Imagine, as business owner, you are about to review the good, the bad and the ugly of your business. Will you be happy with what is revealed? Here are some questions to ask yourself in evaluating your business:
- Is the business in great shape – growing and profitable?
- Is there a management team in place or is it completely reliant on you?
- Can the business continue to operate smoothly without you?
- Are there systems and procedures in place to ensure everything works post handover as it does today?
- Are the financial statements clean, excluding personal expenses?
- Are the agreements and contracts with clients, employees, contractors and suppliers in place? Are they up to date?
- Is the business as recession-proof as possible?
- Is there potential to use the existing business as a platform to grow, franchise or buy other businesses?
- Do you know what your business is worth in today’s market?
- Are you ready to hand it over? What will you do next?
If you have answered more noes than yeses, you’ve got some work to do before the time to sell is right. You want to take the business to market on your terms and not be prescribed by circumstances outside your control. Other considerations to play a key role are:
- Not knowing what you’re going to do next Saying you are going to take 12 months off is not enough. If the business has been a part of your life for a long time, to just cut it off and not have something substantial to replace it with will cause issues over time. Working towards replacing the business before you leave it will benefit all involved, truly.
- Not revealing all that needs to be revealed Trying to get away with holding certain information back just does not work. All comes out eventually.
- Not exploring all options prior to going to market Spending the time, effort and energy on selling your business may not be the best outcome for you and your family, nor hanging onto it. There are other ways to exit worth exploring so finding learned advisers is crucial.
Formulating your “A Team” around the sale process is paramount. Be sure, though, to only include those who have a track record in these particular types of transactions. If you’re not prepared to allocate budget to pay for the skills to achieve a successful outcome, then you may well regret the decision over time. Key specialist professionals to consider bringing together are:
- Business broker (me)
- Financial planner
- Finance broker
- Estate planner
Once in sale mode, as the seller, you have the right — at any time prior to the signing of an unconditional contract of sale — to modify the sales process, negotiate, accept a proposal from other parties or terminate negotiations at any time. It’s your business after all. Hence, getting the fundamentals as right as you can prior to selling should smooth out the selling process as much as possible. Best of Luck, Denise Hall