subject: About Selling Your Business [print this page] So are you thinking of selling your business? Even if you don't plan to sell for some time, it's a good idea to start to prepare for the sale of your business now.
This is the first e-mail of our e course for "10 things every business owner must know about maintaining the value of their business and preparing it for sale". Its essential reading for every business owner, especially if you are in the process of selling your business.
When a buyer is interested in a business, the first thing they want to see is the financials. No matter how much a buyer likes a business, if these don't add up, they will quickly lose interest.
The second thing the buyer wants to know: what is the current owner's role and hours, plus what skills they require to run the business.
At the very least, buyers expect to see 12 months of good, clean financial figures; preferably, you will have 3 years of data to show them. I am referring to profit and loss, balance sheets, and plant and equipment.
It's common for business owners to also combine business and personal expenses to reduce the business's exposure to tax. These are called "add backs." While most buyers accept this practice, this information should be clearly noted in the financials, or it can create doubt for the buyer.
Now that you know the basics to getting your financials ready, the first step you should take is to prepare the information in an easy-to-understand format. Plus, you should note any personal expenses in your documents.
Then, you should determine your role in the business, how many hours a week you'll work, and what skill sets you require to run everything. If not properly looked at, this sort of thing can really limit the number of buyers the business will attract, and, of course, the sale price.
For example, if you are a plumber working for yourself and doing all the work yourself, you are limiting the amount of work you can do as a whole. However, if you employed two other plumbers to do the work, you could focus on coordinating the jobs, pricing, and ordering. This will allow workers, including you, to maximize their skill sets. Essentially, you would attract a much wider range of buyers and could even demand a higher sale price because of your efficiency.
The less you personally need to work in the business, the more the business is worth.
In preparing your business for sale, you also need to consider the name of the business. If your name is John Smith and you own John Smith Plumbing, you would be better off changing the name in preparation of the sale to something else (eg. "Southside Plumbing".) By disassociating your name with the operation, your business could transfer well to the buyer.
To summarize - get your financials up to date, review your role and hours, and, if the business is related to your name, consider changing it.
If you need assistance, Asset Agents offers a free consultancy service. Contact us at assetagents@gmail.com or phone 07 3103 5616.
by: Vishal
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