70 percent of all businesses listed for sale never see an exchange of hands. That means out of 10, only about three sell.
This can be a depressing statistic if you are thinking about selling your business. But crossing the bridge from those that fail to those that successfully make the sale, is not a matter of chance.
It is a result of careful thought and thorough preparation.
There are specific steps to selling a business that you should take, and how well you do at each stage determines the likelihood of making that sale.
Here are 7 steps to selling a business that you should take.
When it comes to selling a business, the preparation starts even two years before the actual listing. You have to make sure all your records are in place and are actually attractive. This means dealing with any damaging tax and legal issues, settling all debts that may make your business look bad and all your books are in a healthy condition.
2. Fine Tune Your Business System
Before listing your business, make sure your business machine is well oiled and in the best working condition. Make sure all employees are in place and are the right fit. Ensure that all paths to your suppliers and buyers are well defined, and potential buyers can clearly see how the business runs.
3. Find a Business Broker
You can self-sell your business, or you can hire a professional, but, even in view of commissions, you are better off hiring one. Selling a business involves a lot of twists and bends which are best handled by someone qualified and experienced. You also risk injuring the value of your business should you take time off and focus on the sale.
4. Perform a Professional Valuation
Of course, you are selling your business, and that involves pricing. But, how are you going to set the price if you don’t know the value? One of the most important steps to selling a business is to hire a professional to determine the value of your business. There are different methods of business valuation and the right fit depends on the nature of your business and the expertise of your valuator.
5. Get Pre-Qualification for Financing
While this may fall under the buyer’s responsibilities, ensuring your business is healthy enough to be considered for funding by the banks is a huge plus, and it makes your business more attractive to potential buyers.
6. Organize Your Contacts and Information
Selling a business involves moving about, contacting this and that person, and gathering all sorts of bits of information. For a less chaotic time selling, make sure all your contacts are well organized, and all information is correctly filed for easy access. The less chaotic the process is, the clearer you think and the better your decisions.
7. Have a Confidentiality System in Place
Should Word get out about the sale of your business way before the actual switch of hands, it will affect the running of your enterprise. There will be a change in attitude in your employees and suppliers, and even your clients. Some employees may even leave due to the looming uncertainty. You, therefore, have to have a system of carrying out the sale process that ensures confidentiality.
It is possible to sell your business in a stress-free manner that yields a comfortable profit, but you have to pay attention to the details. Once you have put your business in perfect order, with all your records at your fingertips, hire a professional broker to handle the sale.