Whenever you sell a house you mow the lawns, clean the walls, wash the windows, weed the garden and make sure all the rubbish of years is off to the dump – so why don’t we do the same for our businesses?

In many cases our business may be worth much more than our house – after all – it can go on earning well into the future – can’t it? In many cases – no it can’t – because the business hasn’t been prepared for the owner’s exit, and 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!

A prospective purchaser devalues the business immediately – often to little more than asset value – usually a fraction of the real worth.

So – 10 simple steps to groom your business for sale:

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 etc that no longer apply.
2. Sort your succession – who 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 – narrowing 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 looks 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 to analyse the patterns.  Get your quotes book organised, follow ups done, win rates worked out.
5. Sort your job management – so that you don’t have to run the whole show – jobs boards, tool box 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. Telling the story – make sure your website, promotional material, yellow pages ads, newsletters etc are up to date, tidy and working well – the effects are measured, and all information is 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. Huge 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.

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 groom your house – you’ll say “why are we selling?”).

The object is to give you a free choice at that time – sell out or stay in – either way you’ll be winning.  Don’t leave it to fate – you’ll probably be disappointed at the outcome.  We help many businesses through this process – some sell, some stay on, some staff see the potential and what can be done and do a staged buyout over a few years. But it all comes down to you taking action now.