How to prepare your business for sale

Selling Businesses August 1, 2016

When you’ve made the decision to sell your business, the real work begins. Buyers will scrutinise your practices, financials, human and capital assets and the good will that you’ve generated over the life of your investment.

Taking the time to properly assess and value your business may involve a restructure and for some businesses this can take years to finalise, so determining why you’re selling is critical in determining the factors that will affect the sale of your business.

Reasons for Selling

There are many reasons for business owners to sell up, just as there are many reasons for prospective buyers to express their interest. Typically, your buyer may be looking to expand on an existing footprint in the market or, in the case of a trade, leverage existing business opportunities to increase visibility and market share.

Your reasons for selling may be related to your age, your changing interests, health, or maybe just stagnation in a small business that you recognise could grow under a change in ownership. Ask yourself the most important question of all when you’re looking to sell your business: why sell the business?

Once you’re clear about why your business is for sale, you’ll be able to be clearer and more honest about what you’re trying to achieve and the real value of your business. Honestly and integrity go a long way in getting the best price for your business and more importantly, insures against any surprise litigation after the sale.

While retirement is one of the most popular reasons for selling, business owners are increasingly looking at businesses not only as an income stream but tradeable asset that is part of a complex financial plan. Consider your long-term goal as you ready your business for sale.

Setting Yourself up for after the Sale

Once you’ve sold your business your career doesn’t necessarily need to finish, having an idea on what you’re going to do after the sale is important to bring clarity on your next steps post sale.

When the Time is Right

The best time to sell a business is during a growth phase or increased stability. Selling is also a very time-consuming process, sometimes taking up to 2 years to assess the financials, assets, succession planning and even your own long-term goals. By keeping an accurate account of your revenue, overheads, assets and evaluating your business plan regularly you’ll put yourself in a position to capitalise on the sale of your business at a moment’s notice.

Failing health can be one of the most emotionally and financially devastating situations for a business owner to put themselves into. By planning for the worst-case scenario, your business will be in an excellent position to take advantage of market and personal dynamics.

Invest in a Business Broking Relationship

A good business broker can be the difference between a sale and a windfall. Investing early in a relationship with a business brokerage will ensure you have the details you need to make the most of the sale of your Sydney business.

Click here or call 02 9552 1111 (9am – 5:30pm Monday to Friday AEST) to speak to an expert business broker at LJ Hooker.

No Tags

  • Ethical Business – People before Profits

    by on October 16, 2016 - 0 Comments

    Businesses around the world are increasingly operating under a model that uses holistic techniques and strives to be ethical. Called holistic businesses, these organisations consider the impact of every process when developing policies and procedures. This is opposed to focusing on specific components, such as profit. Ethical business practices involve ensuring the highest legal and […]

  • A Good Broker, a Good Accountant & a Good Lawyer

    by on November 11, 2016 - 0 Comments

    Starting a business can be intimidating. You need money to live on, money to buy equipment and money to pay staff; all while finding customers and complying with the relevant laws. Lawyers and accountants are expensive, which can make it tempting to forgo these services to reduce your costs. This would be a terrible mistake. […]

  • 5 Mistakes to Avoid When Buying a Business

    by on September 3, 2016 - 0 Comments

    It easy to fall into any number of pitfalls when you’re buying a business for the first time. After all, you’re ready to be your own boss and take charge of your destiny. You’re excited to build value from an established business that looks successful and has a great balance sheet. As business brokers with […]

  • What is EBITDA for Your Business?

    by on January 2, 2017 - 0 Comments

    Having a reliable measure of your business’s financial health is important to ensure its viability and its resale value. EBITDA (earnings before interest, taxes, depreciation and amortisation) is an accounting technique that offers a standard measure of profitability. Unlike other net income calculations, which use simple formulas like revenue minus expenses, EBITDA allows analysts to […]

  • Is a Franchise Worth Your Investment?

    by on August 26, 2016 - 0 Comments

    Buying into a franchise can be a successful strategy for building wealth. You can create value within an established, branded enterprise and benefit from established processes and best-known methods. Similar to any small business opportunity, make sure the franchise is a good cultural fit and skills match. Buying a Pizza Hut probably isn’t the best […]