While the sale of a company may seem like a rapid whirlwind of valuations, presentations, and prospects, it actually takes a lot to get your company ready for market. Since you've probably spent years building your business, it only makes sense to devote the right time, energy, and other resources to the process of selling it.
1. Plan Ahead As Much As Possible
Unless there's an emergency forcing you to suddenly sell your business, you want to give yourself as much time to prepare as you can. Because you want top dollar for the company you've worked so hard to build, you need to be able to control the entire process as much as possible. Look at similar businesses for sale, observing how long they stay on the market, their typical valuations, and other important influences. Selling your business is very different from selling static, inanimate objects. Your company is fluid and constantly evolving, and you want to be ready for anything.
2. Know Your Highs And Lows
Most businesses have ups and downs due to seasonal and other predictable fluctuations. Study your books and determine the best time to sell your business, which should coincide with the highest profit period. You want a potential buyer to come in and see a busy company that's making money, right then and there, as opposed to one that's in a slow period with not much happening.
3. Create An Ultra-Efficient System
If you don't already operate under very efficient conditions, you need to work on a new system that propels your company forward with as few obstacles as possible. From inventory systems to a healthy and reliable IT infrastructure, you should be able to brag about how your business functions like a well-oiled machine when you put it up for sale.
4. Forge A Safe Exit Strategy
What are you going to do if the company doesn't sell in the time frame you're expecting? Depending on market conditions and other factors, you may be forced to continue on with the business for a while, but if you're already obligated to another commitment, your life could become a precarious balancing act. There are many things to consider as you move forward, many of which are intertwined with a timely sale. You need backup plans.
5. Ask Yourself If You're Certain You Want To Sell
If selling your company is a choice, not a necessity, make sure you really want to do it. Most people, even serial entrepreneurs, become attached to their creations, and that can make it difficult when it comes time to walk away, even if the price is right. Also, if you're not really sure you want to sell, you might be overly critical of every potential buyer, turning them down with one excuse after the other. While loving the company may be what drives you to care for and protect it, it can also be what sabotages the sale of it.
6. Include Your Employees In The Upcoming Sale Process
If you have employees, let them know about the sale when you're ready. Speak privately with the key employees the business needs during the transition of ownership, asking them to remain with your company, at least until the new owner is fully adapted. All employees should feel valued and informed, but whether or not the new owner retains them may not be known; hence, you can expect a lot of apprehension among them.
7. Know The True Value Of Your Company
While many factors combine to form the ultimate buying price of a company, it's mainly based on profit and profit projections. The value isn't measured by how many years you've put in, the money you've spent, or the blood, sweat, and tears you've lost; it's all about the money a buyer can expect to make.
8. Clean House
Before you present the company on the open market, you need to eliminate the clutter you've accumulated over the years in building the business. To many, clutter equals chaos, even though it may be part of how your company has flourished for so long. Your system and your "stuff" all need to be made generic so the new owners can see themselves fitting right in and seamlessly taking over.
9. Get Your Accounting In IRS Auditing Mode
Your accounting should be as transparent and obvious as if you were preparing for an audit from the IRS. Although it's wise for a business to always be in this mode, most aren't even close to it. Hire an accounting firm, if needed; just be certain you're ready to answer any question regarding the company's finances and that all information can be verified in the books.
10. Seek Out A Superstar Business Broker
Even if you have buyers lined up outside your door, hiring a business broker is a very smart move. They'll come up with a justifiable valuation, prepare the prospectus and have connections throughout the market. Brokers are also able to match potential buyers with financing, as well as negotiate on your behalf with the sharp skills needed to secure the highest possible price.
There's too much riding on the successful sale of your business to cut corners or go in any aspect of the process without being fully informed. Gather a team of advisors and support staff, roll up your sleeves, and get ready to do more of what you've done for so long with your company: work really hard and accept nothing but the best.
