In the looming landscape of the business world, a wave of change is on the horizon as the baby boomer generation prepares to retire, flooding the market with businesses for sale. This impending surge not only raises concerns about the potential devaluation of businesses but also hints at a challenging and protracted sales process for many. In response to this, the pivotal role of preparing or “grooming” a business for sale has gained unprecedented significance, promising a crucial impact on the success and positivity of the outcome.
For countless business owners, the decision to sell marks the culmination of years of unwavering personal dedication and effort. A successful exit not only signifies a financial milestone but often paves the way for a contented and fulfilling retirement.
Strategic preparation or grooming ahead of the sale becomes paramount in maximizing a business’s efficiency, earning potential, structural integrity, and overall presentation. Neglecting this process, which is unfortunately a common oversight, can lead to missed opportunities and suboptimal sale prices.
While every business is unique, there are fundamental and straightforward steps that owners can adopt to ensure they secure the highest possible sale price. It is crucial to recognise that every business owner will eventually exit their business, and the key is to exit on one’s own terms rather than as a reaction to unforeseen circumstances.
Step 1: Define Your “Walk Away” Number
The first step in preparing your business for sale is to establish your “walk away” number. Whether driven by concerns about legacy, a smooth transition to family or management, or meeting financial retirement goals, consulting with a financial planner and a professional business broker is recommended. They can assess your current situation and help you identify the financial threshold at which you can comfortably exit.
Step 2: Seek Professional Advice
Don’t hesitate to seek professional advice early on in the process. Engage with local business brokers, accountants, or lawyers who can guide you through the preparation process. Their expertise can be invaluable in navigating the complexities of selling a business.
Step 3: Get Your Accounts in Order
Potential buyers are deterred by poorly maintained accounts. Ensure your financial records are in top-notch condition, accurately reflecting your business’s financial health. This step will prove beneficial during the appraisal and due diligence processes.
Step 4: Make Yourself Dispensable
Avoid the common mistake of being indispensable to your business. If you’ve named your company after yourself, take steps to ensure that your role can be seamlessly transferred. Buyers are wary of businesses overly reliant on the founder, and making yourself
dispensable enhances the business’s appeal.
Step 5: Lock in Your Employees
As an extension of making yourself dispensable, focus on grooming and retaining key employees. Encourage them to take on more responsibilities, creating a team that can seamlessly operate the business post-sale.
Step 6: Put a Team in Place
During the sales process, maintain a strong team to ensure the business remains stable. Transactional hiccups often occur when owners neglect day-to-day operations, causing concerns for potential buyers.
Step 7: Presentation
While numbers are critical, the emotional aspect of a transaction should not be overlooked. Buyers make decisions based on their feelings about a business. Ensure your premises and overall business appearance radiate success and professionalism.
Each of these steps aims to instil confidence in potential buyers, portraying your business as solid, well-structured, profitable, and more attractive than others on the market. In the dynamic landscape of business sales, proactive preparation is not just a choice; it’s a necessity for achieving a successful and lucrative exit.
LINK Bay of Plenty has accomplished over 1,000 successful local business transactions, establishing ourselves as the largest and most prosperous brokerage in the Bay. If you are contemplating the sale of your business in the present or upcoming future, feel free to reach out to us. We offer a complimentary, obligation-free, and completely confidential consultation with one of our specialised business brokers.
Seize the chance to enjoy the fruits of your hard work and ensure a successful exit. Connect with us today.
