The length of the business sale process is different for every business and depends greatly on the current condition of the business and on general market conditions. It may take up to a year to prep the business for sale and then another six to twelve months to find a buyer and close the deal.
So naturally, the first step in selling your business is to ensure that it is in the best possible shape. It should be financially viable, on a track to grow, and with solid operational practices in place that will ensure a smooth transition to a new owner.
If you are unsure and if you don’t know the value of your business, you may want to consider having Harvest Business Advisors assist you in doing a Calculation of Value. This will help you determine whether your business is or is not ready to sell.
If it isn’t ready to sell, Harvest Business Advisors can provide you with some ideas as to how to improve your business so it becomes more valuable. If it is ready to sell, read on.
Considering Selling Your Business? Please click here for a downloadable e-book, “ 10 Ways to Increase the Value of Your Business“.
First, ask “What makes my business attractive?”
This is an important question – for in the answer lies your strategy for marketing your business.
Is it the type of business? Is it the quality of my staff? Is it the specialization of my business? Is it my customer base? Is it my recurring revenue or repeat customers? Knowing what makes your business appealing also sets the stage for attracting buyers once the business is on the market.
Once you know what is appealing to a potential buyer you may need to implement some changes.
It’s possible that you might need to:
- Increase profitability,
- Increase the size of your business,
- Develop a stronger management team,
- Expand your customer base to avoid the issue of customer concentration.
Next, assess the readiness of your business for sale.
There are essential elements of your business that need to be in place in order to sell your business.
Take a hard look around your business and ask yourself these questions:
- Are my books in order?
- Do I need to tie up loose ends such as ensuring that my key employees have non-competes?
- Are my facilities clean, tidy and showing my business in the best possible light?
- Have I implemented and recorded essential business systems so the next owner can step right in?
- Have I documented the sales and marketing process?
- Do I have a clean balance sheet?
Finally, maintain confidentiality
Until your business is sold and the transaction has been completed, it’s important to maintain complete confidentiality. It is unwise to let vendors, customers, lenders, and/or your landlord know of your intentions. While you may think these parties are capable of keeping a secret, there’s a good chance that they aren’t.
At the same time, do not tell employees (other than those who need to know) that you plan to sell. Employees may lose motivation, may not like the new buyer, and could also leak word of the sale. The best practice is to not tell them at all.
Once you have prepped your business for sale, you will need to assemble your business exit team. We will discuss that process in our next blog post Assembling Your Business Exit Team.
This article was written by Harvest Business Advisor Partner Richard Stopa.
Clients choose Harvest Business Advisors for our accurate business valuations and our consistent ability to deliver a high price as part of a smooth exit transaction.
Harvest Business Advisors provides business brokerage, business valuation, and business succession planning services. We have extensive experience in the information technology and professional services, manufacturing, distribution, and contracting fields. We maintain offices in Maryland, New Jersey and Virginia. Connect with us at firstname.lastname@example.org or 443.334.8000 to discuss selling your business, ordering a business valuation or buying a business.