Groom Your Business in Advance Before Selling

It is safe to say that the majority of small businesses are owned and run by the baby boomer generation, who are nearing retirement and would be seriously considering selling.

Currently it is a buyers market which makes it harder to achieve maximum profits when selling. So 'grooming' your business prior to advertising your business for sale is recommended.

To get started, put yourself in the shoes of a potential buyer. Otherwise known as 'Due Diligence', try and come up with a list of things you feel would be important if you were looking for a business for sale. These are measures taken when trying to determine the value of a business. I always recommend getting a profession such as your accountant or an independent business valuation company to give you an accurate valuation.

Finding ways to increase profits will definitely be an advantage and help your profit and loss statements look good when the potential buyer request to see them. Below are some suggestion for ways to increase profits.

• Product price increases
• Offer a larger range of products sold or services
• Minimize overheads. Cost which are still incurred even if products or services are not sold such as rent, wages, etc.

Is your industry stable with continuous growth and do outside influences or trends have an effect on business performance such as profitability, sales and margins. Looking for an opportunity to expand your business geographically may be another option to consider.

Some businesses are reliant on the current owner for continued sales and supply. Being able to prove and assure a potential buyer that all business activities will continue the same way they currently are will give the buyer peace of mind. A potential buyer needs to know that knowledge along with current systems will be an easy transfer and will have no negative effect of the running of the business.

Make sure you have all profit and loss statements up to date and ready to hand over to the buyer. This will indicate to them that you are serious about selling and have nothing to hide. A potential buyer is always curious as to why it is for sale and you do not want to give them a reason to walk away, such as not having financial ready for them to view. Also make sure that you have no outstanding bills or overdue accounts.

If your business has a number of staff, make sure that they are good staff and that the staff are happy with their jobs. Assure them that their jobs are safe with the business sale. Having a great business culture is essential. The last thing a potential new owner wants is disgruntled staff members. If the new owner knows that the staff is one less thing he has to worry about, then this is definitely an advantage.

As you can see there are many factors that need to be taken into account and addressing some of these points in advance will definitely put you in the box seat when it comes time to sell.