By Sam Thompson, CBI, M&AMI
Selling your business will probably be the most challenging undertaking that you, as a business owner, experience. Most likely, your business is the largest financial asset you have, so make sure that you put ample time and energy into selling your “baby.” I owned a hospitality business for 29 years and I can tell you that selling my business was much more difficult than starting it. Ideally, you want to allow at least two years in preparation to sell your business.
Strive for the business to operate without you. Make certain that you have quality employees to whom you can delegate important tasks. Do away with micromanaging and take a longer than-usual vacation to see how your staff manages in your absence. When the time comes to sell, you will attract more buyers if it is obvious that your business model does not require an owner on site at all times.
Get your financials in order. Perform a financial assessment and make sure you are showing a healthy profit. Many owners feel that if they have a good customer base, market share, reputation, and quality staff, that they have a lucrative business to sell. Unfortunately, if the business is not showing a profit, it will not attract a buyer. Don’t load up on tax write offs; instead, invest in taxes.
Obtain a valuation early on. Even if you do not plan to sell in the near future, a valuation will let you know where your business needs to improve. Many times, a valuation is a wake-up call for a business owner. Connect with a business intermediary to provide your valuation.
Update proper reporting. Finalize or update your business and marketing plans, as well as your employee training and policy manuals. You want to demonstrate to an interested buyer that your business can successfully exist without you.
Ensure that your employees and customers are happy . Maintain a good benefits program for your employees – this will confirm that your key people will stay on after a change in ownership. Regarding customers, no customer should make up more than ten percent of your revenues. If a large percentage of your income is limited to one client, most buyers will recede.
Organize your transaction team. Meet with your accountant, attorney and business intermediary soon after you start to entertain the idea of selling. These experts can make sure that your future decisions match your goals for your succession plan.