Put your feet in your buyer’s shoes
While healthy financials will attract a potential buyer’s attention, it will take more than that to convince them the business is right for them.
You’ll need to prove the business can operate successfully, and profitably, once you’ve gone. Putting your feet in a potential buyer’s shoes will help you to present compelling reasons why it’s your business they should buy.
Even though some purchasers will relish the opportunity to roll up their sleeves and work in the business themselves, they will still want to know that existing and future customers will continue to buy from the business despite the departure of the former business owner.
Other potential buyers may have no desire to work in the business and for them the key will be to demonstrate that the future success of the business is not reliant upon a specific individual.
Either way, a sale-ready business will have clear-cut and documented procedures and operating systems that will justify why a potential buyer would want to buy the business.
Ensuring your business systems are sale-ready may involve preparing manuals; updating employment contracts (especially for key talent); ensuring equipment leases, maintenance contracts and log books are up to date; and ensuring your financial reporting is current and accurately reflects your business performance.
You’ll need to weigh up the cost of updating some systems and procedures in terms of sale price expectations. It’s important to take into consideration the fact that buyers will be looking for both a solid ‘now’ business and a business with potential for ‘future’ profit and growth.
Rather than attempting to cover up what will inevitably be found through the due diligence process, a logical explanation of future opportunities in the form of existing business shortcomings can work in your favour. Potential purchasers will both appreciate your transparency but also opportunity to consider the benefits that could result from improvements.
Finally, taking the time to make your business sale-ready can provide choice: the choice to increase the value of your business for selling at the best possible price or keeping it and enjoying the prosperity a better business can bring.
We regularly work with business owners to identify:
– systems and processes that allow the business to operate independently of the owner;
– opportunities that can create potential future value for the business; and
– cost feasibility and time frames for updating internal systems and documenting processes.
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 email@example.com
At Core we specialise in business advice and SMSF strategies for growing and mature family-owned businesses and small and medium-sized enterprises (SMEs).