Building a good business model is important, so if in future you propose to sell your business, pretending you’re preparing it for a new owner can be an interesting and valuable exercise.
Like your home, your business is an important asset and its value should be considered on an ongoing basis. Selling a business can set you and your family up very comfortably. However, if you get it wrong, it can make you miserable and feel ripped off.
The reality is that your business is worth whatever someone is willing to pay for it but there are most definitely things you can do to maximise its value. Here are a few things you need to know about selling a business.
Make it easy to acquire
If your business is a mess, it will take longer for a purchaser to conduct due diligence and guess who’s going to end up paying for that? You may also lose out as the acquiring party loses patience or finds an easier acquisition. Any skeletons that were in the closet should be long gone before going down this path.
Understand the process
Your acquirer will often give you a price that is based on a multiple of your profits. During due diligence, even little problems will cause that multiple to reduce. Say the multiple is four. If an adjustment of $20,000 profit is made by the acquirer (for example because they believe you pay yourself too little), $80,000 in value has just been taken away from you. You must be ready for this.
Start preparing now
It can take the best part of two years to prepare a business for market readiness and maximise its value. Don’t leave it to chance and don’t leave it until the last minute. Most people who don’t plan lose.
Prepare it for ‘any’ acquirer. Might your business be of interest to someone who knows nothing about it? Is it a good investment opportunity for someone who doesn’t want a full time job? The closer it is to a model business, the more interested parties you’ll have.
If you’re ready to take action, the Your Business Success program with its proven mixture of filmed business case studies, knowledge packed workbooks and personal one-to-one help has been designed to help you understand exactly what a buyer is looking for.
If you are planning to put your business on the market at any point in the future don’t let being busy stop you from starting the process now. Remember, even if you’re not intending to leave your business, getting it ready for this outcome is still a sound strategy. Any value you create over time will be multiplied in the future and this will only improve your quality of life and that of your family.
To enquire about how we can help, freecall us Australia wide on 1800 632 907 or take five minutes to read more on our website at www.yourbusinesssuccess.com.au/thinkbig2 . There are a number of FREE videos available to get you started.
