Be Prepared – Ensure Your Business is in a Ready State to Advertise For Sale

If you have taken the decision to sell your business, you will no doubt have researched the internet for options on how to advertise your business. There are a large number of paid and free “businesses for sale” portals out there.

However, before you make that ultimate decision to advertise your business for sale, take a moment and ask yourself, is my business really in a ready state to advertise? Is it attractive to a potential buyer? Are my accounts in order? Would I invest in this business? If you have any doubts, no matter how small then take a few moments to consider the following points. They may save you months of heartache, disappointment and money:

1) Talk to the right people – firstly it is good idea to discuss your intentions with your accountant. Not only will this prepare them for any future discussions with potential buyers, they can also help advise on the best way to sell your business. Accountants are in the main very knowledgeable people who have numerous clients from all walks of life – they’ll know the true value of your business and it’s financial strengths and weaknesses. If you do not have an accountant then do yourself a favour – get one! I’ve lost count the number of times I’ve heard the expression “I can’t afford an accountant”. Absolute non-sense – my answer is “you can’t afford not to have one!”

Sadly many small business owners have the distorted impression that accountants cost a lot of money. A good, reputable accountant has one sole aim in mind – to save your business money and ensure you only pay what you have to. If they didn’t, they wouldn’t be in business very long. So many business owners try to take shortcuts by declaring and calculating their own accounts. Invariably, they end up paying far more than necessary. If you are selling a business, you need to ensure you get good financial advice to avoid paying over the odds when it comes to tax, capital gains and the valuation your business and its assets.

So get on the phone and call your accountant and get on the internet and find a good local professional. Most towns and cities have numerous accountants who charge very good rates.

2) Clean your act up – have you kept your business accounting books and tax records in order? If not, why not? A potential buyer wants to buy a business that has been well maintained. How does it look to a buyer if you haven’t looked after the most basic of necessities? It reflects badly on you and it will make any potential buyer nervous and skeptical. So before you even attempt to advertise your business, ensure all of your records are up-to-date, clear and transparent. Even better is to prepare summary figures to show profits and losses for at least three years and show sales patterns. In short, show that you know your business inside and out – it will illustrate a huge level of confidence that you have a complete understanding of your businesses operations, value and profitability.

3) Talk to an agent – by meeting with one or two agents, you get free impartial advice. Whether you decide to use an agent to sell your business is entirely your decision however, by talking to them for an initial consultation, you can get a greater understanding of how a buyer may see your business and it won’t cost you a thing. Agents are very knowledgeable people and have dealt with all kinds of businesses and all sizes of businesses. They will ask the questions that buyers will no doubt ask – if you trip up here, at least you have a second chance to get it right before you lose a potential buyer!

So get on the phone and talk to an agent. Ask them to visit your premises so that they can fully understand your business, what your operation does and why you want to sell. In most cases they will not charge you for an initial meeting and in many cases, will offer an initial valuation and feedback on whether they feel they can sell your business for you. Free advice is good advice so take it if you can.

4) Get the facts together – you’ll be amazed at just how many sellers are ill-prepared to sell their businesses and what little information they have ready for potential buyers. If you have access to a computer with word processing software, you can do yourself no harm by spending a few hours in putting together a business information pack. Inside this document you should include items such as a synopsis of the business, its history and its operations. Also include items such as the reasons for your sale, even if it is a little edited if you do not want to declare the full story. More importantly, you should list the details of the sale and what is included such as the assets, liabilities, property, goodwill and basic customer info (although do not include detailed names or companies).

Also take photographs and include these if they will help illustrate your products or services. Give as much information as you can within reason. Naturally, you need to be diligent and careful in what information you disclose to potential buyers as you do not want to jeopardize the value of your business as it presently stands but by going the extra mile and by preparing this document, you do yourself many favours. For example:

a) you show to any potential buyer that you have done your homework and run your business with efficiency and dedication
b) you’ll weed out the time wasters and prevent meetings or discussions with buyers who are simply window shopping
c) you’ll save yourself hours of discussions covering the same questions and answers, over and over again
d) the document can be used as a download on business for sale websites
e) the document can be used as a handout for meetings and is a great way to break the ice!

This little bit of preparation can go a long way. A few hours of your time could save months of waiting for a buyer.

5) Get a confidentiality agreement prepared – before you meet with anyone, get a non-disclosure agreement (also known as a confidentiality agreement) ready. They can be bought quite cheaply from bookstores in standard legal document packs or online for a few pennies. Potential buyers will ask all kinds of insightful questions regarding sales figure, profits, losses, suppliers and your customer base. Think first about protecting your operation – get a document ready and do not disclose anything to anyone until they sign and complete one.

6) Get a lawyer – just like an accountant, start speaking to lawyers and let them know of your intentions. Selling a business isn’t cheap and lawyers don’t come cheap either! Rates can vary greatly dependent on their level of experience, size of company and location. If you can agree to a fixed or capped fee then you could be onto a good thing. In the legal arena time really does mean money so ensure that you know what you will be expected to pay when you use their services. Very rarely does a business get sold without the use of lawyers or solicitors so if you can strike up a good relationship with one beforehand, it will help you a great deal. Legal costs can be very high so make sure you are prepared for the expense when you calculate the value and price at which you want to advertise your business at.

7) Look Smart – whether you own a shop or store, manufacturing business, a service agency or anything for that matter, make sure you keep your image clean and tidy. When your business goes on the market, you will start to get enquiries. It’s not uncommon for prospective buyers to pay an unscheduled sneaky look at the business so clean the place up and make it look pristine as you never know who may walk through the doors next. A clean business is an attractive business.

If you have now ticked all of the boxes above then great, you’re most likely ready to get advertising your business for sale. Good luck and don’t forget to read my other blogs on ways to buy and sell businesses successfully!