When you started your business you may not have imagined getting to the stage of wanting or being able to sell your business. If this is an option you’re considering as you move onto other opportunities, or if you’re considering retirement, here are six tips that can help.
1. Know what buyers want
Someone who is interested in buying your business is likely looking for strength and stability, including a history of solid sales and a mix of revenue sources. They may also be looking at how the business could grow further. Buyers want to see that there’s room to improve your business and make it even more profitable in the future.
2. Analyze your business
Identify the strengths that can be highlighted in negotiations, and any weaknesses you need to fix before the sale, by completing a detailed analysis of your business’ strengths, weaknesses, opportunities and threats (SWOT). You can get your staff involved, survey your clients and look at what your competitors are doing to have a comprehensive view.
3. Plan to take action
Identify changes that will enhance your business’s value—from making administrative processes more efficient to strategically expanding your product line. Write down your objectives, assign responsibilities and set target dates. In the lead-up to the sale, these changes will likely become your high priorities.
4. Get your paperwork in order
When a buyer asks for a specific detail about your business, you want to have it at your fingertips. If you can’t produce information or documentation readily, it may come across as disorganized and raise questions in the buyer’s mind. The documents you’ll need will vary depending on your business, but they may include:
- Corporate financial statements
- Business plan
- Marketing plan
- Leases and service contracts
- Employment contracts
- Customer list
5. Prepare a sales presentation
It’s essential to be able to persuasively and succinctly present the qualitative features that set your business apart—like customer loyalty and repeat business, for example—as well as the quantitative details of your profit and loss. Your sales presentation can explain your unique value proposition so buyers understand why your business is a better prospect than other investment opportunities.
6. Assemble the right team
Professional advice can help you identify value you may have overlooked, provide an outsider’s perspective and keep negotiations as calm as possible. Put together an experienced team that may include:
- Chartered Professional Accountant
- Business lawyer
- Succession coach
- Chartered Business Valuator
Read more on this topic:
Manulife “Succession Planning at Manulife: Maximizing the value of your business” (booklet)