This is your chance to reap the rewards for all your years of hard work.
So it’s important to be methodical and prepare your negotiating position in
advance.
Selling your business can be a hugely satisfying experience. It’s an
opportunity to realise the value you’ve worked so hard to build, and to create
long-lasting financial security for yourself and your family. That’s why you
need a well-considered marketing strategy. Here are some of the steps you might
take:
1. Build the structure
- Put processes in place so that everything works smoothly, even when you’re
not around. A new owner will find it easy to step into your shoes.
- Keep detailed records of your systems, plans, marketing strategy and
customers. It’s valuable intellectual property that is worth the real money to
you.
- Create a unique niche with a distinct competitive advantage. A unique
selling proposition differentiates you from competitors and makes you business
desirable to a buyer.
- Recruit outstanding people.
- Ensure your plant and equipment are up-to-date, well maintained and well
documented.
- Keep your financials up-to-date. Establish cash reserves or settled lines
of credit, so you can offer purchasers a financially strong business.
2. Decide what you’re selling
- Are you planning to operate a new business in the same industry? Are you
simply selling the business vehicle?
- Will you keep the trading stock or the goodwill? And if so, will the sales
contract include a restraint of trade agreement, preventing you from competing
directly with the business or approaching its customers?
- Having decided what you’re selling, document it thoroughly. Make a detailed
list of what’s for sale and the form in which it’s being sold.
3. Decide on a sales method
- Just like selling a house, you can either choose to employ an agent in the
form of a business broker, or sell it yourself. The Internet has made it much
easier to advertise your business and contact potential buyers directly. At the
same time, a business broker can provide valuable insight into the market value
of your business and the best way of finding a buyer.
- Whichever method you choose, it’s essential to get expert advice from your
solicitor and accountant.
4. Put a value on it
- Now comes the hard part — deciding how much you want for your business.
Most business owners overestimate the market value of their business, partly
because they underestimate the level of risk that a purchaser would be taking
on. It’s important to be realistic, flexible and ready to negotiate.
- Apply the same methods to Assess
Value as we outline in ‘buying a business’.
5. Prepare your people
- Let your team know what you have in mind well ahead of time. They’re likely
to be anxious, so reassure them that they’ll be looked after. They are
essential allies in presenting your business as a well-oiled machine that
anyone would be glad to buy.
6. Start marketing
- Prepare a detailed information package for potential purchasers, and then
begin advertising.
7. Negotiate
- Once you’ve found a potential buyer, the negotiations begin. Almost
inevitably, you’ll have to make concessions to win the sale, so it can be a
good idea to hold something back. Instead of conceding on price, consider other
ways you could add value. For example, you could begin by excluding trading
stock from the sale, and then offer to throw it in during the negotiation
process. Or you could agree to provide training, or to stay on as a consultant
after the sale.
8. Finalise the sale
- Once the contract has been signed, the purchaser will usually pay a
deposit, which is typically held in trust by a solicitor or business broker.
After that, the transition begins in earnest. Your sales contract will detail
requirements for payment of the balance of the price and the transfer of the
title and business assets, with settlement usually taking place within 30 days
after contracts are exchanged.
Where to find out more
