How Well You Run Your Business

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Whether you're planning to sell your business in the near future or many years down the road, one of the most important rules to remember is the better care you have taken of the business, the more easily you'll be able to sell it.

This rule might seem like a no brainer, but it's very common for owners to focus so much on certain areas of the business that they neglect others, ultimately complicating the selling process when it comes time to leave the business. When someone is looking to purchase a business, they want to know that it has been properly run by its previous owner and will allow them the greatest chance for success.

There are a few key considerations business owners should keep top of mind at all times in order to help ensure the process will go as smoothly as possible when it's necessary to leave. Whether an owner plans to sell the business in one year or doesn't plan to sell it for a long time, addressing the following questions and actively making improvements where needed can pay off in spades when the time comes to put the business on the market.

Are Your Financials in Order?

 

Poor internal bookkeeping has been the downfall of many potential business sales. There is perhaps no bigger deal killer than when a potential buyer realizes that the owner has been disorganized keeping up the books and has no concrete way to prove the business's profitability. It's crucial to remember that if you can't accurately measure the financial strengths of your business, there's no way for a buyer to value it.

If you've neglected keeping proper track of financials, you can't start soon enough - even if you don't plan to sell your business for many years. It might seem like too big of a money or time investment to obtain the proper financial staff and systems to keep the books in order, but it's absolutely essential to your future and the future of your business.

Have You Laid Out Future Goals in a Business Plan?

Believe it or not, many businesses operate for years without a clear business plan, which makes it very difficult to sell when the time comes. Simply doing more of what you have been doing all along might have worked for you during your time as the business's owner, but that "strategy" will be of little help to a buyer who would take over the business with little knowledge of what you've done in the past. This is why it's important to develop a clear strategic plan that outlines the future goals of the business before you enter into the selling process.

This plan should include financial projections that prove to the buyer you are confident about the business's potential for growth and aren't attempting to hide anything. It's also important to communicate this plan throughout your business so that your employees can help transform these goals into reality and have a solid direction to follow after you're gone.

Have You Kept Your Business Up to Date?

In a business for sale transaction, physical appearance and condition can mean the world.
Oftentimes, owners are so busy and focused on other areas of their business that they neglect making important upgrades. They might not notice any detrimental effects from this while they're in charge, but once they try to sell the and realize that most buyers aren't eager to take over a business that is out of date, they'll regret not making these improvements along the way. For this reason, it's imperative to make any necessary upgrades or physical improvements to your business before putting it on the market.

Is Your Business Enabled to Run Without You?

It's important for a business owner to be actively in charge and to be invested in its success, but if you've run your business in a way that means it can't survive without you, problems are bound to arise when it's time to sell.

Buyers are typically wary of purchasing businesses in which the owners are indispensable and will have to maintain long term attachment. Owners who are committed to staying with the business can easily change their minds after the sale, leaving their buyers in a precarious situation.

To avoid this problem, make sure to hire and train qualified managers who are equipped to run the business even when you're not around. If necessary, seek the guidance of other business owners who have succeeded in making their businesses self sufficient and are willing to offer advice. This can be challenging, but you'll thank yourself for having done it when the time comes to sell.

Is Your Business Attractive to Business Supervisor?

Most business owners choose to work with a business supervisor when selling, as supervisors can often increase the chances of a successful sale as well as the net proceeds to the seller. To reap the benefits of these services, though, your business must be properly prepared.

The world of business supervisors is comparable to any other service profession in that there are a few select companies whose calls are always answered by potential business buyers because they can pick and choose among the best companies to sell. These business supervisors can be selective, so unless you have an attractive business without major "impairments" (which essentially means your business will be flagged as a risky investment), you might have a tough time attracting reputable assistance when you're ready to sell.

Selling your business might be a once in a lifetime experience for you, but supervisors do it for a living and are able to assess your business and determine whether or not they can find qualified buyers. The best business supervisors probably won't want to waste their time on businesses they know will be a headache to sell, so businesses that are in solid financial and operational shape will have the greatest success.

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Selling a Business is All About Timing

There's a fine line between fetching the best price for your business in a market uptick, and being slightly early or a bit late. To get the best price for your business, it's imperative to prepare, so that when market conditions are ideal, you can strike.

When it comes time to exit a business, the goal of every seller is simply to get the best price. But with the economy still in flux, the question owners must be selling themselves is: When is the right time to get the best price? The fact is that while the economy has been slowing improving recently, businesses might not be able to fetch their peak price just yet.

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But things can change quickly in the business for sale marketplace. We've been seeing an uptick in sales recently as business owners grow more confident in the economy. For those who have been considering a sale, the time to earn that top selling price may be coming soon. That means now is the time to start preparing your business to impress prospective buyers.

Preparing to sell means building upon your strengths and fixing weaknesses so you can secure the best possible purchase price. Above all, make the transaction process easy for the buyer. This means being honest about your motives, expectations and business difficulties. Also, identify common buyer desires and concerns, while maintaining an open minded attitude. This will ultimately put potential buyers at ease with the critical purchasing decision.

Presently, buyers are encouraged to buy because many eager sellers are willing to negotiate the selling price, but it's essential to make sure that the willing buyer is the right fit for your company. Therefore, business owners must decide whether or not they are willing to potentially take a much lower price for their business. Although there is a smaller supply of businesses for sale, this is not to say that all business owners can't command good prices.

It turns out many of the essential business practices you've used to grow your business are also essential to selling your company. This often involves many aspects, including outlining the financial history and outlook for your business; improving the bottom line; overcoming any financial problems and preparing financial records for review by prospective buyers.

This also includes making sure to outline all of your assets (both tangible and intangible), lease conditions and debts both owed by and to you. If you haven't been diligent about keeping the books in a condition that will be easy for a buyer to understand, start doing that now.

Business buyers also want to know that they will have support from an existing workforce that is familiar with the business, its primary needs and existing customers. The employees you leave behind will ultimately help you sell the business. If possible, find an appropriate time to make sure all customers and employees know of the impending sale, but be careful about relaying the information too soon.

The last thing you want is a lack of motivation or loyalty because they know you will be leaving. Maintain the relationships to ensure their transition will be as smooth as the new owner's.

Other pitfalls to avoid include not showing the potential buyer a loyal client base; Exposing the buyer to customers who expects special treatment; and clients who have verbal agreements and contracts with you. It's important to provide the owner with this information and to examine contracts with suppliers to ensure the terms will not expire or need to be revisited when the new owner takes over.

Potential buyers won't be interested in a business that lacks a loyal client base or forces them to recover from damaging press. Happy customers are your best advertising. Conversely, one extremely unhappy customer will likely make ten other individuals turn against you, so combat criticism by being honest and communicative with clients.

One of the cheapest ways to get some loyal followers is by word of mouth. Besides one on one interaction, extend yourself online; correspond with customers via online social networks like Twitter to answer questions and talk about new business initiatives or products. It will show that your business is ahead of the curve in recognizing the importance of the digital channel.

Businesses with well known names, strong marketing and a well executed online presence will ensure a buyer that your business is staying current with the market trends. Because, in some business categories, 90 percent of initial buyer interest stems from the Internet, how well your web site functions, its content quality and the appearance will all give a buyer a first impression of your business.

Also, make sure your web platform is simple to navigate so the new owner can update it accordingly. Speaking at the local Chamber of Commerce and continuing to explore new avenues of advertising are still things you can do to build your brand offline.

A final component in the selling process to consider is whether or not to use business supervisor to ensure that your sale goes smoothly. Attorneys can assist you during the selling process by providing critical services such as preparing detailed contracts to finalize the sale or creating confidentiality agreements which safeguard against potential buyers revealing what they uncover through the due diligence process.

Are You Ready to Sell Your Business?

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If you've gone this far, then selling your business has aroused enough curiosity that you are taking the first step.

Question 1

The first question almost every seller asks is: "What is my business worth?" Quite frankly, if we were selling our business that is the first thing we would want to know.

Question 2

The second question you have to consider is: Do you really want to sell this business? If you're really serious and have a solid reason why you want to sell, it will most likely happen.

You can increase your chances of selling if you can answer yes to the second question: Do you have reasonable expectations? The yes answer to these two questions means you are serious about selling.

Prospective buyers eventually want to review your financial figures. Buyers want to see income and expenses. They want to know if they can make the payments on the business.

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