How To Make Selling Your Business Easy
- 08 Mar 2022
Do you want to sell your business but you are not sure where to start? We have compiled a step by step guide on how to quickly and efficiently sell your business without a lot of hassle or personal expenses.
Below you will find out more about sourcing potential buyers, business valuation, and how to select a seller and marketing channel.
It has been traditionally viewed that small business owners do not stand a chance of selling their own business without the help of a professional.
However, because of technology, the internet and increased transparency in businesses, owners can now sell their small businesses easily and without stress.
How to Prepare for a Sale
If you are properly prepared before going on the market, you are more likely to quickly secure a good deal.
Here are some tips on how to prepare for the sales process before going to market:
• Get your accounts and financial statements up to date. It is easiest to sell at, or near, year's end.
• Sort out any leases or contracts.
• Settle and litigation or employee disputes.
• Reduce all personal expenses so that cash flow looks good.
• Reduce your dependence on the business if you are the owner.
• Communicate with business brokers for advice.
• If selling a building along with the business, tidy it up.
• Find out if you require a commercial EPC.
Create a short sales profile
Preparing a short, one-page market sales profile with the main information about your business, including pictures if relevant.
This information document can then be provided to advertisers or buyers. The goal is to convince a potential buyer of the great business value.
Choose the right marketing channels
Finding the right buyer is all about how many potential buyers are exposed to your business sale opportunity. The following marketing channels are excellent options
• Business-for-sale websites.
• People you know, like an employee, manager or competitor.
• Doing market research to find out who is buying and selling.
• Locating buyers yourself and sending them your sales profile.
• Social Media
• Local publications
• Google Ads
Vet potential buyers
If you get an enquiry, respond with your one-page sales profile. This is also the time to request information from the buyers to begin a vetting process.
Asking the right questions will allow you to eliminate time wasters. You can also do a quick online search to find out more about your interested buyers.
If any show promise, agree to meet in person or online, depending on where they are located.
Provide detailed information memorandum
Once you have narrowed down your list of buyers, provide them with a detailed information memorandum that provides more information on the business assets and business structure.
If you are uncertain, you can hire professional advisers to assist with drafting this document.
Prepare to Negotiate
You may not always be offered your asking price and you will most likely have to negotiate.
If an offer falls short of your expectations, communicate with the buyer and negotiate a price or payment structure that works for everyone.
Heads of Terms document
Once negotiations are complete, it is time to get everything in writing.
A Heads of Terms document is not legally binding, but will provide the buyer and seller with clarity regarding the deal, and can be taken forward into the due diligence phase and eventually the sale agreement.
Time for Due Diligence
As the buyer starts to investigate and familiarise themselves with your business during the due diligence phase, they may reconsider their offering, or even withdraw from the deal altogether.
This is the phase where your pre-sale preparation pays off.
The advice provided above is very generic and may not be suitable for your personal circumstances.
Do not underestimate the complications that may arise when selling a business, as it can be very time-consuming and stressful.
A small business owner may find it easier to consult with a business broker when it comes to business sales to ensure a smooth process.