The level of preparedness of an owner-operator in selling his or her private business is directly correlated to the realizable value of that business at the time of sale. Generally, a business that has been properly prepared for sale over several months and/or years will command greater interest in the marketplace and fetch a significantly higher sale price. Inadequate preparation, on the other hand, can often make a business virtually unsellable.
Professionals involved in buying and selling businesses agree that, unless a fire sale is essential, the process of selling should be planned two to three years in advance and should include the following strategies:
- Obtain a Valuation – Make sure the selling price is realistic. You obviously want to receive the highest price possible for the business while the buyer wishes to purchase your business for as little as possible. Once you decide to sell the business, get it evaluated.
- First Impressions – As the saying goes, you only get one chance to make a good first impression. Ensure your facility and financial statements are aesthetically pleasing.
- Supplier and Customer Lists – Supplier and customer lists with up-to-date business addresses, contact names, email addresses, telephone and other numbers provide confidence to the purchaser.
- Employment Contracts – Employment contracts with sales reps, purchasing agents, mechanics, technicians, or finance staff help the purchaser understand costs and obligations while providing assurance to the employees that they have a future with the new venture.
- Regulations/Certificates – Giving the potential purchaser confidence that you are a good corporate steward removes the worry that unnecessary time, energy and funds might have to be expended to clear up lingering regulatory matters in the future.
Taking the time to prepare your business will ensure your business is at its best when being presented to a potential buyer and provide the purchaser with the confidence to offer a price that is fair to both parties.
