Is your business for sale? Whenever you prepare a house for sale you mow the lawns, clean the walls, wash the windows, weed the garden and make sure all the rubbish is off to the dump.  So why not do the same when you have a business for sale?

In many cases, your business may be worth much more than your house. After all, it can go on earning well into the future. In many cases – it can’t – because the business hasn’t been prepared for the owner’s exit. All of a sudden we find all the intellectual property, tricks and techniques, customer knowledge and sales systems are between the owners’ ears and nowhere else!

In this case, a prospective purchaser would devalue the business immediately. Once sold, it would be worth little more than asset value. That’s usually a fraction of the real worth.

So we would like to share some tips to help you prepare your business for sale:

10 simple steps to groom your business

1.

Get the legalities in order

Tidy up your shareholding, directorships, personal guarantees, any trade or bank loans, get the whole legal side in a file, organised and tidy.  Get rid of any old loans, debentures, and guarantees that no longer apply.

2.

Sort your succession

Which of your staff can run the business in your absence? If the answer is “nobody” you have a problem – only another “owner-operator” skilled in your industry will look at the business. This narrows your field of prospective investors dramatically.  Grooming your “2nd string” may take up to two years, or even more depending on your business type.
3.

Sort your financial systems

Make sure you have a simple, clean and tidy accounts system, reports up to date and neatly filed.  Ensure your debtors are up to date, (purge bad debts, chase slow payers) and that your aged creditors look tidy.
4.

Sort your sales systems

Be able to show a tidy and organised customer database – able to be mailed to easily. Sort by size, and type if necessary. Work out the potential growth from your customer list, using Hi/Lo reports analysing the patterns. Get your quotes book organised, follow-ups completed, win rates worked out.
5.

Sort your job management

So that you don’t have to run the whole show – jobs boards, toolbox meetings, efficient job card and time logging systems – able to be run by your foreman/admin people, or by your staff themselves. Prove your cost-effectiveness.
6.

Work out where the next 3 to 5 years growth may come from

Any purchaser is buying the future, not the past – and if you don’t spell out the future (and who else can?) then all they CAN see is the PAST – the previous financial performance – and your business may be devalued!
7.

Tell the story

Make sure your website, promotional material, yellow pages ads, newsletters etc are up to date, tidy and working well. The effects should be measured, and all information filed in one place, easy to show a prospective investor.
8.

Tidy up your staff files

All employment contracts, job descriptions and performance assessments up to date and in one place. Make sure no anomalies exist – like your cousin in the despatch bay being paid twice (or half) the going rate!
9.

Tidy the premises

Get rid of all that scrap, old machinery, and years of clutter. If you can’t bear to part with it – put it in storage or take it home. It may be treasure to you – but it’s just junk to a purchaser!
10.

Spring clean

Floors, walls, ceiling, lighting, building exterior, signage, grounds, vehicles and parking – just like selling a house. DO pay particular attention to staff facilities – smoko room, toilets and hygiene facilities. These “hidden” areas convey more about how you’ve run the business and the attitudes of you and your staff than you may think.

Your choice

Once you’ve done all that – you have a free choice. After all, with a polished, groomed business you might no longer want to sell. Just like when you prepare your house for sale – you’ll question whether to love it or list it.

Choose to sell out or stay in – either way, you’ll be winning.  Don’t leave it to fate and risk disappointment at the outcome.  We help many businesses throughout this process. Some sell, some stay on. Helping staff to see the potential for what can be done can encourage a staged buyout over a few years. But it all comes down to you taking action now.