So, it is time to sell your business!
Selling a business in Canada can be a very tough, but exciting time too! There is a lot to prepare for and a lot that needs to be done to ensure that when you sell your business, it all moves along smoothly.
As a business owner, deciding to sell a business can perhaps be one of the hardest and toughest decisions you will perhaps make. There will be multiple reasons why you will want to sell your business, but no matter the reason, there is a lot of hard work to put in to ensure that the business will sell well and attract plenty of potential buyers.
When it comes to actually selling your business, what can you do to get your business ready for a sale? Well, in this article we are going to share with you our ten top tips on what you can do to sell your business and to ensure the sale goes through as smooth as possible.
As with anything in life, preparation is vital. And the same thing can be said when selling your business. Discover ways to enhance profitability way before you decide to sell your business. Of course, potential buyers want to see those higher earnings and reduced costs in advance. Sure, you can do this in the middle of the sale, however deciding to it this way is not going to be too much help at all – so be sure to get the ball rolling early.
Take a Step Back
You have built this business up from the very start, developed it, grew it and nurtured it to where it is now; but can the business operate without you? If you were to take a vacation for a month, will the business run on its own?
Your potential buyers want to buy your business; not you. Therefore, they will want to see a strong managerial structure and tight processes in place that will ensure the business runs without you when you exit.
Try taking a step back for a while and watch from afar. Then, be sure to tighten up any weaknesses that you notice.
Tighten up Your Financial Controls
Any buyer to a business will want to see good, clear and solid financials. Controlling your finances with a good CFO/controller/director of finance is the best place to start. You need to be able to display reliable, accurate financial statements with good reporting too.
Your buyer will be a lot more comfortable to buy your business if they can see solid cash flows, strong management teams and lower capital expenditure.
Streamline Your Costs
As discussed in the preparation phase of this article, you want to be well ahead of the game and looking at ways to appear as profitable as possible. Of course, one of the quickest and simplest ways to do this is to spend some time streamlining your spending and looking for expense control opportunities. Are there any non-business assets that can be removed, or perhaps are there any under-used assets that could be re-evaluated?
Sell Your Vision
Behind every business is a good story. Be sure to take your potential buyers through the history of the business and show them how you have grown to where you are now. Also, go one step further and display to them the plans and goals you have for further growth down the line.
This will then help to not only sell your vision for the company, and the story behind it, but also the culture that will remain in the business long after you have gone.
Whittle Down Customer Concentration
You never want too many eggs in one basket and one thing potential buyers to your business will look out for is customer concentration.
Of course, we all want a nice spread-out, broad customer base with as little customer concentration as possible however at times it can be unavoidable.
If this is the case, be sure to display what is being done to diversify a customer base and what is being gone to encourage new and fresh customers.
Don’t Make It Personal
The majority of businesses have grown with support from close family and friends. There is nothing wrong with this whatsoever, however, when the time comes to sell your business you need to draw a line and ensure that the business is seen as a strict business and without family issues included.
If there are any family issues going on surrounding the sale, then iron these out and clean them up as best you can. Be sure to also clean up any excluded assets that may be in the business and also ensure that all expense habits are above board.
When a buyer is looking at a business they are not just buying for the past and the present, they are buying for the future too. With this in mind, have a strong and realistic forecast to be able to bring to the table. This will allow for any potential buyers to understand what will happen in the future and what they can expect when they buy your business.
Working alongside your financial team, be sure to look into your working capital requirement and ensure that any room for improvement is pounced upon. By doing so, you can free up any potential trapped cash and can lower the total level of working capital buyers expect to be delivered.
Let the Experts In
There is nothing wrong with reaching out and asking for support from time to time and when selling your business this is no different. Having seasoned and experienced professionals on your side will give you the best possible chance to sell your business.
These professionals can support you with your tax, legal, accounting and other acquisition matters. Using their expertise and their skill sets will give you the best possible chance to ensure that your sale goes as smoothly as possible.