As the owner of a small business, this might be the first time you are considering selling your business. It is natural for you to feel overwhelmed and wonder how to sell your small business. We have worked closely with thousands of business owners like you over the last few years, and understand where you are coming from. Serious business sellers often ask the question – How can I prepare my business for sale? Hence, we thought of sharing our experience in this article along with a few expert tips that can help you with sale preparation.
Why Should You Prepare Your Business for Sale?
Preparation is an important step in the process of selling your business. The key benefit of sale preparation is that it helps you take stock of your business and review it with a fresh eye. Sometimes, as a business owner, you tend to get so involved in the day-to-day affairs of the business that you barely get time to take a hard look at how things stand, and consider things as objectively as possible. Sale preparation can help you do that.
Secondly, good sale preparation can help you create a great first impression on prospective buyers. Having your books of accounts in order, sorting your key business documents, reviewing your internal systems, and doing organizational improvements can go a long way in smoothening the sale journey for you. We have seen many situations where efforts made on sale preparation even led to better valuation – for example, a staffing solutions company spent a year on fixing its organization structure issues and eventually received a valuation that was very close to the owners’ asking price.
What Does the Process of Sale Preparation Entail?
While there are no hard-and-fast rules about how to prepare your business for sale, we advise that you take a methodical approach to it. You can start by getting together your key team members, preferably from different functional areas such as marketing, distribution, finance and accounts, product development, human resources and so on. Seek their objective view on how things stand and what you can do as a team to make things better.
If the exercise starts to get too overwhelming, take a time-based approach – what can you and your team do in the next 1 month? 3 months? 6 months? Who will be responsible for executing each of the key improvement areas? Who will they be accountable to? Keep an eye on the on-going affairs of the business too – this exercise should not disrupt your usual business as far as possible. Monitor the results of sale preparation periodically and make sure your team members take it seriously.
How Long Will It Take to Prepare Your Business for Sale?
The duration of sale preparation is again a matter of your judgment. Technically speaking, it is a function of two parameters:
a) How much improvement do you want to make in your business?
b) By when do you want to sell your business?
Goes without saying, the more improvements you want to make, the more time will be required. As an entrepreneur, it is important you distinguish the critical aspects from the less important ones. For example, having the books of accounts in shape is a top priority for most buyers.
Secondly, keep an eye on your timeline goals for selling your business. For example, if you must sell your business in a year, you cannot spend more than 6-8 months on preparing your business.
When Should You Start Preparing Your Business for Sale?
The answer is – now!
Yes, if you are seriously considering selling your business, you should start sale preparation right away. There is no good time to start. The earlier you start, the more prepared you will be at the time of handling buyer inquiries, and the more advantage you will have. You will also be able to take stock of things better and get an objective view of where your business stands as of now, and how much can be done in what time. The more you delay, the more you will lose out – one of the common mistakes that sellers make.
So, what are you waiting for? Now that you know how to prepare your business for sale, go for it! At IndiaBizForSale.com, we help thousands of business sellers make their businesses more saleable and connect with matching buyers quickly. To know more about what we do and how we can help you, write to us at [email protected].