Preparing to sell

Selling a business is like selling a house. To get the best price, it has to be structurally sound, with all the paperwork in place. And a fresh coat of paint before it goes on the market makes all the difference.

The hard work of creating a saleable business begins years before the sale. It’s about building the right structure and developing systems that make it easy for anyone to run. When you’re ready to sell, add some polish to get the best possible price.

Building the structure

1. Plan ahead
   Make your business saleable from the start. Look at businesses for sale, then think what potential buyers might want.
   
   
2. Build systems
   Put processes in place so that everything works smoothly, even when you’re not around. A new owner will find it easier to step into your shoes.
   
   
3. Document everything
   Keep detailed records of your systems, plans, marketing strategy and customers. It’s valuable intellectual property that is worth real money to you.
   
   
4. Dig a moat
   Create a unique niche for your business with a distinct competitive advantage — what Warren Buffet calls an “economic moat” to guard against competitors.
   
   
5. Have a unique selling proposition
   A unique selling proposition differentiates you from competitors and makes your business desirable to a buyer.
   
   
6. Recruit outstanding people
   Invest in outstanding staff who can keep the business running without you.
   
   
7. Keep your financials up-to-date
   Make a point of maintaining detailed and accurate financial records.

Polishing it up

1. Sell at the right time
   Sell when your business is performing strongly, not when sales are falling.
   
   
2. Target potential purchasers
   Think about who’s likely to buy your business, then prepare a marketing package designed just for them.
   
   
3. Ramp up sales
   Increase your marketing spend to generate rising sales before you put your business on the market.
   
   
4. Renovate your finances
   Establish cash reserves or settled lines of credit, so you can offer purchasers a financially strong business. Write off bad debts, pay outstanding bills, and chase up overdue accounts.
   
   
5. Review plant and equipment
   Ensure your plant and equipment are up-to-date, well maintained and well documented.
   
   
6. Start the transition
   Begin handing over responsibilities to key employees.
   
   
7. Get advice
   Professional advisers, such as your accountant, your business banker, or a business broker can help you get the most out of a sale.

Where to find out more

• Commonwealth government guide

• Important information
  As this advice has been prepared without considering your objectives, financial situation or needs, you should, before acting on the advice, consider its appropriateness to your circumstances. All products mentioned on this web page are issued by the Commonwealth Bank of Australia; view our Financial Services Guide (PDF 59kb).