5 Ways Your Business Sale Will Fail if You Don’t Prepare
5 Ways Your Business Sale Will Fail if You Don’t Prepare
Selling a business might seem like an exciting way to cash out, but there’s a lot more involved than just listing it and waiting for the offers to roll in. Over the years, I’ve seen businesses fail to sell (or not get anywhere near the expected price) due to a lack of preparation. Here are 5 essential items to consider before hitting the market.
1. Smooth Out Your Business Operations
Every business runs a bit differently, but complicated or overly owner-dependent operations can turn off buyers fast. Imagine buying a business only to find you’ve got to handle every supplier issue or customer problem yourself. The most attractive businesses in the market are those which are “running under management” and the owner isn’t needed for the day-to-day tasks. Buyers want financial freedom and a better lifestyle, not to be stuck doing everything. So, make sure operations are easy to understand, document everything, and hand over key roles to your staff as much as possible before starting the sale process.
2. Get Your Financial in Shape
You might know your business is valuable and making good profit, and your agent might agree with you, but does the buyer? Buyers need to see it clearly in the numbers. When they do their due diligence with their accountant, they’ll be looking for well-organized and simple financials. If the numbers are missing or don’t add up, they’ll back out fast. It’s a good idea to work with your accountant well ahead of putting the business on the market to make sure all the financials and reports are in order.
3. Make Sure Your Permits, Licenses, and Lease are Sorted
If your business needs any permits, certificates, or licenses to operate from council or any other authorities, they all need to be current and valid. Don’t wait until the last minute. This includes council approvals, equipment checks, and making sure your location is in good shape. And if you’re operating out of a physical space, make sure your lease terms are secured for a reasonable period to avoid giving any excuse to potential buyers. I’ve seen deals fall apart because of issues like these that could have been avoided.
4. Choose the Right Agent and Legal Rep
Not all agents are the same, so make sure you pick one who’s experienced in your industry, knows how to market the business properly, and has a strong list of potential buyers. An agent who’s a good negotiator, gets back to you quickly, and has good reviews can make a huge difference. And don’t forget your legal rep – you want someone who understands business sales and has the time to focus on your sale at every step. These two people can make or break your sale.
5. Have a Contingency Plan
Sometimes selling takes longer than expected. Maybe the market slows down, or the right buyer doesn’t show up straight away. Don’t plan your whole life around a certain sale date; keep running the business as normal and focus on growth. This way, even if the sale takes longer, you’re still improving the business and keeping things on track, both for your business and your personal life.
Tags: selling exit strategy tips small business
About the author
Sam Vasli
Sam possesses a great understanding, knowledge, and experience in various aspects of business ownership and operations. Over the past 14 years, he has ...
