Selling a business | 4 min read
Selling your business? Getting your business prepared can make the sale go smoother and give you the best chance of getting the price you want.
Here’s what you need to do.
1. Get your paperwork in order
Interested buyers are going to want to look at your books. You’ll need to prepare:
- Financial records – including profit and loss statements, bank loans, forecast financials, and an outgoing costs breakdown
- Commercial information – supplier accounts, registration papers (for your ABN and other permits), asset and insurance details
- Operation documents – business history, supplier information, stock inventory lists, strategy, procedure and process documents, rosters, and marketing materials
- Legal details – staff and customer contracts, any franchise agreements, leases, or health and safety guidelines
- Forecasting documents – anything that shows intellectual property, revenue growth, or favourable market conditions to help buyers see your business as a good investment
These details will help you understand your business and its true value, and will also eventually help buyers with their due diligence.
2. Take a look at your lease
For a business that relies on its location, you need to make sure you’re offering potential buyers a lease agreement with reasonable time left.
If you don’t own your business premises outright, you need to take a look at your lease as soon as you decide to sell.
Firstly, check if there are any clauses that might come into play when you sell your business. If you find something that could affect the sale, check it with your lawyer before you take any action.
Then, talk to your landlord. If you want to sell your business with a lease agreement in place, it’s likely your landlord will need to approve the sale. While they can’t hold up the sale of a business without a valid reason, it’s a good idea to keep them in the loop.
3. Get an accurate valuation
Having an accurate valuation will help you get in front of the right buyers. There are many ways to value a business and many factors that can influence your price tag.
Before you settle on a price, do your research on similar businesses in your area and see what’s happening in the business-for-sale market. Getting the advice of a professional business advisor, accountant or lawyer can also help you settle on a realistic asking price.
It’s not uncommon for sellers to want to start advertising their business at a much higher price, with the assumption that buyers will negotiate the price down. But advertising your business with an unrealistic price tag can affect your sale in the long run.
4. Showcase the value
What’s important to you and what’s of value to a potential buyer won’t necessarily be the same. So take the time to figure out and demonstrate the real value you’ve built into the business.
People want a solid investment and to feel like they’re making a good decision. The best way you can do this is to give them as much detail as possible and show them what they’re getting for their money.
Better value for money means more potential buyers. So as the seller, it’s your job to highlight the attractiveness of your business and illustrate the value for any potential new owners.
Figure out what the features of your business are and put them front and centre. If yours is the only cafe for miles around, say so. If your cleaning business has contracts locked in for the next 12 months, make sure potential buyers know. If you have the top performing store in the whole franchise, shout it out. It may sound obvious, but putting your business highlights upfront will help set your business apart.
Additionally, while you don’t want to focus on the negatives, it’s important not to hide details about your business, even if they’re not flattering. If you leave it to the last minute to reveal issues, buyers are more likely to walk away. However, showing how you’re addressing any possible concerns can help buyers better understand your business and feel more confident that everything is on the table before they buy.
Getting organised will get you in the best position to sell quickly and for the best price. Now you know the steps to take you can confidently begin preparing your business for sale.
Find out the other steps involved in selling your business in our ultimate guide on how to sell a business.