“I’m not ready to sell my business,” “I am not ready to retire,” or “business is too good right now for me to sell” are all statements you might be thinking right now, but there are very good reasons that you need to start preparing to sell today.
“My business is not for sale though.” Well, it is better to be ready to sell your businesses when you want to, and not when you need to. The overwhelming majority of businesses are not ready for sale. You never know when a great opportunity to sell might come your way and you want to be prepared. Other factors that may lead to a need to sell can include illness, death, sudden relocation, loss of staff, exhaustion, and more. The last thing you want to worry about at a time like that is getting the business in order so that you can sell. Furthermore, not being prepared can lead to receiving a low value or simply being forced to close the doors.
The good news is that most of the steps you take to prepare your business to sell are good business practices that will benefit your business in the long run. “Should I sell my business or shut the doors?” That is a question that all business owners must face at some point. Selling is generally the better choice. You have spent years building a reputation, a team, and a vision. As an entrepreneur, we all want to ensure the success of the people we have hired to help us build our vision.
Are you prepared to sell your business today?
Could you respond to a strategic buyer if they were to approach your business about a sale?
Do you have a plan for your business to continue without you should your circumstances change?
Does that include a strategy for growth and new business?
Can you respond to questions about your competitive advantage and market fit?
A potential buyer is going to spend a lot of time on due diligence and reviewing your firm’s history. It will take you even longer to prepare to make a good first impression. The earlier you get started, the better. First, there are a few questions you need to ask.
When is the best time for me to sell my business?
What will I do after the sale?
How much money will I need to sell my business for to achieve my goals?
The first thing that a potential buyer will ask for is a copy of your financial statements going back at least 3 years. Up to date, clean, and audited financials will get you started off on the right foot. You will also want to ensure your business has contracts in place with customers, employees, and suppliers. Rushing around getting contracts negotiated before a sale may send up red flags to your customers and staff, so the ideal time to put these in place is at the time of business.
Understand your motivations and goals for selling your business and ensure that you maximize the value you can receive for your business. Some other things you can do to prepare for a sale include: preparing a strategic plan including expected future revenue (the higher the backlog the better), prepare a SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis, ensure your business documentation (key processes, procedures, contracts, records, etc.) are in place and easily accessible, prepare management and employee succession plans, understand what your valuation is, and prepare documentation on anything that can show a good business reputation and good customer relationships.
When preparing to sell, think of it from a buyers prospective. If you were going to buy a firm, what would you like to see? What would make a good first impression on you? This will allow you to position your business for the highest value. Taking the steps to prepare your business for sale will make your business more successful. Therefore, today is the day to start preparing your business for sale.
Phillip Keil is a member of Zweig Group's M&A team. He can be reached at pkeil@zweiggroup.com
About Zweig Group
Zweig Group, a four-time Inc. 500/5000 honoree, is the premiere authority in AEC management consulting, the go-to source for industry research, and the leading provider of customized learning and training. Zweig Group specializes in four core consulting areas: Talent, Performance, Growth, and Transition, including innovative solutions in mergers and acquisitions, strategic planning, financial management, ownership transition, executive search, business development, valuation, and more. Zweig Group exists to help AEC firms succeed in a competitive marketplace. The firm has offices in Dallas and Fayetteville, Arkansas.
“I’m not ready to sell my business,” “I am not ready to retire,” or “business is too good right now for me to sell” are all statements you might be thinking right now, but there are very good reasons that you need to start preparing to sell today.
“My business is not for sale though.” Well, it is better to be ready to sell your businesses when you want to, and not when you need to. The overwhelming majority of businesses are not ready for sale. You never know when a great opportunity to sell might come your way and you want to be prepared. Other factors that may lead to a need to sell can include illness, death, sudden relocation, loss of staff, exhaustion, and more. The last thing you want to worry about at a time like that is getting the business in order so that you can sell. Furthermore, not being prepared can lead to receiving a low value or simply being forced to close the doors.
The good news is that most of the steps you take to prepare your business to sell are good business practices that will benefit your business in the long run. “Should I sell my business or shut the doors?” That is a question that all business owners must face at some point. Selling is generally the better choice. You have spent years building a reputation, a team, and a vision. As an entrepreneur, we all want to ensure the success of the people we have hired to help us build our vision.
Are you prepared to sell your business today?
