If you’ve decided it’s time to sell your business, and you’d love to start the next chapter of your life by Q1 of 2020, don’t despair. You absolutely can sell your business by 2020. I won’t lie to you, though: It’s going to take some work.
If you’ve already looked into what’s required to get the best price for your company, you may be overwhelmed by what seems like a complicated, drawn-out process. But, if you’re a conscientious and successful business owner, you’re probably already in good shape on most of the logistics. That means what you need, more than anything, is a simple plan of action.
Follow these six steps to get your business in shape, attract the right buyer, and get the very best price, all without letting the sales process drag out too long.
Step one: Nail down your exit strategy.
The first step of a successful, quick sale is getting your exit strategy solidified. It’s vital for you, as the current owner, to know the answers to some important questions before you even put the business on the market:
- Why do you want to sell?
- Are there any legal complications to navigate before the business can be sold?
- Can you afford to lose the income and/or live on the proceeds from the sale?
- What are you going to do with yourself and your time?
There are more questions that will likely come up that are unique to your business and circumstances. The point of this exercise is to make sure you’ve really thought this decision through, and that you’re not going to inadvertently get in the way of closing the deal when the time comes. It also helps you to prepare yourself emotionally for the sale. Don’t underestimate the emotional toll selling your business can take, especially if it’s been the main aspect of your life for some time.
Discussing matters thoroughly with an attorney and an accountant can make this step easier and ensure you’re not overlooking anything important.
Step two: Get your books in order.
As long as your attorney and accountant are familiar with your plans to sell, you may as well bring them into step two as well. The main goal here is to review all your company’s financial and legal records and make sure they tell the most persuasive story for prospective buyers.
In some cases, this may require a thorough overhaul of your record-keeping processes and/or a lot of research and fact-finding due to years of neglected paperwork. But, if you’ve routinely done a good job keeping up with the routine housekeeping work, this may be a fairly straightforward task.
You’ll want to arrange your records to answer all the questions a prospective buyer is likely to ask,and to do so in the most persuasive manner possible (short of falsifying information, of course.) In some cases, this activity may bring to light situations that could have a detrimental impact on your chances of selling or on the price you can expect to get for the business in its current state. If so, you need to decide whether it’s worth it to you to address the issue(s) and postpone the sale, or to move ahead with a lower asking price.
Step three: Perfect your curbside appeal.
When a realtor agrees to represent a homeowner trying to sell their house, they will often work extensively with them to list the most important improvements the home needs in order to facilitate a quick and profitable sale. While a few functional repairs may be necessary, most of these improvements are cosmetic in nature: a new coat of paint, a thorough cleaning inside and out, landscaping work, etc. The impact of curbside appeal can’t be overstated.
This same strategy can have an equally powerful impact on how quickly your business sells and how much it sells for. As early in the process as possible, take a long, hard look at your building and property. Make a list of items that need to be repaired or replaced, and make arrangements to do so. Then arrange for professionals to come in and do a thorough, top-to-bottom cleaning before you show the property to any prospective buyers.
Step four: Arrive at a realistic valuation.
The valuation of your business is easily one of the most important steps you’ll need to take when preparing for a sale, and it’s not something you should try to handle on your own. Work with an experienced business broker who’s familiar with your industry and your geographic area. They’ll be in the best position to ask all the right questions, gather the necessary information, choose the best valuation method and ensure you’re getting the best price possible. When it’s time to put your business on the market, they’ll also help find and vet potential buyers, making the process faster and less labor-intensive for you.
Step five: Ready yourself for due diligence.
The due diligence period is the opportunity your buyers will have to dive deep into your company’s records to confirm what appeared in your sales pitch, identify any red flags of concern to them and generally satisfy their curiosity before signing on the dotted line. This is an important part of the transaction as this is where most of them break down.
Since you’ve already completed step two, you should have plenty of readily available documentation to provide to buyers. Beyond that, you need to be prepared to answer their questions. To do that effectively without risking damaging the trust factor, you’ll need to be prepared with what questions are likely to come up.
Once again, relying on your team of professional advisors is the best bet here. Before meeting with your first prospective buyer, have a meeting with your attorney, accountant, broker and a commercial realtor (if the sale includes real estate). Take that opportunity to lean on their experience. Find out what questions buyers are likely to ask about your company and how to best answer those questions. If you and your team can identify any likely red flags beforehand and resolve them, that’s one less thing that can slow down or stop the transaction.
Step six: Market your business for sale.
In rare circumstances, all your preparatory work and/or the help of a well-connected business broker can land you the right buyer with almost no effort. If that’s how your sale works out, that’s fantastic!
But, in most cases, you’ll need to list your business for sale both online and offline, and you’ll want to invest something in marketing the listing as well so that you’re sure it’s being seen by the right people as soon as possible. Your business broker can advise you as to where and when you should list your business for sale.
If you follow this simple six-step program, you can likely sell your business by New Year’s Day. Then, you can ring in 2020 with the start of a brand new adventure!