Selling Your Business - Planning And Systems You'll Need To Implement

Selling Your Business – Planning And Systems You’ll Need To Implement

It’s funny how some people tolerate all sorts of imperfections around their home, and only try to “put their house in order” just before they sell it.I say “try” because, while you can slap on a coat of paint in a weekend, you can’t establish a good garden and that “cared-for look” in a month or even a year (they are usually the product of many years of care) and yet they add enormously to the value of a property at the same time as returning you an extra dividend of pleasure every day.

The same goes for your business. For many of us, selling our business forms a key component of our future financial freedom and yet many of us might tolerate a less-than-perfect performance for years while we live off it before suddenly thinking about “putting our house in order” and prettying-it-up for sale before selling it.

That strategy won’t get you your best house price, and it certainly won’t get you full value for your business and we see many people who, when they approach the marketplace to sell their business, go through a bitter and very sobering realisation about the things they should have been doing for at least the previous three to five years.

It kind of reminds me of the old Chinese proverb: “The best time to plant a tree was 20 years ago. The second best time is now.”

So what are the secrets to adding value to your business – starting now – so that it will give you a maximum return when you do come to sell it?

For the answers, I went to the experts, the business brokers, and they offered me “18 Steps to Selling Your Business“, the first 6 of which I have room for here:
The First 6 of 18 Steps to Selling Your Business

1. Right now is the “second best” time to create a Business Plan that a potential buyer can see is a blueprint for the on-going success of the business by which they can survive and thrive. (Buyers pay a premium for certainty.)
2. Include your exit strategy – or more formally, “the succession policy for your business – as a transitional step in your plan. (Buyers like to see that your exit is part of a plan and that the business is designed to survive you).
3. Learn the factors on which the value of your business – and your ultimate sale price – will be calculated and work towards improving every one of those factors. Good, sustainable “Return on Investment” is what buyers and their advisors are always most interested in.)
4. Put the focus onto increasing cashflow – that means sales, credit control, good stock management, productivity. (Buyers look at good cashflow as a comfort factor and will pay a bonus for it.)
5. Pay yourself a realistic salary for the work you do. (Smart buyers – the ones with money – don’t want to work for a pittance, and will automatically deduct a realistic salary before counting your past profits, so you might was well start doing that now).
6. Focus on putting together three to five years of excellent profits that grow each year and represent a 20-30% pa return on the capital you have invested in the business. (Buyers buy cashflow and profits – and the promise of more!)

Free Report
It’s a fact of life that there are about as many good brokers out there as there are good operators in your own industry. So if you would like the full list of “18 Steps to Selling Your Business” along with some handy hints from inside the industry to answer the question “How Can I Tell a Good Broker from a Bad One?” just email me for your Free Report.

Peter Rowe