In our experience, how you feel about your business can impact strongly on how you prepare for its sale and whether you achieve a fair price or not. If you’re keen to retire or perhaps feeling burnt-out, then impatience and the desire to be rid of the business could result in the sort of under preparation that delivers no sale, a slow sale or a sale that fails to meet your expectations.
In the coming months, our articles will outline what you need to consider when planning to sell your business. Please read on for the first article in our Sale-Ready Business series.
Sale Ready or NOT!
Once it’s for sale, your business will need to stand up under the close scrutiny of a potential buyer.
The key is to prepare the business so it presents a compelling opportunity for a new owner to recognise future profit opportunities, growth potential and, on the flip side, no nasty surprises that could cause unwanted expenses or setbacks.
The right sale-ready process will deliver a well-prepared business that is far more likely to achieve a sale price that reflects its true value than an under-prepared business that goes to market too soon.
A sale preparation process that prioritises reviewing the business to identify both positive and negative characteristics is essential. This will likely uncover missed opportunities and reveal problems that you may have been happy to tolerate, but if left unresolved, will impact negatively on your sale potential.
Something many business owners don’t realise until they’re considering selling, is that they have potential to capture significantly more revenue from the business.
The cause is usually inefficiencies in systems, processes and workflows. Higher than necessary wage costs; poor purchasing that results in paying too much for stock; wrongly priced products and services that result in lost profit; and failing to collect money that’s owed, are all common issues that adversely affect revenue.
Many businesses suffer from outdated systems or work-arounds that mask problems rather than overcome them. These often lead to unnecessary costs, productivity issues, staff frustration and even safety issues that will deter a prospective purchaser.
While eliminating problems is important, so too is updating worthwhile systems.
Upgrading technology and training staff can have significant benefits, among them reduced costs and increased productivity. Stepping up your marketing can increase brand and product awareness and attract entirely new audiences of customers which, in turn, can generate additional sales and additional revenue.
For business owners who may be considering retirement or those who may be feeling burnt out, it’s common for problems and opportunities that can positively or negatively impact the sale of the business to be hidden in plain sight.
As your accountants and business advisors, we can provide the support you’ll need for planning and making your business sale-ready. Our services range from providing a sounding board for simply talking through how you feel about your business to what needs to be done to sell it.
Offering professional and business insight while maintaining an objective and arm’s-length approach, we can deliver a clear evaluation of the business that’s unclouded by the emotional involvement that naturally influences business owners.
We commonly provide advice for business owners preparing their business for sale that identifies:
– inefficiencies and unnecessary costs;
– under-utilised aspects of the business which might include technologies and product or service potential;
– opportunities for capitalising revenue including new income generators;
– business improvements;
– expected current business value compared to a sale-ready business with recommended improvements actions; and
– Capital Gains Tax and personal tax implications as a result of the business sale.
Of course, working towards a sale-ready business has the added benefit of allowing the business owner to enjoy a better business with more profit contributed to their personal prosperity while they’re waiting for a buyer.
Your next step…
To discuss what’s involved in making your business sale-ready, please contact your Core business accountant on 07 5438 8088 or email mail@corebusiness.com.au
Further Reading
Project Urban Cool Client
Bill Darby Cool Client
At Core we specialise in business advice and SMSF strategies for growing and mature family-owned businesses and small and medium-sized enterprises (SMEs).
