Preparing your business for sale: handy tips.
Last month, we spoke in detail about the importance of a concrete business exit strategy. Whether you’re retiring or just moving onto a new chapter, a sound exit strategy is a major part of securing the most returns from the business sale and ensuring a smooth handover. Your exit strategy may be collecting dust for some years before you actually need it, but when you do, the first step is to prepare your business for sale and start creating a succession plan.
Today, we’re laying out three tips to consider when it comes to doing just that — preparing your business for sale.
1. Plan ahead.
Most business owners only think about what to do with their business when their health starts to decline, they are approaching retirement, or they become ill. This often leads to owners making important decisions under unnecessary time pressure. As a result, these rash decisions are usually ill-informed and don’t provide the outcomes one had hoped for.
Another reason business owners start rushing through the sale process is because they’re forced out of business. This might be due to the loss of an irreplaceable employee, unforeseen changes in the market, or shifts in customer demand.
Whatever the reason, waiting for any of these events to happen will almost certainly put you in an unfavourable selling position. Planning ahead with a succession plan means you’re empowered with the ability to be in total control of your business sale — whatever the circumstances. You can forecast and mitigate against such events, helping you exit on your terms.
2. Ask yourself, “why?”.
Everyone starts their business based on something. A feeling, goal, passion, vision, dream, perhaps you just noticed a gap in the market and sought to fill it, or you just needed the income and wanted to work for yourself. The point is, you started your business for a reason. With the sale of your business, you get to be just as clear about what you wish to achieve as you were when you started it.
Usually, there is a lot more to consider than just making a profit from selling your enterprise. For example, a popular desire is that the business will be passed on to a family member, or at least a trusted individual who will continue the business’s good name. You might wish to retain the rights over a particular product, or still be consulted when it comes to major business decisions.
So, think about it — what do you wish to gain from selling your business? For some, it will be purely financial gain (and that’s fine!), but for many, there are other elements to consider.
3. Choose the right time.
When you launched your business, you might have had a vision that it would endure forever — or at least long after you’ve sold it — and become a household name or local legacy. However, 50% of businesses are 10 years old or less, and only 10% reach the 25-year mark. It goes without saying that most businesses close unexpectedly, so knowing when to sell a business is crucial. The question is, how do you know when it's time to let go?
Studies show that the best time to sell a business is when sales are peaking and profits continue to rise. Now, we know it’s tempting to hold on to a business during these times because of course you want to see those profits rolling into your bank account. But, it is significantly easier to sell a profitable business than a failing one. So, let’s say you plan to sell your business in 2028, but in 2026 your profits are suddenly soaring. You might like to sell then, albeit two years earlier than you intended, and make the most of the opportunity to sell a successful, thriving business. Come 2028, your profits might have plummeted, and you’re left with a dwindling business no one wants to buy…
Need tailored advice for succession planning?
Business succession planning is one of our core offerings We provide advice and guidance on how to adopt a succession plan that provides for your future security. So, we’ll work with you to tailor a succession plan and help you roll it out over a set period — ideally, five years. See
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