Getting your business ready to sell: how do you do it as an SME?
Are you thinking of selling your business someday? Then of course you want it to be attractive to potential buyers as well as fetch a good price. But how do you do that? Actually, preparing your business for sale is almost the same as future-proofing your business, with a few extra steps added. Business coach Lizanne Jakobs gives 7 practical tips to prepare your business for sale step by step. Good for now, and for later.
1. Start with yourself: make yourself expendable
Many entrepreneurs are the face of their business. But for a buyer, that is precisely a risk: what happens if you leave? Therefore, start in time to transfer knowledge, responsibilities and customer relationships to your team or suppliers. Make sure that processes are established and that employees can operate independently. This is how you build an organization that will continue to run without you.
2. Get your finances and records in order
A buyer doesn’t want surprises. Make sure you have up-to-date records, clear financial statements and an insightful playbook for your business. If you have employees, make sure there is an employee handbook. Work off any backlogs and make sure all contracts and important documents are neatly organized. Transparency builds trust and prevents “bodies from the closet” during the due diligence that a potential buyer will do. It’s like buying a house, that also needs to be tidy before you put it on Funda.
3. Optimize your structure and processes
Optimize processes so that the business operates efficiently and scalably, even without your day-to-day involvement. Think about automating things, making efficiency strokes. For example, I once helped a client who wanted to go from working eight to one hour a day so he could travel internationally in a van. And he succeeded!
4. Create a sales plan
A good sales plan is indispensable. See what needs to be done before this is an interesting buy for someone. Is the business profitable enough now and in the future? Is there a clear cash flow forecast, a business plan, a pitch deck? Is everything attractive or do you still have a lot of dead stock in your warehouse? Your business can always be sold, but how much you get for it is something else entirely. You can certainly influence this positively.
5. Focus on your people and culture
A healthy company has a strong team and a positive culture. Invest in your employees, provide clear terms of employment and resolve any staffing issues. A stable team and a pleasant working atmosphere are attractive to buyers and contribute to a smooth transfer. Often companies buy other companies so they don’t have to recruit employees but get them in 1x!
6. Your role and your legal entity
Think about what you want to do during and after the sale. Do you want to negotiate yourself or have it done? Look for buyers yourself or outsource? Sell your company (if it’s a limited liability company) entirely or just the assets? Or if you have a sole proprietorship or VOF, go to a limited liability company? There is also the issue of how long you want to stay in the business after you sell it and exactly how you are going to do the substance of the transfer. Many business owners make that period either too short for a proper transfer, or too long so that they reluctantly have to work for the new buyer for years to come.
7. Get help in time
Getting your business ready to sell is a process that requires time and expertise. Consider hiring a business coach or advisor to guide you through the preparation, valuation and sales process. This will help you avoid pitfalls and increase your chances of a successful sale.
Want to spar about your situation? A free consultation can help you take the first step towards a successful sale of your business. And often there is a subsidy on these trajectories as well. For more information, please contact us, we would like to help you with this important step.
Author: Lizanne Jakobs, founder of Brilliant Work and business coach. She has sold her own business and helped clients in various industries get ready to sell their businesses.
