September

7th

2015

Business Sale: When Should You Start Planning? – Part 1

By

Deciding when to sell your business could be prompted by a number of factors.

  • The market may be telling you it’s the right time.
  • You’ve lost interest in the business, or lost the excitement.
  • Your business relationships with fellow directors have broken down.
  • You’re just plain ready to retire.

The six million dollar question is when should you actually start planning your sale.

In the first of this series of 3 articles, we look at the factors that will trigger you planning activity.

Business Sale? What Will the Buyer Want?

PROFITABILITY is the most basic requirement a buyer will look for. Is the business making a profit and will it continue to do so in the future? Is there room for growth in the industry still or is it a declining sector?

Having a POINT OF DIFFERENCE to your competitors will help. If you provide simple commodities which can be easily replicated by your competitors, you will quickly be in a discount price war which will de-value your business. If your products (or services) are more unique, your sales and profits are more likely to be sustainable, just as buyers want.

If your PROCEDURES are well documented, the new business owner, or the staff you leave behind will be able to run the business without you.  If every decision relies on you to make it, the chance is that the business will collapse as soon as you leave. A buyer knows this and will either walk away from a sale, or make your sale conditional on the future performance of the business.

Can your business GROW. If you have trained personnel in place and professionals supporting your business it will enable growth, linking directly to the future profits the buyer is looking for.

CULTURE is more than just having trained personnel. It’s about those people in your business understanding  and embracing the way in which you want things done in  your business. Think Apple or Virgin Atlantic.

Plan to get these points right and you are already planning for a business that will attract multiple buyers.

If you require any further information about planning your business sale, please contact us.

 

 

Click here for Part 2 which looks at some of the technicalities of a business sale.