B.A. Boss offers a small guide so that business or company owners can better prepare in case they want to sell their companies. In Spain it is estimated that in the next 5 years there will be some 400,000 companies for the succession, or to be sold or closed. Unfortunately the biggest part ends with a closure: almost a million (!) companies have decommissioned in the last 10 years. This is the fourth of 5 articles in which we give a little more detail to the process of a sale.
4- What to do before putting the business up for sale: Appearances count! You must replace the obsolete equipment before you decide to sell. Don't think that the new owner will have to renew it or that the price will be slightly lower because you haven't replaced it. The time to improve the company is now, even if you are not selling it. This will make it look like a good deal. Plus, you never know when it might be time to sell. Keep in mind that anything that increases sales also increases profits and all-important liquidity! Everything has value There are other things that add value to your business. Don't neglect the value of customer accounts or lists, products and/or techniques, well-maintained equipment, secret recipes or formulas, custom software, or good employees. These factors are off the balance sheet and while not used in most pricing models, they do add value. Look at your business very carefully without overlooking those factors that make your business more attractive to the buyer. Eliminate surprises Long before putting your company on the market... eliminate possible surprises! Go over every facet of the business and remedy any problems that might arise during the sales process. Nobody likes surprises – especially potential buyers. Whether it's a legal, accounting, environmental, or anything in between – fix it now. You must create an operations manual. You may already have one or have thought about making one. Now is the time. It can add value to the business. Even if it isn't, it will impress buyers and help you sell faster. Preparing a manual on how to run your business can also be helpful even if you don't want to sell. It doesn't need to be very elaborate, just cover the basics. Include any business issues that might be helpful to a new owner, but not customer lists, secret formulas or recipes, etc. As a seller, you are part of the marketing process. We will give you some recommendations that will help you in your marketing efforts. We have selected the items that we believe are especially applicable to your type of company.
It can be helpful to look at your company from a buyer's perspective, trying to put yourself in their shoes. What would you do to make it more attractive or more sellable? Obviously, the financial situation of your company is crucial for the sale, but its appearance is also important. Remember, first impressions are important! If a potential buyer doesn't like the look of your business, they may never be interested in learning more about it. You may want to check the following factors to see if any of them apply to your company:
Make repairs, maintenance: repair the signs, change the exterior lights, etc. You don't want your business to look run down!
Maintain normal work hours. There may be a downward trend when you list your business for sale. However, it is important that potential buyers see your company at its best.
Keep inventory at a constant level. If you let your inventory go down, your business will appear sloppy. Increase it and so your company will appear active.
Remove items not included in the sale and remove unnecessary items, especially if they are not in operation.
Repair broken equipment or remove it if you are not using it.
In the coming week we will discuss how long it takes to sell a business in the process of preparing for a business sale. If you want a copy of this article, click here.