Whatever your reasons, there are several things you’ll need to do to ensure you have properly prepared your business for sale.
There are many reasons that could prompt you to sell your business. It could be that old age has crept up and finally made the sweet struggle of competing for customers too much for your body to bear. It could be that ever since WA lost its perch as the strongest economy in the country in 2014, you feel that it is time to get out before we slip beneath the 7th position we now occupy, only ahead of Tasmania.
Conduct an audit of your business and flag areas in need of pre-sale improvement
A business evaluation will reveal the areas that are lagging behind in your business. Some of the areas are bound to be important to any potential buyer and include: legal condition, image of the business and business brand, customer base and concentration, operations and organization of the business. These are key areas of any business, and you should evaluate and assess them before thinking of listing your business for sale. Any improvements in these aspects will bump the value of the business when you finally call in a business valuation expert to tell you how much your business is worth.
Create a pre-sale improvement plan
There are a few questions you need to answer after evaluating your business for weaknesses that may make potential buyers think twice:
- Is the weakness or flaw in an important area of my business?
- Will this flaw lessen buyer interest or depress the price significantly?
- Is the cost of erasing this flaw going to be more or less than the concession the weakness will force?
- Can I improve and remove this flaw before my sales deadline?
Once you have answered these important questions, you can proceed to create a plan on how you’ll improve your business and make it presentable to potential buyers.
Due diligence and housekeeping duties
It will be important to have in written form all policies and procedures, especially those that may exist as unwritten rules. In addition to this, all employees should have all their positions neatly and clearly defined, with roles and tasks that can be measured to track progress. Any redundant or obsolete assets should be sold off as they might lead to a price concession on your part. Employees with outstanding leaves and other entitlements should take them before the business is sold as they might be viewed as liabilities by the buyer.
Set the right price for the business
Setting the right price is tricky, because you want the highest possible price that you can get in the market while the potential buyer is looking for the business that will yield the highest future profits for the lowest buying price. This is where an independent business valuation plays a vital role. A professional Business Valuation company will dispel the fears of both parties as they can be assured of getting a fair price and will thus be willing to make the transaction.
Finally, as you make the sale, consult your accountant and a licensed business broker to set the whole process in motion.
Mathieu Paul
Director – Business Improvement
P: +618 6315 2700
E: enquiries@insightcp.com.au
The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.
Liability Limited by a scheme approved under Professional Standards Legislation
Reference Links:
https://thediplomat.com/2016/09/economic-outlook-for-western-australia-difficult-but-not-dour/
https://businesssalesperth.com.au./thinking-selling-business-western-australia-tips-perths-leading-business-brokers/
https://sofrankoadvisors.com/2016/11/preparing-business-sale-new-year/
