Selling your business is one of the biggest tasks you’ll undertake, and one that you’ll no doubt have spent a lot of time thinking about. It’s not as simple as just signing up and listing your business though – you’ll need to spend some time preparing both your business and documents before you take the step. Read on to find out how you can prepare your business for a sale.
The most important thing when planning the sale of your business is to allow yourself enough time to bring your business to market. If you try to rush the process in the early stages you’re less likely to get top dollar and more likely to run into problems further down the line.
Make sure you get your house in order before you start listing. All serious buyers will want to see figures relating to your past few years’ performance, as well as an indication of future profitability based on projected business and ongoing costs. Obviously you’ll need to spend time collating this information as well as ensuring all your other paperwork – lease information, supplier contracts, staff records and health and safety documentation – is all up to date.
If you have all your records in good condition, potential buyers will be much more likely to see your business as a viable proposition. They’ll still need to complete their own due diligence of course (and here’s what they’ll be looking at), but your orderly approach to record-keeping will give them much more confidence to proceed with a purchase.
What about setting a fair price?
Bizdaq has its own pricing algorithm, which calculates a price based on your location, business type and an in-depth assessment of comparable businesses sales, together with your own income and cash flow figures.
It’s important to take a measured approach to pricing your business. If you’re overly optimistic about your sale price you risk facing months of low interest followed by a dramatic reduction, but pitch it too low and you’ll miss out on valuable profits.
There’s no hard-and-fast rule to valuations – your business will be worth as much as someone’s willing to pay for it. Most business valuations take the annual revenue, minus costs and multiply by 2-3 times. But factors including how competitive the market is, whether the business is growing and what potential it offers are all relevant.
Will it be easy to sell my business online?
Almost every type of business can be sold using an online listing – from a web-based mail order company to a Lake District B&B. The approach you take to preparing your listing is important, though. You should aim to give as much information as you can without compromising the more confidential aspects of your business.
You’ll probably be wary about giving away sensitive information about your income but unless you give buyers an idea about your revenue and profit figures, they won’t know if it’s the right prospect for them. You don’t have to go into too much detail at this stage but do consider pitching a ballpark figure.
Most buyers search for businesses for sale based on their location. The only real exception to this is if you run a 100% online operation – and even then the location will be part of the equation if there’s a warehousing aspect, for instance. If you keep your location confidential, you’ll be lucky to get any serious enquiries, so list at least at county level.
Try to include a headline that gives your listing a bit of impact. If you have a wonderful location or a brilliant brand, tell people. Think about what makes your business stand out and write a headline that communicates your USP.
Consider creating a phone number and email contact specifically for sale enquiries. That way you’ll keep your own details confidential, should you wish, and you’ll easily be able to filter sales enquiries from normal business comms. Check daily and respond promptly to queries.
Make sure your business comes up in the right searches by choosing all the categories that match your business type. If, for example, you’re selling a tea shop, you’ll want to list it under cafes and restaurants, as well as tea rooms.
Describe your business in as much detail as possible and paint a picture that’s designed to capture the imagination of a potential buyer. If you’re keen to maintain confidentiality, it can be tricky, but make sure you list your business’ strengths and give buyers some idea of the opportunity it offers.
Take pictures that make the most of your business. If you don’t want to give the identity of your business away at this stage, use non-assignable shots, where possible. It’s worth spending a little to have good photos taken if you don’t feel confident you can do your business justice. If you’d like to learn how to take better photos of your business, see our guide on how to take high-quality photos.
List your business’ best features. Perhaps it’s on a busy street in a popular tourist destination, maybe you’ve won awards – or been nominated for them. Whatever gives your business the commercial edge, make sure your potential buyers know about it.
Check and refine
It goes without saying that you’ll need to check your listing thoroughly before pushing the publish button, although the great thing about online ads is that you can amend them whenever you like. Feel free to tweak your listing to reflect feedback.
What about buyer credentials?
It’s up to you to weed out serious prospects from tyre-kickers. The best way to discover who’s serious and who’s not is by asking questions. Quiz your prospects on their situation: ask them how long they’ve been looking, how they’re planning to finance the purchase and what their timescale is. This will give you an idea of whether it’s an avenue worth pursuing.
Be aware of your own responsibilities though and make sure you respond to queries promptly; your buyer may switch off if they have to wait days for a response. Keep the lines of communication open, be professional and you’ll give yourself the best chance of finding a serious buyer.