As the pandemic caused by the novel coronavirus Covid-19 hit the planet, businesses everywhere ceased to operate and function as normal. This massive disruption affected sales for many businesses, while others could only anticipate the affects the coronavirus would have on them. While a lot of businesses continue to sell (albeit at slower rates), others wait for buyers to take them off the market. But how do these company owners prepare to sell their business? What do they have to do to get ready? Read on and discover more about the preparation involved for selling a business.
Before You Begin…
Before you begin to take the steps needed to prepare for selling your business, one of the most important things to do first is to have your reports and other important documents up to date. Inform the appropriate persons about any paycheck protection program loans you may have and bring in help where and when you need it. Set up a plan for your profits as well.
Also, consider the following before you begin:
The attractiveness of your business.
Make sure you try to get your business to look as attractive as possible. Remember that your business will only sell when it looks attractive to a potential buyer. Attractive business qualities include:
- growing profits
- consistent income numbers
- a strong pool of customers
- a major contract that extends far into the future.
Reasons for the sale.
Why did you decide to sell your business? Are you selling because of:
- Partnership disagreements
- Too much work to do
Timing of the sale.
Why is now the best time to sell? Start planning 1-2 years in advance to give you time to improve your:
- Financial records
- Business structure
- Customer base
Decide if you want a broker.
Do you want broker or an investment banker? Brokers take commission, so working without one will allow you to keep your money.
However, a broker can also give you the time and freedom to run and operate your business, while they try to get the highest offer they can. Make sure to constantly communicate with your broker and confirm your expectations with them.
10 Ways to Prepare for Selling Your Business
- Determine your company’s worth and audit your books.
- Prepare your financials with your accountant and create a 3-year financial projection.
- Develop the executive summary of your business and create your SWOT (strengths, weaknesses, opportunities, and threats) analysis.
- Put your business on the market and increase its visibility.
- Find prospective buyers.
- Field offers from potential acquirers.
- Find an M&A (merger and acquisition) advisor or consider the alternatives.
- Hire a controller or CFO.
- Cut unnecessary expenses from your budget and consider your current resource allocation.
- Have the buyer complete due diligence and close the deal.
By implementing the tips and methods found above, you will surely and successfully sell your business!