In many cases, selling a business will be even more difficult than running it in the first place. Your business has been our heart and soul for who-knows-how-long, and you’ve likely got quite a bit of work ahead of you. Experts advise business owners to begin preparing for sale at least twelve months beforehand, if not longer, to give you ample time to get everything in order. Follow these steps to prepare your business for sale.
Preparing Your Business for Sale: Assemble Financial Records
Prospective buyers will want to know about all of the transactions in which your business has engaged for the last several years, as well as adequate projections for future sales. Most buyers will be working through a business broker, who will go over your books with a critical eye. Make sure that your records are clear and uncompromised and that everything is kept in a safe location.
Preparing Your Business for Sale: Prepare Customers
Many business owners develop long-term relationships with valuable customers, which could create a problem for prospective buyers. Have you ever gone into your favorite coffee shop only to discover that its under new management? No more free double-servings or complementary upgrades, which might encourage you to shop elsewhere. Prepare your customers for the change in advance and inform them that you can’t guarantee continued preferred service.
Preparing Your Business for Sale: Cancel Extraneous Contracts
Evaluate your contracts with vendors and customers and decide which need to go. Anything that might cause a prospective buyer to go elsewhere should be cut, as should any contract that doesn’t help your business succeed in any way. If you have written or verbal agreements with customers, break them off before the new owner steps in.
Preparing Your Business for Sale: Codify Unwritten Policies
Many business owners have unwritten agreements or policies that they enact with their employees, which won’t be passed on to the new owner. If you know that your employees will expect to continue receiving the same treatment, codify those policies so that the new owner can continue them. Make sure to note anything that might help a prospective owner get along well with employees or customers.
Preparing Your Business for Sale: Consider the Location
If you are concerned about the location of your business, examine your lease with the real estate agency and find out when it expires. If you think that you would benefit by moving the business, do so before you put it up for sale. You should also make sure that the lease on your space won’t expire as soon as a new owner takes over. You should also make sure that your leases are up-to-date on equipment, vehicles or other necessary items.
Preparing Your Business for Sale: Evaluate Company Assets
Go through and catalog all company assets, regardless of their value. Decide which items you want to sever and which will remain with the business after it sells. Keep in mind that some buyers will be reluctant to assume ownership over a business that has complicated financial dealings, so you may want to sell off much of your assets before putting your business on the market. Your employees also qualify as assets, so find out which are likely to stay and which will go.