| “What’s my business worth?” |
Every Seller’s very first question! Regardless of what you or your accountant or your banker thinks your business is worth, ultimately the market will decide its value for you.
Your task then is to maximize that figure by getting your business into the best possible shape beforehand, and by using professional assistance to ensure that the market has all of the necessary facts at hand to establish a fair price. | |
| “Is it time tosell?” |
You have devoted a lot of time, money, and energy building up, running, and operating your business. It may even represent your life's work! For a variety of reasons, your priorities have changed and now you want to look into your future options. Alternatively, you may have already decided that the time is right to sell.
Either way, you want the very best professional guidance which can make the difference between just getting rid of the business, and selling it for the very best possible price and terms! | |
| “How long does it take to sell my business?” |
It generally takes, on average, between five to eight months to sell most businesses. Some businesses will take longer, while others will sell in a shorter period of time. The sooner you have all of the necessary documentation to begin the marketing process, the quicker you can expect a satisfactory result.
It is also important that the business is priced correctly, right from the start. Sellers frequently overprice their businesses, assuming that they can always come down in price. This approach will certainly extend the overall time period, and can even backfire completely as many otherwise serious buyers simply refuse to look at an overpriced business. | |
| The first Step: |
Okay, let's assume that you have decided to at least take the first few steps towards selling your business. Before you even think about placing your business on the market, the first thing you have to do is to gather together some essential documentation about the business, including:
- Three years Profit and Loss statements;
- BAS statements for the last four Quarters;
- A complete list of all Plant and Equipment;
- The Lease and any lease-related documents;
- A copy of the Franchise Agreement, if applicable;
- An approximate value for any Stock on hand, if applicable
Make sure that the financial statements of the business are current and as accurate as you can get them. If you are halfway through the current year, ensure that last year's figures are available plus any for the current year-to-date.
All financial statements should be presentable, even if you have to get outside professional help to put them in order. Pricing a small business usually starts with its cash flow and/or overall profitability, and includes the owner's salary and benefits, any depreciation, plus other non-cash items.
Don't panic if the bottom line isn't what you think it should be. By the time all of the owner’s discretionary items are added back into the bottom line, the cash flow may look quite different. | |
| What do Buyers want to know? |
Prospective buyers want to do their own thing - be in charge of their own destiny! Money is important, but it's not usually at the very top of their wish list. In order to pursue the dream of owning their own business, buyers must have enough confidence in your business to justify the "leap of faith" necessary to risk buying it.
Buyer will almost certainly want to know:
- How much money is required to buy the business?
- Typically, how much Working Capital is required?
- How much is tied up in Stock?
- Will the seller train and stay on for awhile after settlement?
- What makes the business different/special/unique?
- What further defines the product or service? Bid work? Repeat business?
- What can be done to grow the business?
- What can the buyer do to add value?
- What is the profit picture in bad times as well as in good?
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| Appearances do count! |
| The time to replace old, worn-out equipment is before you decide to sell. Don't assume that a new owner will want to do it, or that the price will be slightly lower because you haven't replaced it. The time to "spiff up" the business is now, even if you aren't selling. Fix the sign, replace the carpet, paint the place - make it look good. Even if you're not selling, it's just plain good for business, and you never know when the time to sell arises. Keep-in-mind that anything that increases sales also increases profits and the all-important cash flow! | |
| Eliminate the surprises! |
| No one likes surprises - most of all potential buyers. Before you put your business on the market, review every facet of it and remedy any problems that could have an impact during the sale process. Whether legal, accounting, environmental, or anything else - resolve any outstanding issues now! | |
| What can business brokers do? (and what can't they do?) |
As professional Business Brokers, experienced in all aspects of selling businesses, we will be able to guide you through the traps and pitfalls of the selling process. We can help you decide on pricing, prepare an appropriate marketing plan with a view to finding the right buyer for your business, and later work with you and the buyer in negotiating every step of the way until the transaction is successfully completed.
A Business Broker is not, however, a magician who can sell an overpriced business. Most businesses are saleable if structured properly and priced correctly. While the marketplace will ultimately determine what your business will sell for, we can ensure that you have everything in place, with a view to maximizing the result within that marketplace.
There is no charge for an obligation-free business appraisal from Action Business Brokers! | | |
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