise your profits
It’s vital to ensure your business remains profitable in the years running up to a sale, as this makes it more attractive to a potential buyer.
Ways to add value include:
- Manage the multiple a buyer uses against your profit figure
- Don’t think short term and cut costs and increase prices. Repeat customers are important.
- Make sure you monitor the profiles of both your suppliers and customers to ensure you are not relying on just one large area, which could massively impact you if it disappeared. Many buyers will not be willing to take that risk.
5. Market yourself
There are enormous benefits to marketing the business effectively online. Obviously, it should positively impact your sales and profit, but it will also give prospective buyers a good idea of the position of your online presence.
Make the most of online marketing by:
- Understand your USP (unique selling point) and use it consistently in all marketing material to make your business stand out
- Create and promote testimonials, they are a trusted way of marketing your business
- Review your SEO strategy – it’s important to be as up-to-date as possible, and if you need support, consider using a specialist digital marketing agency
- Set up your Google My Business, which is a good way of bringing in local customers
- Have a strong, regularly updated social media presence with your authentic voice
6. Review and detail your processes
Having a detailed document outlining all your processes can make any handover run much more smoothly once the sale has been completed.
The aim of having such a document is to ensure that the operational side of the business can run without you not necessarily being present.
It may also highlight software, systems and procedures that are out of date.
Ensure that the processes are easy to access by the people you need to see them, for example if a password is required, make sure that the relevant people know where to find it.
Have a detailed contact list of everyone involved in the processes, and if necessary, set up a screenshot guide to explain complicated processes.
It may be useful to include links to documents that explain specific processes in greater detail if required.
As we have stressed throughout, all this should be done well in advance of any sale to ensure that processes are reviewed and as up to date as possible.