Selling a Business? What You Need to Know
Most businesses today last about five years. That’s a short time frame in which you have to build capital in your business before you sell, merge or exit in less fortunate circumstances.
Your marketing strategy may be the best vehicle you have in selling your business for the price you want when you’re ready. Creating value through a consistent approach to your value proposition that ripples through your product, service, people and customers will deliver in the end.
Preparing your business for sale starts from the day you purchase or start your business. With a well-considered business plan and an executable marketing strategy, your business has an excellent foundation from which to grow and flourish.
In the absence of a clear vision and pathway, taking some steps in hindsight can make a huge difference. Assume you’re selling to the most fastidious buyer and prepare a transparent presentation of your business.
Assemble a Team
Your accountant and solicitor are essential to the sales process. A business broker on your team can provide an appraisal, similar to a broker for your home, as well as an objective analysis of the market. Business brokers who know your category and the market you operate within are also the best method for identifying qualified buyers.
Your team will help you to ensure all documentation related to the business is properly recorded and accounted for. With fewer questions from buyers, you and the broker can focus on identifying better-qualified buyers.
Quantify Your Assets
The buyer of your business isn’t buying what you’ve built today. They’re buying what they can make of your business tomorrow. You’re selling potential and promise. Unlike a home, a business needs to deliver solid income and earnings.
If you’ve been in business for many years, the good will you’ve built in the community – local, state, international – is worth something. You’ll have tangible and intangible assets within your business. The intangible are not as easy to value or liquidate but they give your business permission to exist, expand and innovate.
| Tangible | Intangible |
| Real estate | Brand |
| Computers, vehicles | Goodwill |
| Plant machinery, equipment | Community involvement |
| Employees | Location |
| Trading partners | Intellectual property, patents |
Be Transparent
Integrity goes a long way in establishing mutual trust and respect. Precision and honesty with any liabilities, limitations, etc. will net you a better outcome in selling your business.
Detailed records of your systems, plans, organisational structure, job descriptions, marketing initiatives and improvements will give the buyer peace of mind. A legible and highly detailed financial ledger will also show that you have built a business with vision and care.
Call in the Experts
As Australia’s leading business broker and only broker operating within a real estate group, LJ Hooker Business Broking has more than 16,000 buyers. Our bespoke database is designed specifically to manage business acquisitions and mergers. For more on how to sell your business, visit us online or call 02 9552 1111.
