Best Practices for Selling Your Business
When it comes to making decisions as a business owner, you already know how important it is to carefully consider each step of your planning and execution. Given that selling your business is likely the final and most significant decision you’ll ever make for it, researching and planning the best way to proceed is sound advice.
Have you been thinking about selling your business? Maybe a personal, family, lifestyle or industry change is perceived, and you know you need to move on. The best thing you can do for your business between now and whatever future date you decide to sell is to start making decisions that increase its value to potential buyers. Keep reading this brief post for some general insights into this process:
Take yourself out of the loop
This might seem strange as you are the central piece of your business, but if you want to sell it, you’ll need to be able to demonstrate to potential buyer’s that the business has value WITHOUT you. That is, you’ll want them to see a strong management team and operating model that will obviously continue to thrive long past the time you’ve stepped away.
This makes your company more attractive because there is less hassle for potential buyers and they can see the ability to scale (if applicable) more readily.
In order to get the most out of our efforts to increase the value of your company, get started well before the time to sell has actually arrived.
Not sure what that looks like? Start with resolving inefficiencies, reducing costs, and improving operations and cash flow so that your profits are stronger in ways a potential buyer can quickly understand.
Implement Strong Financial Controls
Because of the everyday pressures of running a business and the responsibility you may feel to those that help you run or operate the business, chances are you will find you have a few opportunities for improvement in your financial controls. Strong financial controls require a deep understanding of the overall business operations, marketing and prospects of your ongoing business. It is in your interest to implement changes early, enhance cash flow and demonstrate high growth opportunities available to maximize your sales value.
Ensure your company produces regular and accurate financial reports with the ability to demonstrate the reliability of these reports. Without strong reporting, you will be unable to convince potential buyers that your business valuation is legitimate.
Diversify Your Client Base
Certainly, a bit of customer concentration is unavoidable for most businesses, but when it comes time to market your business for sale, potential buyers tend to favor businesses that have a broad base of customers.
Another way to help encourage potential buyers who are worried about your client base diversity is to use contracts or to win spots on approved bid lists with key clients as a way to demonstrate the security and longevity of your concentrated client base.
These are just a few insights and general tips to help with selling your small or retail business. If you would like to know more or have other related legal issues you’d like to discuss with an experienced business attorney, call Stephen Rizzieri at 214.434.1017 or fill out the form site today.