5 top tips for selling your company

For business owners and entrepreneurs, selling a business is among the biggest deals they will ever make.

Very often, large amounts of money will change hands, and for most people, getting a good deal is crucial to the success of any future plans. The importance of getting the sale of a business right then, cannot be underestimated.

Here, we offer 5 top tips to keep in mind when selling a business of any size, giving you the chance to negotiate the best deal for you.

1. Plan at least 2 years in advance

   Forward planning when selling your business is really the core tenet of a successful sale. Many business gurus will advise you to start drafting an exit strategy as you create your business plan, continually revising it as your business grows over the years. This should include things like operating costs and other financials, transition plans, and of course, an up-to-date valuation.

   This type of planning ensures you know exactly what your business is worth to a buyer, as well as giving you the opportunity to highlight the most attractive parts of your venture, and even put you in the driving seat during negotiations.Planning ahead also offers other benefits, and even if you haven’t got the highly advisable 2-year head start, it’s never too late to begin drawing up your strategy. A decent plan will give you the psychological impetus to deal with the sale of your hard work and effort without becoming too emotionally attached. This ensures you will always look objectively at any deal presented to you and allow you to enter negotiations with a positive attitude.

2. Wait for the best time to sell

   This is a tricky one, but it has the potential to make a significant impact on the amount of profit you take away from any sale. Waiting for the best time to sell is no exact science but there are ways to mitigate any disasters by selling at the wrong time. Firstly, it’s a common mistake to sell a business when things are going badly, and by doing this you stand to lose a lot of potential profit. A better approach is to sell when your business is on-the-up, presenting buyers with a bright future for their investment.

   Secondly, market fluctuations are inevitable, and you will always want to wait until the market favours your particular type of business or industry. Make sure you trawl the market to see what’s available and what kind of prices are being asked. Additionally, ask yourself just how unique your particular venture is or whether it is similar to what’s already being advertised. Sometimes it’s better to hold off your sale if others are also selling similar businesses, particularly if they are in the same geographical area.

3. Keep marketing and broker costs down

   Your business might sell quickly, but it’s more than likely that it will take some time. In fact, most business sales take a number of months to complete. Additionally, you want to make sure your business gets the exposure needed to attract multiple buyers so you are in a strong negotiating position. With this in mind, it’s a good idea to keep advertising and broker costs down.

   Many SMEs can do this by using online marketplaces to advertise a business, negating the need to employ expensive brokers. This has the added advantage of allowing you to advertise for long periods of time at little cost, giving you the greatest exposure for the sale of your business.

4. Pre-qualify potential buyers

   Once you have some interest in your business and a list of potential buyers is beginning to take shape, it’s a good idea to pre-qualify them before moving to the next stage of the process. This helps to discount those buyers who are not considered serious, mitigating any potential for a sale falling through at the last minute.

   This process involves understanding the motivations for the buyer’s interest, identifying the buyer’s expected completion period, and perhaps most importantly, ensuring the buyer has the financial means to complete the sale. Put simply, a correctly implemented pre-qualification process will save you both time and money in the long run.

5. Be ready for life after the sale

   During the hustle and bustle of your sales preparation and the inevitable stress of the handover, many business owners find themselves in a state of shock immediately after the process is completed. Very often there is an element of sellers’ remorse that, if left unchecked, can severely impact life after the sale. With this in mind, planning for life after the sale is crucial to ensuring you can move on – both personally and professionally.

   Naturally, this preparation will depend largely on your motivations for selling and your specific future plans. Remember though, that such a significant change in routine can impact both you and those around you. For instance, if you are retiring, then make sure everyone is prepared for you to be spending more time at home. Equally, if you plan on returning to education, for instance, being prepared for life as a mature student rather than a successful business owner will allow you to keep your priorities straight.