Reasons why you should prepare your business for sale
If you are looking to sell your business, it is a good idea to prepare your business prior to selling.
Due to the recent pandemic, there will be many businesses up for sale so it is up to the seller to present their business in a way that makes it stand out of the crowd.
As is the case with selling real estate where sellers tidy up and stage their property prior to selling, business owners hoping to sell should prepare their business for sale to help potential buyers see and understand the value of their business.
Buyers will want to know your business inside out, so the idea is to avoid giving them a reason to decide against buying your business.
There are several low-cost ways to tidy up your business prior to selling and it is a good idea to prepare several months in advance.
Review and secure all intellectual property
Ensure that the intellectual property in your business such as the trademark for your business name and logo are secure.
Take this time to also review all contracts, franchise or business agreements, licenses and permits.
If it is not up to date, get this sorted prior to selling so that it can be included as a part of your business when you decide to sell your business.
Review employment contracts
Go through your employment contracts and scrutinise your staff’s accrued entitlements. There may be some staff members who have an unreasonably high amount of accrued annual leave which will add to your business’ liabilities.
Speak to your staff and see if they would be interested in using some as this will help make it easier for the future buyer to manage the business with fewer liabilities.
Finalise and collate your financial paperwork
Your business should legally be up to date with its financial and legal paperwork but sometimes things come up and get in the way. If you intend to sell your business, get all your paperwork sorted as buyers will ask for it as part of their due diligence process. It is also important to organise a non-disclosure agreement/confidentiality agreement to present to interested buyers before sharing sensitive information about your business.
You should have all of the documents below available for them to review upon request:
- profit and loss statements
- balance sheets
- bank loans
- forecast financials
- depreciation schedule
Review and update all operational documents
Go through all databases and internal spreadsheets and ensure that information is accurate.
Documents such as your:
- Supplier accounts and details
- Stock inventory lists
- Strategy, procedure and process documents
- Marketing materials
Tidy and clean up your business
It is commonplace for sellers to “stage” their property when selling real estate. This process normally involves strategically placing rented furniture and decorations to make the home look more appealing to potential buyers.
If your business is based in a physical location such as a shop, cafe or retail store, you could make your business more appealing by cleaning, sprucing up the decor and merchandising.
Although it sounds intuitive, many business owners put little to no effort into selling their businesses. Performing these tasks will help make your business stand out with little to no investment other than time and effort.
Review your lease agreement
If your business is operating on leased premises, then review the lease agreement to ensure that there are no legal implications of selling your business. There may be issues that need to be looked into or resolved prior to selling.
You do not want to offer a business that relies on its location for sale if the remaining lease is an unreasonably short period of time.
Speak to your landlord as the landlord is usually required to approve the sale especially if you intend to sell the business with the remaining lease agreement. They cannot withhold a sale without a valid reason.
Lastly, run your lease agreement over with your lawyer to see if there are any other issues.
Take nice photos
Many businesses that are listed for sale online use a generic stock image as the featured image. Having a stock image used as your listing’s featured image will make your listing blend in with all the other listings that have the same generic image.
If you are selling a business that includes an office or shop, you could make your business listing stand out by taking nice landscape photos of your office or shop.
This is arguably the easiest and cheapest way to make your business stand out. If you do not have the latest smartphone to snap a few photos, one of your family or friends most likely will.
If you intend to sell your business in the near future, plan in advance and prepare your business beforehand to maximise the final selling price.
When in doubt, speak to a professional business broker and get some advice on how you can get the most out of your business.